Special Report: UAE - Dubai debt tests federal structure

For two years, soaring contractor costs and the mushrooming housing developments have been making Dewa chiefs uncomfortable.

Rising costs have forced the authority to delay power plant projects, at the same time as peak power consumption is projected to hit 15,000MW a day by 2015, with current installed capacity of just 5,448MW.

Now, power demand has dropped and is unlikely to rise at the predicted levels because real estate projects are being delayed.

Dewa is revising Dubai’s future power needs. And its rejection of the high-cost bids that came in over the summer may prove to be a wise move for the authority.

With labour and materials costs coming down, and more contractors available, bids are likely to come in at a more affordable price, enabling projects to go ahead.

Dewa’s situation is mirrored across the emirate, where all areas of infrastructure have strug-gled to keep up with Dubai’s rapid expansion.

The real estate correction provides Dubai’s infrastructure providers with a chance to catch up. In the long run, this will put Dubai in a much stronger position.

List of stories:

• Brand Dubai loses its lustre

• Debt threatens to delay recovery in Dubai

• Correction cools Dubai property market

• The rise of Dubai’s mega-malls

• Slowdown brings respite for Dewa

• Centre of trade moves south to Jebel Ali

• UAE bourses plan for the long term

• Sharia banks in Dubai shift business focus

• Diversification boosts manufacturing in UAE

• Commentary: DP World must act without delay