Abstract
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 emirate’s total consumption of
water resources exceeds by 24 times its natural recharge capacity.
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)
region’s second largest producer of desalinated
water, after Saudi
Arabia.
The UAE water sector is organised along federal lines. Abu Dhabi
Water & Electricity Authority
(ADWEA) is the utility responsible for the
supply of water in Abu Dhabi, taking over from the Water &
Electricity
Department in 1999. In Dubai, Dubai Electricity & Water Authority (DEWA)
operates the
water and electricity sector. Sharjah Electricity & Water
Authority (SEWA) is the authority with
responsibility for the small
emirate’s 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.
ADWEA has also been the most active promoter of privatised 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.
The much weaker economic climate
– with demand substantially down, particularly in Dubai – may
force
the Abu Dhabi authorities to reform the entire water sector model.
The spectre of nationalisation is
looming if the emirates’ major
privately financed water projects encounter further delays.
In May 2009, a
study commissioned by the Abu Dhabi Executive Affairs Authority revealed that
there
was still scope for cutting back water and power consumption. The
report said the installation of more
efficient irrigation technologies and
water-efficient taps and toilets could reduce consumption by 30%, or
71mn
gallons a day (g/d).
Dubai has been hardest hit by the global economic
downturn, and the clutch of real estate developers that
have driven the
expansion of the state’s megaprojects are now delaying, scrapping or
downsizing their
various schemes. This will have a material impact on
water demand, particularly on the district-cooling
air-conditioning
systems.
There was already evidence of a tailing off in demand in 2008.
Figures released by DEWA in April 2009
show that the emirate’s water
consumption fell by 37% in 2008, despite a 10% increase in demand for
desalinated water over the previous year.
DEWA will stagger its
developments as the emirate faces a sharp fall in expatriate population
numbers in
2009-2010. Contract awards for the 600mn g/d Hassyan power and
water project at Jebel Ali have been
delayed since DEWA regards Dubai as
having a sufficient supply of power and water.
Developers are also
downsizing deals in anticipation of weaker demand. In May 2009, Dubai
property
developer Nakheel announced the successful restructuring of a
AED3bn contract with Suez
Environment-Degremont and Besix to design, build
and operate a sewage treatment plant at Jumeirah
Golf Estates –
previously, the contract just covered the design and build elements.
ADWEA
may decide to dispense with the competitive tendering processes that have been
the mainstay of
its expansion plans in order to speed up the construction
of new IWPPs.
H209 should see a revival in water project activity in the
UAE, as project sponsors activate schemes that
had been mothballed in 2008
amid concerns over demand strength. DEWA has announced plans to invest
more than US$16bn over the next five years to boost its power and water
capacities.
They will be helped by evidence of funding support from export
credit agencies. DEWA completed a
US$1bn ECA-backed funding package in May
2009, the first sovereign to secure such support in Dubai.
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.
In 2008
DEWA requested government permission to raise power and water tariffs for the
first time in 10
years, in order to fund its investment programme and
cover rising costs.
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