CEO says there will be no problem financing clean coal project
Dubais Electricity and Water Authority (Dewa) will have no problems raising the required financing needed for the emirates two independent power projects (IPP), says the authoritys chief executive Saeed al-Tayer.
Speaking to MEED on the sidelines of a conference in Dubai on 10 March, he said that in the absence of sufficient interest from private investors and banks, Dewa is in a position to fund the projects itself.
Dewa is developing the second phase of its 100 mega-watt (MW) Mohammed bin Rashid al-Maktoum solar park as an IPP. It is also planning 1,2000MW clean-coal fired IPP at Hassyan in Dubai.
Dewa has a funding strategy. It has [access to] export credit agencies, syndications and it is investment grade so at any time it can go to market to get finance, there will be no problem. But we are going to open the door for the private sector thats why we are doing this, he said.
[There will be] no difficulty, believe me, of getting the financing. If Dewa is going to do to the project, they can do it, he said.
The tender for the second phase of the solar plant is expected to be floated in the next couple of months, Al-Tayer said. In December last year, consultancy firms submitted bids for an advisory services contract for the second phase.
The first 13MW phase of the solar project was opened in October last year. US-based First Solar was awarded the estimated AED124m ($33.8m) contract to build the first phase in 2012.
This initial phase was fully funded and owned by Dubai Supreme Council of Energy, but it was decided to structure the second phase as a public-private partnership which a roughly 50-50 split between the developer and the government.
50 per cent of the total investment will be from the developer and then the developer has to select the sub-contractor to not only construct the solar park but also to operate the park and then there will be power purchase agreement between the developer and Dewa to guarantee the purchase of the power, Al Tayer told MEED.
The solar project is expected to attract a relatively high degree of interest from potential investors, which contrasts to the highly sceptical market reaction to the coal plant project.
The market is already relatively cautious about the project given that the Hassyan site was also the proposed site for the gas-fired IPP, for which Dewa received bids for in December 2011, but announced it was putting the scheme on hold in April 2012 just as the preferred bidder was due to be announced.
Some progress on the coal project has been made, with a consortium led by the UK-based consultancy EY selected as a financial advisor for the project in early February.
Dewa plans to carry out the coal project in two 600MW phases, with the first phase to be completed by 2020 and the second by 2021.
The two IPP projects will form a key part of Dubais long-term plans to diversify its energy mix, as set out in the Dubai Integrated Energy Strategy 2030, which aims for clean coal to account for 12 per cent of total power generation.
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