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com

Dubai Expo 2020 Projects Report

A comprehensive overview of the
project opportunities in Dubai in the
run-up to the 2020 Expo
A MEED Insight report

Table of contents
Table of contents ............................................................................................................................................. 2
List of tables .................................................................................................................................................... 4
List of figures ................................................................................................................................................... 5
1.

Preface .................................................................................................................................................... 6

2.

Executive summary ................................................................................................................................. 7

3.

The Political Context ............................................................................................................................... 9

3.1
History .............................................................................................................................................. 9
3.2
Government....................................................................................................................................11
3.3
Foreign relations ............................................................................................................................13
3.4
Financial crisis ................................................................................................................................13
3.5
Dubai ..............................................................................................................................................15
3.5.1
The historical context ............................................................................................................ 15
3.5.2

4.

Expo 2020 ............................................................................................................................. 17

Economy ............................................................................................................................................... 19
4.1
Economic impact ............................................................................................................................19
4.1.1
Job creation ........................................................................................................................... 20
4.2
The UAE economy .........................................................................................................................20
4.2.1
UAE Federal budget .............................................................................................................. 22
4.3
Dubai economy ..............................................................................................................................23
4.3.1
Travel and tourism................................................................................................................. 23

5.

4.3.2

Dubais budget ...................................................................................................................... 24

4.3.3

Debt ....................................................................................................................................... 25

4.3.4

Banking ................................................................................................................................. 25

4.3.5

Post Expo 2020 risks ............................................................................................................ 26

Dubai Projects Market ........................................................................................................................... 28

5.1
The UAE and regional context .......................................................................................................28
5.2
Dubai ..............................................................................................................................................31
5.3
Sector analysis ...............................................................................................................................33
5.4
Top contractors ..............................................................................................................................35
5.5
Future projects ...............................................................................................................................36
5.6
Forecast .........................................................................................................................................39
6. Construction .......................................................................................................................................... 42
6.1
Expo 2020 Preparatory Committee ................................................................................................42
6.2
The Expo site .................................................................................................................................43
6.3
Leisure and tourism ........................................................................................................................45
6.3.1
Tourism ................................................................................................................................. 45
6.3.2

Leisure facilities ..................................................................................................................... 49

6.4
Transport infrastructure ..................................................................................................................51
6.4.1
Metro ..................................................................................................................................... 51
6.4.2

Rail ........................................................................................................................................ 53

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6.4.3

Ports ...................................................................................................................................... 56

6.4.4

Aviation .................................................................................................................................. 56

6.4.5

Roads .................................................................................................................................... 60

6.5
Real estate .....................................................................................................................................63
6.6
Preventing another bubble .............................................................................................................67
6.7
Funding ..........................................................................................................................................67
6.8
Disputes .........................................................................................................................................68
6.9
Construction costs ..........................................................................................................................69
7. Power & desalination ............................................................................................................................ 71
7.1
Power .............................................................................................................................................71
7.1.1
Existing facilities .................................................................................................................... 73

8.

7.1.2

Fuel and alternative energy ................................................................................................... 76

7.1.3

Renewable energy ................................................................................................................ 78

7.1.4

Transmission and distribution ............................................................................................... 79

7.2
Desalination....................................................................................................................................80
Wastewater ........................................................................................................................................... 83
8.1.1

9.

TSE ....................................................................................................................................... 84

Industry .................................................................................................................................................. 86

9.1
Aluminium.......................................................................................................................................87
9.2
Cement ...........................................................................................................................................88
9.3
Other industrial projects .................................................................................................................89
10.
Appendix A Dubais transport links ................................................................................................. 90
...................................................................................................................................................................... 90

