Keith Levers, CEO of Palm Utilities, says that its USP and success in the market lies in engaging with every individual end user. Expansion plans include setting up a company in Abu Dhabi and signing MoUs in India, with potential for more in Egypt and Malaysia.

An IPO is also in the offing, though no dates have been set, he said.

In April 2008, Istithmar, a part of Dubai World group of companies, launched Palm Utilities, which unified Palm Water (PW) and Palm District Cooling (PDC) utility companies to offer a fully packaged utility portfolio. The four-year-old PDC has completed district-cooling facilities for projects such as the Dubai Multi Commodities Centre, Ibn Battuta Shopping Mall, Jumeirah Islands, Gardens Apartments, Palm Jumeirah, Jumeirah Lake Towers and Discovery Gardens.

The three-year-old PW offers build-own-operate and build-own-transfer services for all types of commercial, municipal and industrial projects. Its portfolio includes the Palm Jumeirah, Jebel Ali Free Zone Authority, International City and Jumeirah Golf Estates.

Levers spoke to Emirates Business about the challenges facing Palm Utilities in carving its own niche in the market and why lobbying for change benefits all.

—What are your expansion plans beyond Dubai?

—We are in the process of forming a company in Abu Dhabi. We have been approached by many other countries but will expand in a controlled manner. We are also working with Jafza International. Through the formation of Palm Utilities, we have been able to achieve our expansion plans.

So far, we have signed an MoU in India. One is a project in southern India while the other is with a developer who has projects all over India. Meanwhile, a MoU is in progress in Egypt. In terms of being an independent profit centre, our USP is to engage with every individual end user. That has been our advantage. We have worked with a number of tariff structures that are flexible with the developers. Our experience is gaining momentum. We will take that overseas and are prepared to work with an authority or developer in that aspect.

—In March, Palm Utilities had sent a letter to Dewa chairman Saeed Al Tayer requesting a formal review of the tiered tariff structure imposed by them. What has happened since then?

—They said that they will look into the matter but we have not heard anything so far. We have spoken to Empower and are aware that Tabreed and Emicool have made their representations to Dewa.

There were also numerous media reports indicating the impact of the tariff increase on district cooling, in particular, and on water. We were selling our cooling at 34 fils, which has gone to 49 fils.

This makes district cooling now more expensive, which means that the end user is paying that cost. In a way, it defeats the purpose of Dubai and Abu Dhabi governments in using district cooling to reduce energy costs. But if we secure a lower tariff from Dewa, we will pass back the benefits to our end users.

—What are the challenges facing the district cooling industry?

—It is a process to educate developers and end users about district cooling. The fact that the UN is taken an effort to see how district cooling enables carbon credits is a positive sign. Dewa too is advocating district cooling to developers.

—When will Dewa stop supplying freshwater to district cooling plants and enforce the use of TSE ?

—We met with them around four months ago. It will be enforced after 18 months and Dewa asked us for feedback. The forecast is that there will have a surplus of TSE, then why not use it. But there are some obstacles that have to be overcome such as getting Dewa to assist us with the developers to get a plot of land within the project to build a district cooling plant and a polishing plant. Or the availability of TSE on a new development.

—What are your investments into the business?

—In terms of capital costs, the figure stands at Dh10,000 per tonne of cooling. In the initial year, when we started the company, it was around Dh7,000 a tonne. We expect this to go up to Dh11,000 per tonne.

This is the investment for what we have built and ordered so far. We still see costs increasing but we are hoping that it will tail off and the market will calm down.

—How do you address rising costs in the business?

—With rising costs, we negotiate to buy additional chillers at a price within the period of our initial orders. But the current big issue is that the chiller manufacturing segment, which is the principal component of what we do, are quite busy. So they will not give us much since there is plenty of business out there with the current construction boom in Dubai. But we do negotiate that as best as we can.

—What does the coming year look like in terms of your order books for district cooling?

—By end of this year, we will commission 300,000 tonnes of cooling capacity. We have made a commitment to build 550,000 tonnes for those orders in place or existing plants with need for extra modules.

Additionally, we have commitments from developers for us to build 1.1 million tonnes by 2010.



PROFILE: Keith Levers, CEO Palm Utilities

A qualified electrical and civil engineer, Levers first came to the Middle East in 1978 as Regional Director for the Morrison Construction Group. In the last 30 years he has established and managed a number of joint venture businesses throughout the region, and in various other parts of the world.

Levers joined Palm District Cooling in 2004 as Chief Executive Officer.

He led the company's early development in building the organisation, while managing the execution and operation of the company's major district cooling projects as CEO of Palm District Cooling and Director of Palm Water.

In 2006, Levers was appointed as Chief Executive Officer of the newly created Palm Utilities.