DEWA delays fund-raising bond sale to next quarter

Utility says credit markets are not yet suitable for fund-raising and delays a $1.5b bond sale until after March.

Dubai Electricity and Water Authority (DEWA) will delay a US$1.5 billion (Dh5.51bn) bond sale until after March, as it considers credit markets are not yet suitable for fund-raising. Despite being on credit watch at ratings agencies, the Dubai utility plans to tap into debt markets in the second quarter of this year, its chief executive, Saeed al Tayer, said yesterday. "This quarter, the market is not attractive; not only for us but for everyone in the UAE," Mr al Tayer said. The funds will go towards water and power projects, he said.

International rating agencies downgraded DEWA, along with other Dubai Government-related corporations, last year on concern over the level of state support they could expect. DEWA is expecting its power generation capacity to grow to 10,000 megawatts within 18 months, from 7,000mw. Demand for electricity in Dubai is expected to grow by 6 per cent this year, a slight decline from 6.3 per cent last year, but DEWA has no plans to increase its prices.

The utility last week said it would allow private investors to own a stake in the Dubai power industry for the first time, a move designed to ease the Government's investment burden and make the sector more efficient. DEWA is in the process of hiring an adviser to help it iron out ownership and regulatory issues, before selecting a preferred bidder for a new power plant to be built at Hassyan, near the Abu Dhabi border.

In the next 15 to 18 months, the authority will appoint a consultant to choose the best bidder for a stake in the plant, which will eventually supply 9,000mw and cost less than Dh8bn to build, Mr al Tayer said. * with Bloomberg