Both authorities will replicate the tariff structure recently adopted by Dubai Electricity & Water Authority. As in Dubai, the changes will not apply to UAE nationals. The changes are expected to be brought in within two weeks.
The changes mean that, among the seven emirates, only Abu Dhabi has yet to announce a tariff hike. However, with sufficient gas supplies in the emirate, it is not under the same pressure to do so.
Fewa customers pay AED0.15 ($0.04) a kWh. The cost of production is AED0.92 a kWh. Under the new structure, residential customers will pay tariffs ranging from AED0.20 a kWh to AED0.33 a kWh, and larger consumers will pay higher rates for power and water.
The increase is expected to only lead to a marginal increase in revenues for the utility firms, but attempts to introduce a more aggressive tariff structure were found to be politically unpalatable. Another tariff increase is expected within the next three to five years.
Fewa is also planning to introduce power generation by the private sector in the northern emirates. It is still unclear whether this will be limited to generating power for new megaprojects or how the fuel for the private power plants will be sourced.
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