Dubai Electricity & Water Authority (Dewa) has received around 30 expressions of interest (EOI) from developers to build its first independent power project (IPP), despite not yet confirming whether the project will carry a government guarantee.

Developers are understood to have sent in EOI responses, but may not actually submit bids depending on the final guarantees that Dewa is able to offer on the project. Dubai’s debt crisis has led to questions about its creditworthiness as the guarantor on a long-term project such as the one Dewa is planning.

Dewa also says it is unlikely to solicit bids from all the companies that responded to the EOI. Dewa invited companies to show interest in the project in March. Bert Kleinveld, Dewa’s director of special projects says, “It’s a really global list. Of course there’s a lot of screening to be done. It’s a very exhaustive and expensive exercise to submit a bid for an IPP, so we do not want 27 or 28 companies to go through this expense.”

Companies will be prequalified and sent the request for proposals as part of the evaluation of the EOIs. “By the end of this month, we hope to issue a request for proposals (RFP),” says Kleinveld.

Fatima al-Shamsi, senior manager of new business development at Dewa, has said that Dewa has approached the Dubai government about providing a payment guarantee on the project. No response has been given to this request yet, although it is understood to be viewed positively by the government. More significantly, many banks will see the Dubai government guarantee as being a proxy for backing by Abu Dhabi, which has shown itself ready to support Dubai to ensure its government-owned companies can avoid defaulting on their debts.

Dewa is considered to be one of the strongest companies owned by the government of Dubai, although profit fell by 20 per cent in 2010 due to increases in costs and one off gains in 2009.

A UK consortium comprising bank HSBC, engineering firm Mott MacDonald and law firm Clifford Chance was selected in June 2010 to advise on the project.

Hassyan 1 IPP is expected to be followed by five or six similar independent projects as part of Dewa’s private power programme.

The IPP at Hassyan was originally to be developed as an independent water and power project (IWPP), but the desalination element was subsequently dropped. According to a source at Dewa, the decision to adjust the project plan was taken following a revised water demand forecast. While power continues to increase at a steady rate, meeting water needs in coming years will be less difficult.

The Hassyan 1 project will be constructed on a build-own-operate (BOO) basis. When complete, it will generate 1,500MW. The project is expected to be commissioned in 2014. The chosen developer will take a 51 per cent stake in the Hassyan 1 IPP. Dewa will buy all of the power produced by the project.