x Abu Dhabi, UAE Friday 21 July 2017

Powerless, the north waits for dawn

Since the northern Emirates became responsible for providing non-residential electricity, new high-rises have sat dark and unoccupied while businesses are folding. Some are getting by using expensive generators, but many are losing hope.

Patrons relax at Al Forat coffee shop in Ajman. The cafe's generator cannot power the air conditioner, forcing them to bear the heat.
Patrons relax at Al Forat coffee shop in Ajman. The cafe's generator cannot power the air conditioner, forcing them to bear the heat.

AJMAN // Outside Al Forat coffee shop in Ajman's Al Naeemiya district, a group of men sit smoking shisha in front of a television set that has been hauled out on to the pavement. In sheer frustration that the power has not been switched on for more than six months in the building housing his business, Mahmoud Alam decided to open anyway a week or so ago using a small generator. However, this cannot provide sufficient power for the air conditioning, forcing his customers outdoors. Mr Alam, 33, who came to the UAE three years ago, says that if the business folds, he will have to return to Egypt. "I had another coffee shop here which was a successful business, but it was closed down because the building was old," he says. "And now this." In entire districts of Ajman, brand new high-rise towers, finished to perfection, have stood empty for months. At night, occasional lighting powered by generators highlights the idle buildings. Developers, unable to persuade the federal or municipal authorities to switch the power on, are watching investments running into millions of dirhams show no sign of producing the expected return. It is a similar story at Al Bahhar Seafood Restaurant in the city's Al Rashidiya area. Mustafa Shaban, an Egyptian businessman, rented the whole of the first floor of a seven-storey building for a second branch of a popular restaurant he runs near the fish market, and two flats for his workers. His brightly lit restaurant, powered by an expensive generator, stands in marked contrast to the eerie darkness of the empty flats in the six storeys above. "When I came here in April the building was fully occupied," he said. "People had moved their furniture in waiting for the power to be connected, but now everything has gone back. The owner told me to get the decorators in as the power would be connected by Oct 1 so I took a bank loan and invested Dh2 million (US$545,000) in getting the restaurant ready. "But now I have been told there will not be any power for at least two years." Mr Shaban, who is married with two children and has been in the UAE for 16 years, believes he will have to close within the month. Beside his initial investment in kitting out the interior and kitchen, Mr Shaban is spending Dh6,000 a month to rent the generator and up to Dh800 a day on diesel along with Dh1,200 a week on bringing water to the restaurant. "I went to the head of the electric department but nobody gives you a proper answer," he said. Ask the businessmen of Ajman and they say the problem is political. However, Anas Alhajji, energy analyst and chief economist at NGP Energy Capital Management, in Texas, said the problem was down to "plain old planning, and to some extent, greed". "A combination of factors led to rapid real estate development including easy and cheap credit that enabled developers to erect buildings everywhere they can find land," said Mr Alhajji, who used to work in Dubai's energy sector. "As real estate prices in Dubai and the cost of living increased substantially, it pushed people out and created demand for housing in these emirates; consequently, it increased the demand for utilities. "Some developers are discussing joint investment to build power plants," he added. "However, some local banks have already written off some debt." For many years, the federal Government took responsibility for supplying power to the northern Emirates through the Federal Electricity and Water Authority (FEWA). But earlier this year, FEWA announced it was responsible only for supplying electricity to residential projects. This required each of the northern emirates to take responsibility for its own commercial projects. There appears to be some confusion about which residential projects they have responsibility for. When asked about the issue, Ahmad Abdruzzak, head of the engineering section at Ajman Municipality, said: "This is not our responsibility. We give approval for the project and when it is completed we offer a certificate of completion. Then the developers must go to FEWA to ask for electricity." FEWA did not respond to a series of questions on the issue, but its official position has been that energy shortages are due to local authorities which had not co-ordinated with it on precise water and power requirements. A spokesman previously told The National the authority was committed to meeting the "minimum eight per cent growth in power and water demand". In time, FEWA insists, the shortage of power will no longer be an issue. As the wrangling over who is responsible for power continues, the development of Ajman, along with that of Ras al Khaimah and Umm al Qaiwain, is slowly grinding to a halt. In RAK alone, 3,532 building permits have been issued. But up to 2,145 buildings in the emirate are still waiting to be connected with electricity, according to the municipality. Port Al Jeil in RAK was due to open this week but officials say they as yet have no main electricity and will be relying on generators to operate it. The port, which will specialise in exporting and importing livestock and food materials, is set to be the largest of its kind in the emirate and one of the biggest in the GCC, according to Mohammed Abdullah al Muhariza, the director general of the ports and customs department in RAK. Mr Muhariza said an agreement had been reached with FEWA officials for power, fees have already been paid and a transformer installed in the port, but the power had not been switched on. "We don't know why they rejected our request," he says. "The port is a very essential component of development and foreign trade. We are resorting to the use of generators as the last resort; we are desperate to open." Mr Muhariza is worried the generators could stretch their budget to as much as Dh20,000 every day because of high fuel prices. Furthermore, Safeer Mall, in RAK, which was completed in June, and has the largest hypermarket in the region, remains empty due to the electricity crisis. A spokesman for the mall said they have lost all hope of solving the problem and businesses are starting to withdraw stock. And in Umm al Qaiwain, a Dh30-billion project by the Dubai-based developer Tameer, Al Salam City, was put on hold in May due to the shortage of electricity and water. The delay in such a high-profile project, which was believed to have been 70 per cent sold, was a major blow to the emirate. In a bid to solve the problem, most of the emirates have embarked on projects to develop their own power plants. In August, Sheikh Rashid bin Humaid Al Nuaimi, the chairman of Ajman Municipality and Planning Department, held crisis talks with Sheikh Khalifa bin Zayed, the President of the UAE and Ruler of Abu Dhabi, who later pledged to meet up to eight per cent of all the total demands of electricity in the emirate. Ajman has also signed a $2bn agreement with the Malaysian power producer MMC to build the Gulf's first coal-powered electricity plant. The project will not be ready until 2012. Mr Alhajji does not believe the energy crisis will be resolved before 2013. "In the worst-case scenario there will be brownouts and blackouts in the middle of the summer in the afternoon hours." The only way to solve the problem is by curbing spending and credit and changing the local laws, he added. "Developers should not build without ensuring water, electricity and parking." In the meantime, it is the developers, businessmen and people who had rented out flats who are suffering. As Mr Shaban says: "If I had known this would happen I wouldn't have spent money on decoration and I wouldn't have hired staff from around the world. I will have to send them back." His head chef Mahmoud Barak, 46, left a job in Milan, Italy, where he had been working for 14 years, to join the restaurant. He had been planning to bring his family over from Egypt, but now he may have to return to Italy. "Every day I have to throw food away as we have no refrigeration," he said. "I had heard very good things about the UAE, and I was shocked to find out that this can happen here." Mr Shaban says others are in comparable predicaments. "Many people bought a flat here. They may have bought it for Dh900,000 and now they have had to sell it for Dh500,000." Without power, he says, there can be "no life, no development ... you are nothing". "You can expect this to happen in other countries, but not the UAE," he added. "How will the development of the city be achieved if all the business people leave? People are already saying there is no power in Ajman, so why are they still giving approval for the buildings?" kattwood@thenational.ae ykakande@thenational.ae