Businesses in for a shock as Dewa increases tariff

Dubai: Commercial and industrial businesses are in for a shock this month when they receive electricity bills that could be as much as 65 per cent higher as Dubai acts to curb excessive consumption, says an energy conservation company.

Dubai, with one of the highest per capita consumption, will see an increase in million as a result of slab tariff placed by Dubai Electricity and Water Authority (Dewa) -aimed at encouraging energy consumers to use less by paying more - at the end of this month. Commercial and industrial business will face the brunt of the tariff.

A typical office tower on Dubai's Shaikh Zayed Road has an annual energy bill of around Dh2.5 million to Dh3 million, which could increase by almost Dh2 million, according to a facilities management company Farnek Avireal.

"The new tariff system will encourage people to keep a closer eye on their electricity and water consumption. It will also pave the way towards a more responsible utilisation of natural resources," Saeed Mohammad Al Tayer, Dewa Managing Director and CEO said.

Average individual electricity usage, according to Dewa is 20,000-kilowatt hours per annum and 130 gallons of water daily.

"The new tariff will eventually have a positive effect for Dubai," said Markus Oberlin, general manager of Avireal. "The new rates will help in bringing in new technologies and even individual solar cooling of buildings begins to become economical for owners and companies."

An average five-star hotel in Dubai that has a total energy bill of up to Dh7 million a year would increase by an additional Dh4.5 million. A five-star beach hotel with energy costs of around Dh15 million could see their bills rise by an additional Dh10 million.

"Gulf extrusions, manufactures of aluminium moulds, have already optimised their energy consumption by all means possible, said Modar Mohammad Al Mekdad, general manager of the company, but still face high energy bills as there are unavoidable power requirement which can't be reduced.

"We have seen a 61 per cent increase in our bills, from Dh8 million to Dh14 million. To absorb it into the budget we have already incorporated the increase in the price of our products, making them less competitive than similar products from other GCC countries that now have an advantage. The tariff will have a negative effect on the market," said Al Mekdad.

Price breakdown

Dewa's new tariff means that residential and commercial consumers will pay 20 fils per kilowatt hour (kWh) for 0 to 2,000 kWh; 24 fils per kWh for 2,001 to 4,000; 28 fils per kWh for 4,001 to 6,000; and 33 fils per kWh for 6,001 and above.

For industrial users, the rates will be 20 fils per kWh for 0 to 10,000 and 33 fils per kWh for 10,001 and above.

A similar pricing structure is also being introduced for water charges. UAE nationals are only excluded from the new tariffs for their houses and farms.

Projects: New power stations

The Dubai Electricity and Water Authority (Dewa) has embarked on setting up two power- transformation plants in Al Barsha and Racetrack at a cost of Dh815 million.

The new power stations will come operational by 2009.

Saeed Mohammad Al Tayer, Managing Director and Chief Executive of Dewa, said the first station will house four power generators with a capacity of 505 megavolt each, and 12 high voltage switchgears with a total capacity of 400 kilovolt. It will be set up in Al Barsha.

The second power-transformation plant, which will be set up in the Racetrack, will also have four power generators with 14 high voltage switchgears and a capacity of 400 kilo volts.

Al Tayer said the two power stations will be fully equipped with the latest technical equipment, and serve the new residential areas near the Jumeirah village and Emaar Hills.

- WAM