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List of tables
Table 1: The UAE government and cabinet .................................................................................................. 11
Table 2: UAE oil production .......................................................................................................................... 21
Table 3: UAE key economic data .................................................................................................................. 21
Table 4: Foreign Direct Investment ............................................................................................................... 22
Table 5: Dubai GDP growth (percentage) ..................................................................................................... 23
Table 6: Dubai GDP by sector, 2012 (percentage) ....................................................................................... 23
Table 7: Dubai budget 2013 core principles ................................................................................................. 25
Table 8: Total Dubai debt - maturing bonds and syndicated loans .............................................................. 25
Table 9: Annual change in credit (%) ............................................................................................................ 26
Table 10: Annual change in deposits (%) ..................................................................................................... 26
Table 11: Dubai top 20 largest projects under execution ............................................................................. 34
Table 12: Top 20 un-awarded projects in Dubai by net value ...................................................................... 38
Table 13: Top 30 Dubai projects due to be awarded in 2014 ....................................................................... 39
Table 14: Top 30 Dubai projects due to be awarded in 2015 ....................................................................... 40
Table 15: Dubai hotel sector performance .................................................................................................... 45
Table 16: Dubai room supply as of 5 January 2014 ..................................................................................... 46
Table 17: Abu Dhabi room supply as of October 2013 ................................................................................. 46
Table 18: Dubai hotel room supply ............................................................................................................... 47
Table 19: Dubai hotel projects planned and under way ................................................................................ 48
Table 20: Dubai theme parks planned and under way ................................................................................. 50
Table 21: Dubai Mall projects planned and under way ................................................................................. 51
Table 22: The existing Dubai Metro .............................................................................................................. 53
Table 23: Contracts won at Al-Maktoum International airport ....................................................................... 57
Table 24: Dubai International airport timeline ............................................................................................... 58
Table 25: Dubai road and bridge projects planned and under way .............................................................. 63
Table 26: Dubai planned mixed-use and residential projects ....................................................................... 66
Table 27: Dubai power sector key facts, 2012 .............................................................................................. 71
Table 28: Dubai existing power plants .......................................................................................................... 74
Table 29: Selected major power projects, 2005-13 ...................................................................................... 74
Table 30: Dubais targeted sources of generation, 2030 (%) ....................................................................... 78
Table 31: Dubais key transmission and distribution infrastructure, 2011-12 ............................................... 79
Table 32: Existing desalination capacity in Dubai ......................................................................................... 82
Table 33: Dubai Municipality STPs, 2012 ..................................................................................................... 84
Table 34: Selected cement plants and production capacities in Dubai ........................................................ 88
Table 35: Dubai current and future industrial projects .................................................................................. 89

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List of figures
Figure 1: Map of the UAE and the seven emirates ....................................................................................... 10
Figure 2: GCC total contract awards 2007-13 .............................................................................................. 29
Figure 3: Value of GCC contract awards by country, 2007-13 ..................................................................... 29
Figure 4: Breakdown of GCC contracts awarded by sector, 2009-13 .......................................................... 30
Figure 5: GCC contracts awarded by sector, 2009-13 ($m) ......................................................................... 30
Figure 6: Value of projects put on hold on cancelled in Dubai 2004-13 ....................................................... 32
Figure 7: Dubai contract awards 2003-13 ..................................................................................................... 32
Figure 8: Dubai contract awards by sector, 2005-13 .................................................................................... 33
Figure 9: Dubai contract awards by subsector, 2005-13 ($m) ...................................................................... 34
Figure 10: Dubai top 15 contractors by value of work awarded 2011-13 ..................................................... 35
Figure 11: Dubai value of planned projects by sector ($m) .......................................................................... 36
Figure 12: Dubai breakdown of planned construction projects by subsector ($m) ....................................... 37
Figure 13: Dubai top 10 future clients based on announced projects .......................................................... 38
Figure 14: Dubai projects market forcast 2014-2020 .................................................................................... 41
Figure 15: Location of the Dubai 2020 Expo................................................................................................. 43
Figure 16: Breakdown of Dubai hotel rooms by star rating ........................................................................... 47
Figure 17: Dubai metro map ......................................................................................................................... 52
Figure 18: The planned Etihad Rail map ...................................................................................................... 54
Figure 19: Dubai airport passenger growth ................................................................................................... 59
Figure 20: Dubai Island Projects ................................................................................................................... 65
Figure 21: UAE contract cost index .............................................................................................................. 70
Figure 22: Dubai peak demand growth, 2005-12 ......................................................................................... 72
Figure 23: Dubai peak power demand and installed capacity, 2005-12 ....................................................... 73
Figure 24: Dewas fuel bill, 2004-08 .............................................................................................................. 77
Figure 25: Annual growth in Dubai water demand, 2005-12 ........................................................................ 80
Figure 26: Installed desalination capacity and peak desalination demand, 2005-12 ................................... 81
Figure 27: Demand outlook for desalinated water, 2011-20 ......................................................................... 85

