Dewa is in a strong financial position, with firm government support and reliable payments for utilities from its customers. The raising of electricity and water rates helped the firm turn profitable in 2008.

Since then, though, the creditworthiness of Dubai’s government has taken its toll on the utility. In March 2011, ratings agency Fitch Ratings lowered its rating of Dewa, citing a lack of information on the finances of the Dubai government. In October 2011, Fitch raised its credit rating for Dewa from Ba2 to Ba1.

As Dubai has postponed plans for private power, with the exception of its renewable energy projects, the rating changes will have minimal impact on the cost of borrowing, but they are important to raise corporate debt.

Dewa has maintained a strong balance sheet. In 2011, revenues stood at AED14.7bn ($4bn), gross profit was AED6.20bn and net income was AED4.37bn. It was a significant increase in income on the previous year’s AED3.51bn.

Between 2010 and 2011, Dewa reduced its cash balance and borrowing levels. This is not a cause for concern, as Dubai does not need to build additional power or water capacity for the next few years. Dubai expects to import a large amount of power from Abu Dhabi when its nuclear plant comes online.

Despite reduced borrowing, Dewa still has significant foreign currency exposure. The authority has borrowed a large volume in euros and this has the potential to affect profits.