Dubai Municipality plans to retender a contract to build a waste-to-energy facility for the third time. The project scope is likely to be revised down significantly before tendering.

According to a source at the municipality, the tender for a build-operate-transfer (BOT) contract was cancelled as “nobody came forward to finance the project.”

Bids were submitted for the second time in November 2011. Two companies submitted bids and Japan’s Hitachi Lenovo was tipped as the favourite for the contract.

The company submitted a proposal for the project, which would see three incinerators constructed at Al-Warsan in Dubai, each with a capacity of 50MW. The waste-to-energy facilities were to process around 6,000 tonnes of domestic waste a day under a 20-year contract.

Hitachi Lenovo proposed a price of 26 fils per kWh for the power produced by the projects in addition to a gate fee for the amount of waste disposed. According to sources close to the deal, the municipality was keen to accept the power price, but would not agree to a gate fee.

The municipality has said that it “may reduce” the scope of the project from 6,000 tonnes a day to around 2,000-3,000 tonnes of waste. This will reduce the projects costs considerably. Under the original scope, the project was set to cost around $2bn.

The latest tender for the project will be launched “soon” and will be for a BOT contract lasting 15-20 years. Only waste incineration services will be included in the contract. Waste collection will continue to be carried out through the municipality.

The first tender for the project was cancelled because the scope of the project was too open. Bidders were allowed to submit proposals for waste incineration and/or collection and the submissions were to be judged against a complex bid evaluation matrix.

France’s Cabinet Merlin is advising the municipality on the project.