Abu Dhabi plans to sell off power assets prompts mixed response

29 October 2007 - The Abu Dhabi government's plan to sell off assets controlled by the Federal Electricity & Water Authority (Fewa) has received a mixed response from Gulf-based developers, equipment suppliers and power consultants, according to local reports.

Fewa is a federation-run utility supplying water and electricity to the northern emirates and has installed capacity of 1000 MW and 55m gallons of water a day of desalination. However, the majority of its power plants are diesel-fired and in need of rehabilitation. "Of course we would be interested," says one Gulf-based developer.

However, an executive at an international equipment supplier based in the Gulf is more cautious. "If [Fewa] follows the route of Abu Dhabi Water & Electricity Authority (Adwea), using independent power projects, then we might be interested," the executive told MEED.

Adwea is the authority in charge of supplying power and water to Abu Dhabi and is the leading utility authority in the federation.

For others, Fewa's assets are unlikely to prove attractive. "Fewa has been heavily subsidised by Adwea for some time and has not made decent revenues from its plants," says a UAE-based consultant. "Our understanding was that Adwea has already moved to [manage] Fewa's assets."

The announcement to privatise Fewa's assets could increase pressure for a similar sell-off by Dubai Electricity & Water Authority (Dewa), although it does have other options.

"I do not think privatisation will be an issue for Dubai over the next five to 10 years," says the consultant. "It is under pressure to build up capacity but my impression is that, rather than an [independent power project] route, Dewa will favour an engineering, procurement and construction model. It will continue to appoint international consultants but will try to carry out much of the construction work itself."

A spokesman for Dewa declined to comment.

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