United Arab Emirates Water Report Q4 2011
Business Monitor International, October 2011, Pages: 57
BMI View: Over summer 2011, the UAE authorities worked harder to ensure that power blackouts and water shortages were kept to a minimum, suggesting a keener appreciation of the need for stronger water provision and a better balance between supply and demand. Whether this translates into a more concerted emirate-wide strategy for improved consumption and increased production, remains to be seen.
Looking at the track record, Abu Dhabi in particular – via its ambitious electricity and water utility the Abu Dhabi Water and Electricity Authority (ADWEA) – should be on course to ramp up supply in the period up to 2015, when BMI see total water produced to register at more than 346,000mn gallons.
ADWEA is sticking to its strategy of rolling out greenfield independent water and power projects (IWPPs), while investing in the expansion of its existing stock. Investment in water transmission networks will also help to minimse leaks, while drawing more consumers, particularly those in the Northern Emirates, into the network.
Key themes to highlight for UAE’s water sector:
- Dubai is moving towards raising tariff rates in line with increases in the cost of imported fuel, which should help to rationalise demand. Under a system which has been in place since January 2011, consumers in Dubai receive monthly bills that show fuel surcharges based on a fils per gallon rating system. For September 2011, the fuel surcharge is set at 0.4 fils per gallon. However, officials in Dubai have ruled out steep increases in water prices.
- In Umm al-Qawain, the Federal Electricity and Water Authority (FEWA) awarded a AED60mn contract to the UAE’s Balhasa Projects in July 2011. The contract will see the company construct a 30km water transmission network in Umm al-Qawain, which will come onstream in late 2012 in response to rising demand from both commercial and residential consumers. The network will comprise 600-800mm diameter piping.
- Dubai has revealed a new commitment to the private model, moving forward with plans for a 1,500MW independent power project at Hassyan, which will come on stream by 2015. If this project runs to schedule, it could lay the foundations for IWPP activity in Dubai.
Average daily water production remains on a starkly upward trajectory and BMI anticipate that the UAE will produce 950mn gallons per day (g/d) by 2015 – nearly twice the level seen in 2005. BMI envisage big increases during 2013-2014 in particular, when a large slice of desalinated water capacity is due onstream thanks to Abu Dhabi’s IWPP programme. ADWEA will continue to draw on assistance from international developers to help increase the emirates’ overall water production by 175mn g/d between 2011 and 2015. There will be pressure to invest in expansion, in light of robust domestic demand. The sense that Dubai has put most of its financial problems of 2009-2010 behind it, should also increase confidence and underpin robust consumption trends over the next five years. The big challenge is on the financing front; ADWEA and its partners could find it more onerous to tap project financing than in the pre-2008 period. Nonelethess, BMI are confident that the UAE will keep pace with rising water demand over the forecast period.
Executive Summary
SWOT Analysis
UAE Water Industry SWOT
United Arab Emirates Political SWOT
United Arab Emirates Economic SWOT
United Arab Emirates Business Environment SWOT
Market Overview
Domestic Competitive Landscape
Northern Emirates/Sharjah
Pricing Mechanisms And Regulatory Framework
Tariffs
Table: ADWEA’s Water Tariffs
Sectors
IWPPs
Desalination
Wastewater Treatment
Water Systems/Pipelines
Major Projects
IWPPs
Wastewater Treatment
Water Pipelines/Systems
Key Projects
Table: Major Projects – Water
Industry Forecast Scenario
Table: Key Data, Water Industry
Table: Annual Water Production by Region (MG)
Table: Annual Water Supply By Company (MG) 1999-2006
Regional Overview
Middle East Infrastructure Business Environment Ratings
Table: Middle East Regional Infrastructure Business Environment Ratings
Company Profiles
Abu Dhabi Water & Electricity Authority (ADWEA)
Abu Dhabi National Energy Company (TAQA)
Suez Environnement
Veolia Water
BMI Water Forecast Modelling
How We Generate Our Industry Forecasts
Sources
Business Environment Ratings
Ratings Overview
Table: Infrastructure Business Environment Indicators
Project Finance Ratings Methodology
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
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