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All rights reserved. No part of this publication may be reproduced, stored in any retrieval system, or
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without the prior permission of the copyright owner. While every care has been taken in completing this
report, no responsibility can be accepted for any errors or omissions that may occur.

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1. Preface
Until 2008, Dubai was the dominant projects market in the region. However, the
crash of its real estate sector and the subsequent drying up of activity saw an
exodus of contractors as they sought opportunities in new markets. The effects of
this sudden slowdown are still being felt today.
Yet the award of the 2020 Expo to the emirate has provided a strong stimulus for
projects market growth. Combined with rising property prices, new project
announcements and the reactivation of on hold projects, there is a renewed sense
of optimism in the market.
As a result, tor the first time in half a decade contractors, suppliers and consultants
alike are again looking seriously at Dubai as a growth market. It will not be easy.
Competition is intense, and funding options remain fairly limited. At the same time,
the government is keen to avoid a repeat of the boom-bust conditions that
enveloped the market in 2008.
Nonetheless, the outlook for the Dubai projects market following the Expo award is
stronger than it has been at any point in the past half-decade. In this latest MEED
Insight report, we assess the impact of the 2020 Expo and the commercial and
project opportunities it will bring, directly and indirectly.
The report is the latest by MEED Insight, the research and consultancy arm of
MEED, and thanks go to everyone who contributed to it.
Ed James, Head of MEED Insight
Dubai, January 2014

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4. Economy
The announcement on 27 November 2013 by Paris-based Bureau International
des Expositions (BIE) that Dubai had been selected to host the World Expo 2020
provided an immediate confidence boost to an economy that was already
recovering strongly following the late 2008 global financial crisis and subsequent
real estate crash.
Concern had been growing that another bubble was forming in the emirates real
estate and construction sectors, as property sales prices climbed by more than 20
per cent in the second quarter of 2013. News of the win immediately allayed those
fears, lifting confidence in the sustainability of Dubais recovery.

The main
sectors that will
directly benefit from
staging the event are
the construction and
hospitality industries

With a major international event to host in 2020, economic growth is now expected
to be more sustained. The Expo builds on the core sectors of Dubais economy,
namely trade, tourism and transport and hosting the event will draw further
investment into these areas. It will not just be Dubais economy that will benefit,
neighbouring emirates, particularly Sharjah and Abu Dhabi, will also likely see an
increase in visitors during the event, which will be held between October 2020 and
April 2021. The UAE will also be celebrating the 50th anniversary of its founding in
1971, making 2021 a focal year for the entire country.

4.1 Economic impact

The potential direct economic impact of Expo 2020 on Dubais economy was
detailed in the bid documents, which estimated that over the six months of the
event, 25 million people would visit, with more than 70 per cent coming from
outside the UAE.
The cost of constructing the Expo site and related infrastructure (including
extensions to roads and the Dubai Metro) was put at 5.2bn ($6.9bn) and it was
said that more than 277,000 jobs would be created in the run-up. The total
economic impact of staging the event was estimated at 28.8bn. But with building
work on the Expo site only expected to begin towards the end of 2015, the real
boost to the economy is only expected from 2016 onwards.
The main sectors that will directly benefit from staging the event are the
construction and hospitality industries. For the construction sector, there is firstly
the building work on the Expo site itself. This will involve the development of a 4.4square-kilometre plot at Dubai World Central (DWC) next to the new Al-Maktoum
International airport in Jebel Ali. The work will include building 700,000 sq metres
of pavilions and other venue space, and 500,000 sq m of permanent structures.
But the impact will be much broader than this.
Winning the event will also spur the wider development of the property industry. It
was already recovering strongly, with many projects that had been derailed by the
financial crisis being revived and new ones being launched over the past year.
Those schemes will have been given fresh impetus by the 27 November
announcement, and analysts expect in particular to see a step-up in activity to
complete projects in the new Dubai end of the emirate. The construction sector

