Nakheel expansion plans rely on Dubai utilities authority

05 March 2008
The expansion plans of local property company Nakheel rely on the Dubai Electricity & Water Authority (Dewa) providing enough power and water for its projects, according to the company's legal counsel Steve Hunt.

The extent of Nakheel's plans will be determined by the extra power and water capacity that Dewa can provide.

“I believe Dewa is implementing a very extensive water and electricity programme,” Hunt told MEED’s Dubai Mega Projects conference on 4 March. “The growth in capacity will determine Nakheel’s plans. We need to work in partnership."

“Nakheel has undertaken the procurement of electricity infrastructure, including substations,” said Hunt. “It is vital therefore that what we do is compatible with what Dewa is doing.”

Hunt said the UAE federal law number 37 of October 2007 allows for investment in the private production of power and water.

“Outsourcing these utilities will provide a proactive solution to the problem,” he said.

Hunt said Nakheel has received bids for concessions to design, build, operate, maintain and transfer utilities for a number of its developments. They include Madinat al-Arab in the Dubai Waterfront, Palm Jebel Ali and Dubai Waterfront's island archipelago.

“We had 90 interested companies and we are in the process of appraising the proposals,” said Hunt.
The services to be provided under the concessions include water production, water reuse, district cooling and energy supply to the process units.

Hunt said the key challenges facing the consortiums include how to manage the customer collection and billings process, sourcing feedstock for the utilities plants, the regulatory regime for the projects, and how to deal with the possibility of reduced Dewa power and water subsidies.

Nakheel has established environmental regulations for contractors that are tougher than the Dubai Building Code, which went into effect in January 2008.

“It is likely that utilities will continue to be tendered to concessionaires and structured and linked to particular areas,” said Hunt. “Private sector investment is likely to continue. The interest in [Dubai] Waterfront so far is an indication we are going in the right direction.”

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