Research and Markets: United Arab Emirates Water Report Q1 2011 - For 2011, A 7.4% Increase in Production Is Expected, A Substantial Increase on the Previous Year

DUBLIN--()--Research and Markets (http://www.researchandmarkets.com/research/258b8c/united_arab_emirat) has announced the addition of the "United Arab Emirates Water Report Q1 2011" report to their offering.

The United Arab Emirates Water Report provides industry professionals and strategists, corporate analysts, utilities associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Arab Emirates water industry.

The UAE is a thirsty consumer of water. Abu Dhabi claims the highest per capita water consumption rate in the world, at 525-600 gallons a day (g/d). Officials estimate that the emirates total consumption of water resources exceeds by 24 times its natural recharge capacity. In peak periods, demand spikes: Dubai Electricity & Water Authority (DEWA) noted a 6% month-on-month (m-o-m) increase in consumption in July 2010.

In the UAE as a whole, desalinated water accounts for 80% of total water consumption. The UAE has emerged as the Middle East and North Africa (MENA) regions second largest producer of desalinated water, after Saudi Arabia.

The UAE's water sector is organized along federal lines. Abu Dhabi Water & Electricity Authority (ADWEA) is the utility responsible for the supply of water in Abu Dhabi. It took over from the Water & Electricity Department in 1999. In Dubai, DEWA operates the water and electricity sector. Sharjah Electricity & Water Authority (SEWA) is the authority with responsibility for the small emirates water and power. For the four northern emirates Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, a single authority, the Federal Electricity & Water Authority (FEWA), is the water and power provider.

With Dubai's water and power utility DEWA looking to follow ADWEA's private financing lead, the UAEs water sector stands an increased chance of attracting the kind of funding needed to meet the sharp uptick in demand that is expected over the next decade. Though the economic recession bit a chunk out of the country's demand in 2008-2010, the historic trend is expected to resume with more vigor over the next four years. For 2011, a 7.4% increase in production is expected, a substantial increase on the previous year. By 2014, an additional 200mn g/d of water is expected to be in the UAE system the bulk of this new supply emanating from the expanded array of IWPPs from the ADWEA stable.

ADWEA remains the most active promoter of privatized water provision, via a series of independent water and power projects (IWPPs). Since its foundation, ADWEA has built at least one new IWPP every year, besides expanding existing facilities. It is assisted by Abu Dhabi National Energy Company (TAQA), which has bought stakes in a series of IWPPs in the country.

The selection in October 2010 of a Korean-Japanese consortium, comprising Sumitomo and Korea Electric Power Co (Kepco), to undertake the Shuweihat S3 project under a 15-year power purchase agreement is the first significant new ADWEA power project that does not include a desalination component. In November, ADWEA's privatization director Abdullah Saif al-Nuaimi announced that if the authority's experiments with three RO plans were successful, new projects could be developed as separate water/power schemes a break with recent tradition.

Abu Dhabi's water consumption is increasing at a rapid rate. ADWEA subsidiary Abu Dhabi Water and Electricity Company (ADWEC) notes that water demand increased by 8.1% in the 2008-2009 period. The company is anticipating robust long-term demand growth, with 2015 demand expected to reach1.06bn g/d, rising to 1.28bn g/d by 2025.

The much weaker economic climate, poor investment flows and lower demand has resulted in delays and downscaling of projects, most notably in cash-strapped Dubai, but also, to an extent, in Abu Dhabi. This has raised fears among investors that some emirates might consider greater nationalization of the industry if major privately financed water projects encountered further delays. However, the success of some recent projects that had struggled to find funding initially, and signs of recovery in the global economy seems to have allayed such concerns for the moment.

Dubai will proceed with its Hassyan 1 scheme as an IWPP, confirming that the tough economic climate could prove to be a trigger for economic reform. Meanwhile in Abu Dhabi, ADWEA said in November 2009 it would issue a call for tenders for a new electricity and desalination plant in the first half 2010, in which it would take a 60% stake, which has been the norm for previous projects.

In a positive sign of growing confidence in the Dubai Inc parastatals, DEWA issued a US$1bn five-year bond, the first greenback-denominated benchmark offering completed by a Dubai corporate since 2008 and the first time a Dubai parastatal has tapped the debt capital market since the Dubai World restructuring late in 2009. DEWA was reported, in Q3 2009, to be seeking a new loan in excess of US$1bn, backed by export credit agencies. The utility needs to shore up its funding sources since it is due to spend up to AED28bn in the next two years to raise both power and water supplies.

DEWA will stagger its developments as the emirate faces a sharp fall in expatriate population numbers in 2009-2010. In order to speed up project activity, in June 2009 DEWA sanctioned a cut in the bid bond for tenders exceeding AED2bn, bringing it down from 5% to 2%. It also lowered the performance guarantee bond from 20% to 10%. Despite Abu Dhabi's successful deployment of private-led development models, Dubai, Sharjah and the northern emirates have yet to adopt the IWPP template. However, in Q407 the government made the first moves to open up the northern emirates power and water sectors to private investment.

The amount of new water capacity should continue to increase across the UAE at a healthy rate, spurred on by the improving investment levels and the need to meet rising demand.

In June 2010, Abu Dhabi's main water regulator, the Regulation and Supervision Bureau (RSB), announced new trade effluent control regulations aimed at controlling effluent and boosting recycling of water. Companies will now face restrictions on the amount of wastewater they can discharge.

Another area where Abu Dhabi is focusing resources is in the storage of desalinated water, through the optimization of the existing water supply network and fostering storage. The award of a new AED1.6bn contract to a Lebanese/Korean consortium in Q3 2010 to build a major storage facility in Liwa is a sign of this new strategic push. In the Western Region, where Liwa is located, the aim is pump large volumes of desalinated water into the aquifer. Similarly in Dubai, construction is under way of a potable water reservoir in Mushrif with a 415mn gallon capacity.

Companies Mentioned:

  • Abu Dhabi Water & Electricity Company (ADWEA)
  • Abu Dhabi National Energy Company (TAQA)
  • Suez Environnement
  • Veolia Water

For more information visit http://www.researchandmarkets.com/research/258b8c/united_arab_emirat

Contacts

Research and Markets
Laura Wood, Senior Manager,
press@researchandmarkets.com
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716

Contacts

Research and Markets
Laura Wood, Senior Manager,
press@researchandmarkets.com
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716