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will also benefit from a massive expansion in Dubais hotel capacity that is now
expected to follow in order to accommodate the hoped-for 25 million visitors.
Translated into Dubais gross domestic product (GDP) growth, the US Merrill
Lynch forecasts a modest increase of 0.5 percentage points in 2016-19 and a
more substantial 2 percentage-point boost in 2020-21. It estimates that the total
boost to the economy over the 2015-21 period will be $23bn or 24.4 per cent. The
UKs Barclays has forecast the Expo win could boost Dubais economic growth to
average 6.4 per cent a year from 2014 to 2016 and potentially to 10.5 per cent by
2020.
Many of the major investments that will support Expo 2020 were already planned
as part of the emirates Vision 2020 for economic development and were due to go
ahead regardless of the win, but the victory adds to the governments confidence
in the sustainability of economic growth and will spur it to fast-track certain
schemes.

4.1.1 Job creation

Dubais bid documents estimated that hosting the Expo would create 277,000 new
jobs by 2021, with 40 per cent in the travel and tourism sector and 30 per cent in
the construction sector. Ninety per cent of the employment opportunities would be
generated between 2018 and 2021. The documents also said for every Expo
employee a further 60 additional jobs would be sustained in the wider UAE and
regional economy.

4.2 The UAE economy

Expo 2020 will provide a lift to the non-oil economy across the UAE, particularly
the travel, tourism and transport sectors, and is projected to see the UAEs
economy growing by up to 10 per cent a year by the end of the decade.
Blessed with substantial oil and gas wealth, the UAE economy has traditionally
been highly dependent on income generated from its natural energy resources,
largely concentrated in the emirate of Abu Dhabi, the seat of the federal
government. The oil sector has been particularly vital to the UAE economy over
the past three years, as non-oil GDP struggled to recover from the 2009 global
recession and debt crisis.
But with volatility in global oil prices and Abu Dhabis oil production set to slow, the
government is accelerating its long-term drive to diversify the economy. Based on
current oil production levels, Abu Dhabis oil reserves will continue to be
productive for another 90 years. But weaning the UAE economy off its
dependence on energy exports is also intended to help the country become selfsustainable by the time it runs out of oil.

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Table 2: UAE oil production, 2011-18

2011
Exports of oil, oil products
and gas ($bn)
Average crude oil export
price ($ a barrel)
Crude oil production (million
barrels a day)

2012F

2013F

2014F

2015F

2016F

2017F

2018F

111.6

118.1

115.5

116.0

112.8

110.6

109.7

109.9

109.6

112.0

108.1

101.5

97.3

94.1

92.0

90.9

2.6

2.6

2.7

2.8

2.8

2.9

2.9

3.0

F=forecast
Source: IMF

Abu Dhabis oil sector will continue to be the mainstay of the UAEs growth, but the
emirate is expanding new sectors in parallel, such as science and technology,
renewable energy and petrochemicals. It is also promoting itself as a regional
centre for culture in order to attract larger revenues from tourists.
Dubai, which hosts the worlds second-busiest international airport, is focused on
growing its services and tourism industries while strengthening its transport and
trade businesses.
Table 3: UAE key economic data, 2011-18
Nominal GDP ($m)
Real GDP growth (%)
Real hydrocarbon GDP growth
(%)
Real non-hydrocarbon GDP
growth (%)
CPI inflation (average)

