Dubai Electricity & Water Authority (Dewa) plans to award the contract for the emirate’s first independent water and power project (IWPP) in the first quarter of 2011, according to Bert Kleinveld, director of special projects at the authority.

Dewa is currently seeking a team of technical, legal and financial consultants to advise on the project, which will be located at Hassyan, in the southwest of the emirate, close to Jebel Ali.

It issued a request for proposals for consultancy services on the IWPP at the end of December, with a deadline for bids of 22 February. Dewa aims to appoint the consultancy team by the beginning of the second quarter of this year. It then expects to issue a request for proposals for the IWPP two to three months later.

The IWPP replaces Dewa’s previous long-standing plans to build the Hassyan 1 power and water plant on an engineering, procurement and construction basis.

The winning consultant will advise Dewa throughout the project. This will include reviewing, assessing and advising the authority on the appropriate regulatory framework and the best IWPP strategy.

The Hassyan IWPP will have a capacity of 1,500MW of power and 120 million gallons a day of water – the same as the original Hassyan 1 plant. Dewa will guarantee to buy the power and water output of the plant.

After looking at the experience of other utilities in the region in developing IWPPs, Dewa is now considering whether to follow the approach taken in Oman or Abu Dhabi, according to Kleinveld.

In the past, Muscat has allowed private developers to take full ownership of its plants, while Abu Dhabi has preferred to retain a substantial stake in its projects.

Bankers and developers tell MEED that the success of the IWPP plans could hinge on whether banks will be willing to accept a guarantee from the Dubai government that it will pay for the output of the plant, given the financial difficulties at other government-linked bodies in the emirate.

However, Dewa is confident that it will receive a strong response from the market.

“It is a standard IWPP and there seems to be quite a big appetite among banks and developers,” says Kleinveld.

The authority will guarantee land availability and provide feedstock for the project.

The plant will be gas-fired, with the gas likely to be supplied from Qatar’s North field through the Dolphin pipeline.

The IWPP is scheduled to come on line in 2014, three years later than the date planned for Hassyan 1, which was originally known as Hassyan P Station.

The economic slowdown in Dubai over the past year has affected power demand in the emirate, enabling Dewa to delay the commissioning date of the new plant.

With current power capacity at 7,464MW and peak demand at 5,622MW, Dewa is already in a comfortable position. The rate of power demand growth in the emirate has fallen from 12 per cent in 2008 to 5 per cent in 2009.