Interested companies can prequalify either as water or electricity operators. However, where a prequalified company does not satisfy the criteria in both sectors it will be required to team up with another company. Water operators must have experience running a minimum of three potable water distributions systems in the past five years each serving more than 150,000 customers in at least two countries. Electricity operators are required to have the same level of experience in electricity distribution. All bidders are required to have a minimum market capitalisation of $350 million. ADDC has approximately 170,000 water and 200,000 electricity subscribers, while AADC has 50,000 water and 90,000 electricity customers.
The tender marks the beginning of a 12-month privatisation programme that will see the government sell 40 per cent of its ownership in each of the two companies. The first stage of the sale will involve the private placement in October of a 20 per cent stake in each company to local institutional investors. A further 20 per cent holding in each company will then be offered through an initial public offering (IPO) in the first half of 2006. BNP Paribas
is financial adviser on the sale and the US’ Dewey Ballantine
is legal adviser (MEED 16:4:04).
‘We are issuing the management contracts in advance of the placement because we believe they will make the companies more attractive to investors,’ says a source in Abu Dhabi.
The part-privatisation of ADWEA’s distribution networks follows a long-running programme to privatise the emirate’s generation capacity. The programme has seen the addition of about 5,760 MW electricity generation capacity and 394 million gallons a day (g/d) of desalination capacity since 2001 through the construction of four independent water and power plants (IWPPs). A further 2,000 MW of electricity and 160 million g/d of water will be added by mid-2008 through the construction of the Taweelah B IWPP.
Abu Dhabi began reforming its water and electricity sectors in 1999 with the corporatisation of its production, transmission and distribution businesses and a new regulatory framework.