Ghadan 21: Abu Dhabi to slash energy bills for businesses

Industrial companies may be eligible for a reduction of up to 40 per cent

Emirates Global Aluminium passed 30 million tonnes of production since commencing operations in 1979. In April, it paid the highest dividend in the history of the company, AED 2 billion to shareholders. Courtesy Mubadala Investment Company
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Abu Dhabi's government will offer industrial companies a reduction on their energy bills in exchange for contributing significantly to the economy.

Under a new scheme, businesses can apply for a discount that could lead to bills being cut by up to 40 per cent.

The offer is part of a broader drive under Ghadan 21 - or Tomorrow 2021, a three year project to support the private sector.

Energy bills relief was one of eight measures outlined on Tuesday as the government marked six months since the 2019-21 project began.

The scheme will run for 10 years, allowing companies to plan ahead and have a clear idea of how much they will expend on energy once rates are set.

Rashed Al Blooshi, undersecretary at the Abu Dhabi Department of Economic Development, said the government was answering calls from the private sector to allow them to invest more into their businesses.

At present, industrial companies pay 28.6 fils per kilowatt hour (kWh).

Those who want to benefit must have very efficient use of power and enjoy a high level of productivity

With the full discount that would drop to about 17 kWh.

The formula focuses on how much a company - the scheme will largely favour industrial producers and suppliers - is producing and distributing, in order to measure its level of contribution to the economy.

It also takes into consideration the company’s efficient use of power.

Mr Al Blooshi wants businesses to think about efficiency and how they use energy.

“Those who want to benefit must have very efficient use of power and enjoy a high level of productivity," he said.

Ahmad Al Bloushi, director general of the Industrial Development Bureau, said the energy bill relief scheme would allow firms to invest money elsewhere.

“When they save on power costs... can contribute more positively towards the emirate’s economy," he said.

Energy bills for companies have grown as the government reduces subsidies and looks for better efficiency in spending. Domestic energy bills also rose for households in 2016 and in 2018.

“Following recent increases in electricity tariffs, we studied the issue with our strategic partners and decided to break down the tariff," Mr Al Bloushi said.

“In Abu Dhabi, we are serious about developing the economy and bringing ideas the will contribute to that.

"Issuing this formula wasn't easy and we hope the private sector will help us develop it," he said.

Salah Al Shamsi, chairman of Liwa Investment Holding, which manufactures paper, carpets and medical equipment such as syringes, said the new formula will clearly cut costs.

“I am sure if we follow the new formula we will save," he said.

Businesses have been told the scheme will eventually be extended to discounts on land, water and gas, he said.

“This will create a positive atmosphere for companies to invest in the industry,” he said.

Dr Mubarak Al Ameri, an investor in a building materials factory, said companies are eagerly awaiting news of further support from the government.

“At our factory we use both diesel and electricity, so we will see if we can apply the new formula," he said, commenting on the requirements to hit efficiency targets.

“They said a similar mechanism will be coming up soon for diesel consumption.”