The federal power authority unveils an upgrade of electricity grid in the northern emirates but experts say it is little more than an 'oil change'.
New power lines raise faint hopes of a revival
RAS AL KHAIMAH // The federal supplier of electricity to the northern Emirates, long hindered by acute power shortages, has announced what experts say is a "modest" strengthening of power transmission and distribution in the area.
According to the state news agency WAM, the Federal Electricity and Water Authority (Fewa) has approved a Dh172 million (US$47m) upgrade that includes new power transmission stations in Ajman, RAK, Dibba and Fujairah. The approval, at a meeting led by Mohammed al Hamili, the Minister of Energy, also includes new long-distance and local overhead power lines in Masafi, as well as others in the northern, eastern, western and central regions.
The authority covers the Northern Emirates, consisting of Ajman, Fujairah, RAK and Umm al Qaiwain, as well as some rural areas of Sharjah. Officials from Fewa could not be reached for comment yesterday. Robert Bryniak, a Dubai-based energy and utilities consultant, said that while the move would strengthen the system it was not enough to solve the area's electricity woes. "It's not a lot," he said. "It will strengthen the transmission system, but it's no different than getting an oil change for your car. I'd leave it in that context."
Yet the announcement seemed to have stoked hopes among residents and officials who have long hoped for better electrical infrastructure. Scores of buildings in the area lack power. A fair number have become empty shells that have lost their investors millions of dollars. Developers have consequently become reluctant to build, pushing up rents. Many residents have resorted to diesel generators for power, an expensive and dirty alternative that most say is not a viable long-term solution.
"We've had slow growth when the electricity wasn't there," said Hamad al Shamsi, the deputy general director of the RAK Department of Economic Development. He hoped the improvements would help revive the local economy, by convincing "the investor [to] come back again and start building". Fewa has in the past attributed the area's electricity shortages to poor planning on the part of local authorities, mainly because they had been building without disclosing plans.
Fewa's head, Mohamad Saleh, recently said a review of federal energy subsidies would also help, because the system was stifling investment in much-needed infrastructure. The current subsidies, which fix prices at between 7.5 to 33 fils per kilowatt hour for residential, commercial and industrial customers, make it uneconomic for private power suppliers to build new plants. Market rates for fuel to generate electricity were between 75 and 80 fils per kilowatt hour - more than double even the most expensive price charged to customers. When a barrel of oil reached $140 two years ago, according to Mr Saleh, that cost soared to nearly 150 fils.
Fewa currently operates six power plants, all of which are running at capacity. For Rabah Abou Ramadan, 24, an employee at Abu Dhabi Islamic Bank in RAK, he hoped more electricity would allow the scores of complete but empty buildings to be occupied, bringing rents down. Indeed, according to report being compiled by the Federal National Council, an estimated 1,000 completed buildings in the northern Emirates currently lack electricity.
"With electricity the rent for the offices will decrease," said Mr Ramadan. "The old buildings will be cheaper, the new buildings will open and businesses can finally move to new buildings." Ismail Khan, an employee at Doha Real Estate who has worked in RAK for 18 years, predicted that sufficient power supply could reduce rents by nearly 25 per cent. "When electricity comes landowners and renters will be happy," he said. "This will be good for all of RAK and affect so many people."