2011
349
3.9

2012
377
4.3

2013
387
3.6

2014
398
3.7

2015
414
3.8

2016
431
3.5

2017
450
3.4

2018
474
3.5

6.6

5.2

2.1

2.6

3.1

2.1

1.8

1.8

2.6
0.9

3.8
0.7

4.3
2.0

4.2
2.4

4.2
2.5

4.2
2.7

4.2
2.9

4.2
3.0

GDP=gross domestic product

Source: IMF

The UAEs GDP was about $377bn in 2012, slightly higher than in 2011, when it
stood at $349bn. In 2013, GDP is forecast to rise further, to about $387bn,
according to the US-based International Monetary Fund (IMF).
In October 2013, both the IMF and UAE Economy Minister Sultan al-Mansouri
projected GDP growth of about 4 per cent in 2013, a similar level to the previous
year, with the oil sector growing by 2.1 per cent and the non-oil economy by 4.3
per cent. A slight increase in overall GDP growth was projected for 2014.
But following Dubais Expo 2020 win in late November 2013, several leading
economists revised up their GDP growth forecasts for 2014, with the main drivers
being Dubais resurgence and the expansion of the non-oil sector.
After the announcement, Egypt-based investment bank EFG-Hermes upgraded its
2014 forecast for real GDP growth in the UAE to 5.4 per cent from 4.5 per cent
with the country projected to have the second-strongest real non-oil GDP growth
in the region after Qatar. The bank estimates real non-oil GDP growth for the UAE
at about 5-6.5 per cent until around 2015, increasing to about 6.5-8 per cent in
2016-18 and 8-10 per cent in 2019-20.

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5. Dubai projects market

5.1 The UAE and regional context
The UAE projects market has experienced a momentous few years since the
collapse of its real estate sector in 2008/09. Saudi Arabia overtook the UAE as the
largest projects market in 2010, and the federation has seen declining levels of
activity since then. Recently, however, the market has shown some signs of
recovery, recording $26bn-worth of contracts in 2012 and $32bn-worth in 2013,
ensuring that it remains the second-largest market in the GCC.
The strength of the UAE and Saudi Arabia projects markets combined is
significant. Together they accounted for a total of 73 per cent of all project awards
in the period 2006-13. In the same period, the UAE awarded an estimated total of
$350bn-worth of projects, representing 35 per cent of the total contract awards in
the GCC. In fact, the value of awarded contracts in the UAE was 30 per cent
greater than Bahrain, Kuwait, Oman and Qatar combined.

The power,
water and transport
sectors have been very
resilient with almost
$68bn-worth of
contracts awarded
since 2008

Despite its historical strength, the UAE projects market has until recently been in
decline since 2008. In 2011, the market experienced its worst performing year
since 2005, when a little over $23bn-worth of contracts was awarded.
The principal reason for the contraction in the market can be attributed to the
collapse of the construction and real estate sector, particularly in Dubai. Following
a total of $34bn-worth of construction-related contracts awarded in the UAE in
2008 alone, only $45bn-worth of similar deals was awarded in the period 2010-12.
The collapse of the construction sector was offset by increased government
expenditure in the oil and gas sector in 2009, when almost $28bn-worth of
hydrocarbons contracts was awarded. This coincided with Seoul-based firms
winning the majority of contracts in the oil, gas, power and desalination sectors.
South Korean contractors have been making their presence felt in the region
since.
From a sector perspective, the largest over the past five years has been
construction despite its issues with just over $75bn-worth of contracts signed,
although only 12 per cent of that total ($16bn) was awarded in 2013,
demonstrating the declining influence of the sector.
Unsurprisingly, the power, water and transport sectors have been very resilient,
with almost $68bn-worth of contracts awarded since 2008. As the UAE strides to
provide infrastructure to keep up with its rapidly growing population and economy,
there is an expectation that the volume of contract awards will increase in the
future.

