Wednesday, Apr 18, 2012

--Dewa delays project for which several international consortia were competing

--Says move will help defer capital and operational expenditures

--Will focus on raising existing production capacity, improving conservation to meet increasing demand

--Notes no policy change on private sector partnerships in future projects

(Recasts, adds details, background throughout.)

By Nikhil Lohade

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Dubai Electricity and Water Authority, or Dewa, said Wednesday it has deferred its estimated $1.3 billion Hassyan independent power project, and will instead focus on raising existing production capacity and improving conservation to meet increasing demand.

The Hassyan power plant project can be deferred until a later date, thus deferring capital and operational expenditures, as the company boosts power reserves by raising existing capacity and improving demand conservation, Dewa said in an emailed statement.

Dubai has been forced to review several of its projects as it struggles to recover from a sharp downturn in its economy after the global economic crisis in 2008 hurt businesses in the emirate and demand for its massive real estate projects fell sharply.

Dewa's Hassyan deferment however comes as a surprise as the company--the sole provider and distributor of electricity in Dubai--until recently was very positive about the project as economic activity in the emirate picked up again.

In December Dewa said it had received four bids from international consortia competing for the contract to build the first phase of the Hassyan IPP, which was to have the capacity to generate about 1,600 MW of power--and would help meet rapidly rising electricity demand in the emirate from 2014.

Dewa on Wednesday said it has conducted a comprehensive review of its plans to deliver all future demands for power and water in line with Dubai's strategy.

The utility company said it has succeeded in raising the efficiency and production capacity of its existing power plants at Jebel Ali by around 450 megawatts, while managing to cut the percentage line losses in its electrical network.

"These energy savings will partially offset existing demand," Dewa said.

Dewa also expects a 10 MW project in the 1000 MW solar energy park launched earlier this year and being implemented under its supervision to commence operations by the end of 2013.

"This is in addition to numerous initiatives to produce electricity from distributed solar power plants in partnership with the private sector," Dewa added.

Even as it delayed the Hassyan project, Dewa moved to soothe nerves by stressing that there is no change to the emirate's policy on partnerships with the private sector in future power-generation projects.

-By Nikhil Lohade, Dow Jones Newswires; +9714 446-1694; nikhil.lohade@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

18-04-12 1416GMT