Private sector allowed to build power plants

The Federal National Council (FNC) yesterday approved an amendment to allow the private sector to build power generation and water desalination plants for the first time in the UAE's history.

In addition to the change to the Federal Authority of Electricity and Water law, the FNC also instructed the federal utility authority to extend electricity and water services to nationals at prices that ensure equality across all of the emirates.

Minister of Energy Mohammed bin Dhaen Al Hamli, who attended the FNC deliberations, praised the new amendment, saying it will contribute to attracting foreign investment to the UAE's energy sector.

However, the minister expressed his reservation to some FNC members' request that the new amendment should include text requiring electricity and water services to be provided at subsidised prices.

The request, he said, would only serve to be a hurdle in the path of the energy sector, which is already facing obstacles. He also warned the addition of the requirement would deter foreign investment into the sector.

The minister promised to extend electricity and water services to citizens in areas it supervises at prices ensuring equality between them and those of other emirates not supervised by the authority.

As part of the discussions, a number of members, including Ali Jassim and Ahmed Al Khateri, demanded that the amendment specify that the private sector should not be allowed to build plants that utilise underground water. Natural underground water reserves, they noted, are under threat and continually decreasing.

Al Hamli did not accept the suggestion. However, in the end the FNC agreed to allow the private sector to build plants to produce water from the sea only.

Several members of the council also suggested that the government should issue a separate law for privatisation and foreign investment, as many of the UAE's neighbouring countries have done. They said such a law would help attract more national and foreign investment.

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