Abu Dhabi - Restructuring & Privatisation.

The power sector in Abu Dhabi is being restructured and partly privatised under a programme launched in October 1998. The sector will consist of ten companies, beginning operations on Jan. 1, 1999. They have replaced the emirate's recently-disbanded Water and Electricity Department.

The restructuring process was undertaken by the Regulation and Supervision Office for the Water and Electricity Sector, a body created as part of the programme, along with the Abu Dhabi Water and Electricity Authority (ADWEA). ADWEA is the purchaser of power and water from the companies.

The Emirates CMS Power Co. This is the first independent power and water producing (IPWP) venture in Abu Dhabi. It is owned 60% by the state's new Emirates Power Company (EPC) and 40% by CMS Energy Corp of the US. It will run the gas-fired Taweelah A-2 combined cycle plant and water desalination complex, which will be built to generate 763 MW and 50 million gallons/day of water. The complex will cost about $800m and its first gas turbine should be in operation by May 2000. Full operation of the complex is scheduled for August 2001.

CMS Energy Corp signed the JV agreement with EPC on Oct. 3, 1998, against competition from several companies. CMS was selected in mid-September by ADWEA and its choice was confirmed on Sept. 29 by Abu Dhabi's Executive Council (local government). Apart from being the operator, CMS' local unit CMS Generation Taweelah will manage the financing and construction of the complex. Its power and water outputs will be sold to ADWEA under a 20-year contract. The JV has a capital of Dh408.4m (about $111m), of which EPC has subscribed to Dh244.8m ($66.8m) and CMS to Dh163.6m ($44.5m). The financing was arranged in December on the basis of a 75:25 debt/equity package, with the borrowing secured on a non-recourse basis. About $600m worth of debt has been fully underwritten by Barclays Capital, the lead arranger which was joined by a group of underwriters.

The complex is to be built by a partnership of Siemens of Germany, which will provide the turbines and related installations, and Hanjung of South Korea which will supply the four multi-stage flash (MSF) desalination units and be in charge of all civil engineering work. Their contract is worth about $695m. CMS has contracted Mott MacDonald of the UK to act as its engineering consultant, having already provided conceptual designs, performance models and specifications. It will supervise all engineering activities, provide project management assistance, audit the contractor's designs, carry out site installation and provide commissioning supervision during the construction period.

EPC, 100% owned by the Abu Dhabi government, represents the state in new IPWP. It has a capital of Dh428m ($116m), with the Abu Dhabi government having subscribed initially to 25% and to pay the rest on demand by ADWEA. ADWEA, chaired by Shaikh Dhiyab Bin Zayed Al Nahyan (one of the bright young sons of Abu Dhabi Ruler and UAE President Shaikh Zayed), is now the highest authority for the power and water desalination sector and will spearhead the privatisation process in the emirate. ADWEA's next project is a 1,000 MW and 100m g/d co-generation complex to be built as a JV.

Al Taweelah Power Co. is in charge of the Taweelah B plant, which is being expanded to 1,220 MW and 103m g/d under a $360m project. Taweelah B will become the biggest single producer of power and water in the emirate.

Umm Al Nar Power Co. runs the Umm Al Nar power and desalination complex, which has a capacity of 1,215 MW and 97m g/d, and the 120 MW Bani Yas station. Umm Al Nar island is the site of an oil refinery.

Al Mirfa Power Co. is in charge of two major power plants in the western region. It now owns and operates the Mirfa co-generation plant, which has a capacity of 246 MW and 16.2m g/d, and the 134 MW plant at Madinat Zayed.

Bainounah Power Co. is in charge of two co-generation plants and one power plant: the 269 MW and 28.8m g/d Taweelah A complex, the 540 MW/16m g/d Abu Dhabi Central Plant, and the 461 MW Al Ain station.

Abu Dhabi Distribution Co. is in charge of supplying and distributing desalinated water and power in the area of Abu Dhabi Municipality.

Al Ain Distribution Co. is in charge of supply and distribution of water and power in the area of Al Ain Municipality.

Abu Dhabi Transmission & Despatch Co. is in charge of all power and water transmissions in the emirate.

Abu Dhabi Water and Electricity Co. is in charge of procurement for all water and power projects.

Abu Dhabi Co. for Servicing Remote Areas is in charge of generation and supply in all the remote regions of the emirate. Its capacity is 286 MW and 31.1m g/d, consisting of small plants.

A joint power grid for the UAE, a two-phase project launched in April 1995 and to cost $194.8m, should help the emirates save funds and avoid infrastructure duplication - with this small federation having a high concentration of international airports, ports, free zones, banks, etc. Under a GCC power connection programme to be launched in early 1999, the joint network will be connected to that of Oman before 2001 and to that of the other GCC states by 2004 (see details in DT Vol. 51, No. 24).

Abu Dhabi and Dubai are the fastest growing markets for electricity. Peak demand there and in the other five emirates occurs in the summer, when people depend heavily on air-conditioning because of the heat. Abu Dhabi's peak demand for electricity in the summer of 1996 exceeded 2,700`, while actual generating capacity was 2,100 MW. As a result, there were power cuts at Mussaffah and other areas. Bechtel of the US is working on a 10-year master- plan for the power and water sectors until 2010.