Sewa to finance new power project

Dubai: State-owned Sharjah Electricity and Water Authority (Sewa) plans to raise at least Dh10 billion ($2.72 billion) to finance a power project, the authority's director-general said yesterday.

Sewa could raise the funds by selling bonds or sukuk, Al Waleed Khalid Bin Khadem said.

Demand for power and water in the region is surging as the population grows and businesses expand, spurred by a quadrupling in oil prices since 2002 that has fuelled economic growth.

The Dubai Electricity and Water Authority (Dewa) is planning to sell as much as $2.5 billion of Islamic bonds to finance expansion, sources said last week.

"There is a lot of growth," Bin Khadem said. "We have to prepare now to meet the demand."

Sewa plans to expand a 400 megawatt power plant more than six-fold to 2,580 megawatts by 2014 to meet demand surging as much as nine percent a year, bin Khadem said.

"We will go to the banks and need above Dh10 billion ... it could be through bonds or sukuk," he said.

Sukuk are asset-backed Islamic bonds that pay holders a dividend rather than interest.

Companies have until November 18 to bid for the contract to expand the power plant over several phases, a project which includes adding 120 million gallons per day of water desalination capacity, Bin Khadem said.

"We will evaluate the financing after the negotiations with contractors," Bin Khadem said.

Sharjah's population more than doubled to about 750,000 in the decade to 2005, according to the Ministry of Economy. The population has expanded further, fuelled by demand for workers in Dubai who find the emirate more affordable.