The UAE’s privately owned utility, Utico Middle East, will invest about $185 million to more than double its water desalination capacity in two years, aiming to chip away at state-owned rivals' market dominance, it said on Monday.
Demand for water and power in the UAE is expected to grow by five to six per cent annually in the next few years on the back of a growing population and industrialisation, according to estimates by state-owned utilities. They account for nearly all of the country's water desalination and power generation capacity, leaving Utico with a very small market share.
Utico has 600 customers including manufacturing companies, port operators, government utilities in the small UAE states, hotels, palaces, quarries and private entities. However, it currently has capacity of only 31 million gallons per day (mgpd) of desalinated water, from four plants in the northern emirate of Ras Al Khaimah.
To more than double capacity, it is building a new plant and upgrading two existing plants. The new plant is under construction in Ras Al Khaimah with a capacity of 24 mgpd, in a joint venture with Spain's Grupo Cobra, for an investment outlay by the partners of $196 million.
The Utico plants being upgraded will add a total of 10 mgpd with investment of $68 million, managing director Richard Menezes told reporters.
"The new plant as well as the two upgrades will be operational at full capacity by October 2018, when Utico's total capacity will be 65 mgpd," he said.
Financing for the plants will be partly through a $150 million club loan from three local banks - Emirates NBD, National Bank of Abu Dhabi and Commercial Bank of Dubai - and the remainder through equity, Menezes said.
An infrastructure fund incorporated in the Bahrain Financial Centre is taking a minority stake in Utico valued at around $50 million, he said without elaborating.
The company has won regulatory approvals to build a clean coal power plant in Ras Al Khaimah at an estimated cost of $500 million in a joint venture with Shanghai Electric Group Corp.
"Some packages will go out to tender soon and we are seeking project finance," Menezes said, adding that completion was scheduled for 2019.