Dewa expects higher rating

Utility provider eyes good 2009 financial results. Upgrade may lead to lower cost for the $1.5 billion bond Dewa plans to launch in April. (REUTERS)

Dubai Electricity and Water Authority (Dewa) is positive that its credit ratings will be raised next month as it posts "good" 2009 financial results.

Saeed Mohammed Al Tayer, Dewa MD and CEO, told Emirates Business that the utility firm has not been affected by the recent credit downgrades, and remains "very strong".

"We are actually going to be upgraded because of the [financial] results," he told this newspaper on the sidelines of Dewa nursery inauguration yesterday. "Dewa is doing very well with respect to technical and financial KPIs [key performance indicators]. The upgrade may be in March."

Analysts expect Dewa to post higher profits in 2009 due to a six per cent growth seen in 2009 over 2008. At the end of 2008, Dewa recorded a net profit of Dh4.2bn compared to a net loss of Dh744m in 2007.

The upgrade may lead to lower cost in obtaining the $1.5 billion (Dh5.5bn) bond it plans to launch in April to fund its ongoing expansion plans. When sold, Dewa would have raised nearly Dh10bn from global markets in 12 months, as per analyst estimates, at a time when raising credit is still relatively tough.

Stephen de Stadler, Managing Director and Head of Business Development – Middle East at Fitch Ratings, said: "Dewa ratings are undertaken by the appropriate utilities and energy team. I cannot comment specifically on this but the principle in Dewa, which is important, is that it is linked to the ultimate rating of Dubai."

Dewa is planning to involve the private sector in its new plant in Hassyan. But over the long term, it is considering increasing the involvement in power generation to 15 per cent.

"Part of the generation or 15 per cent of the installed capacity – that's we're going to privatise. This will take some time. The initial stage is the advisory stage," Al Tayer said.

The Dewa chief, who is also the chair of Dubai Executive Council's committee infrastructure and development, said tenders for the first phase of the Hassyan project is to be awarded in the third quarter of 2011. "We plan to award the Hassyan IPP contract maybe a year and a half from now because there is a lot of engineering study," he said.

 

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