Dubai: Dubai's power utility aims to be debt-free this year after paying off a final bond in October and expects electricity and water demand to return to normal levels after dropping due to the coronavirus, CEO Saeed Al Tayer said.
Dubai Electricity and Water Authority is due to pay off a $1.5 billion bond. Other borrowings linked to the utility comprise unused credit lines, according to data compiled by Bloomberg. Joint-venture companies building DEWA power plants in the emirate have taken on some project-level loans.
"With the removal of lockdown measures and gradual resumption in economic activities, electricity and water consumption for 2020 is generally expected to be around the same" as normal, Al Tayer said in an emailed response to questions from Bloomberg. "Dubai's economy has shown a propensity to recover and we expect that moderate growth in electricity and water demand will resume."
The pandemic crushed economic activity worldwide as businesses shuttered and workers stayed home. That's cut energy demand, including for utilities such as DEWA.
Moody's Investors Service in April lowered the company's debt rating to Baa2, two levels above junk. It said departures of foreign residents may reduce demand for power and that Dubai's government may rely more heavily on transfers of funds from the firm as the economy stutters.
A return to normal
DEWA is developing renewable energy alongside its traditional natural gas-fired power plants. It's building a desert solar park with capacity planned to reach 5,000 megawatts by 2030.
Just over 1,000 megawatts of solar capacity is in operation now, with another 1,850 megawatts under construction, Al Tayer said. A 900-megawatt section of the energy park is set to start in the third quarter of 2021, he said.
DEWA is also building a coal-fired power plant along Dubai's border with Abu Dhabi, the capital of the United Arab Emirates. The plan is for that to be able to produce as much as 2,400 megawatts.