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Figure 4: Breakdown of GCC contracts awarded by sector, 2009-13

160,000
140,000
120,000

$m

100,000
80,000
60,000
40,000
20,000
0
2009

2010

2011

2012

2013

Source: MEED Projects

Figure 5: GCC contracts awarded by sector, 2009-13 ($m)

Water,
26,974, 4%

Chemical,
39,461, 6%

Transport,
144,203, 22%
Construction,
215,847, 32%
Power, 86,146,
13%

Oil, 77,427,
12%

Gas,
48,299,
7%
Industrial,
26,072, 4%

Source: MEED Projects

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5.6 Forecast
While Dubais projects market has languished at between $5bn and $11bn-worth
of contract awards over the last five years, the general expectation is that there will
be considerable growth over the years ahead. The 2020 Expo has provided
confidence and impetus to this optimism. However, it should be noted that a
revival in the markets fortunes was already evident prior to the award
announcement.
Rising property prices and major project launches such as the Mohammed bin
Rashid City schemes, the extension of Dubai Creek and Al-Habtoor City gave
credence to the view that the Dubai projects market had recovered and was on the
path to growth again. Regardless of whether the Expo had been awarded to Dubai
or not, the market would have likely grown in any case. That said, there are
specific projects directly associated with the Expo, such as the site infrastructure
and additional hotel rooms required, that will contribute to the long-term project
pipeline. For real estate investors too, the Expo win will perhaps have provided the
additional push required to proceed with their projects.
The MEED Insight forecast for the Dubai projects market anticipates significant
future growth on a year-by-year basis. For 2014 alone, there is visibility on more
than $27bn-worth of projects that are scheduled to be awarded this year. Of this,
there is $9.5bn-worth of projects currently under bidding.
Table 13: Top 30 Dubai projects due to be awarded in 2014
Project
Meydan Sobha - MBR City - District One
Meraas Holdings - Dubai Theme Park
Nakheel Corporation - Al-Furjan Development: Villas
Drydocks World - Water Discus Hotel
Emaar - Downtown Dubai: The Address Residence Fountain
Views
Link Global Group - Falcon City: The Taj Arabia
Dubai Municipality - Deira Market Face Lift (Deira Souq)
Dubai RTA - Sixth Creek Crossing
Dubai Health Authority - Expansion of Rashid Hospital
Zabeel Investments - Porto Dubai
Dubai Holding - Madinat Jumeirah Expansion Phase 4
Iris - Dubai Maritime City: Iris Mist
Nakheel - Palm Jumeirah: Nakheel Mall
DEWA - Hassyan Coal Fired Power Plant: Phase 1
Nakheel - International City: Warsan Village
Kensington - Dubai Maritime City: Kensington Krystal
Meraas Holdings - Phoenix Mall
Sobha Real Estate - MBR City : Sobha Lifestyle
Emaar Properties - Downtown Dubai - Westside Phase 1
Nakheel - Palm Jumeirah: Palm Mall Hotel
Dubai Municipality - Jebel Ali Sewage Treatment Plant : Phase 2
Xtreme Visions - Business Bay: Volante
Damac Properties - Downtown Dubai: Prive by Damac
Meydan - Entisar Tower
Dubai International Real Estate- Jewel of Creek Development:

The Dubai Expo 2020 Projects Report

Contract value
($m)
3,000
2,722
2,000
1,500

Status
Design
Main contract PQ
Design
Study

1,200
1,000
817
817
816
700
680
680
680
650
600
545
544
500
436
408
400
400
367
350
300

Main contract bid

Design
Study
Study
Design
Study
Main contract bid
Design
Main contract bid
Study
Main contract bid
Design
Study
Design
Main contract bid
Design
Design
Design
Study
Design
Main contract bid

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39

There are also plans to extend the Red and Green lines. The RTA is expected to
appoint an external adviser to explore its options for funding the extension of the
Red and Green lines in early 2014.The appointed adviser will look at the possibility
of raising funding from banks and other private sources to finance the project, and
whether the extensions could be structured as a PPP. It will also be asked to look
at the possibility of using the PPP model to develop commercial space around
three existing stations on the metro. Funds raised from this would then be used to
help finance the metro line extensions.
In addition, there are also plans to link Dubai Metro with the federal rail network
being built by Etihad Rail. A railway station will be built in the Meydan area and the
RTA is currently reviewing plans internally for a metro line that would connect the
station with the Bur Dubai area.

There are also

plans to link Dubai
Metro with the federal
rail network being built
by Etihad Rail

In January 2013, Mattar al-Tayer, the chairman of the board and executive director
of the RTA (and also member of the Expo 2020 Preparatory Committee) confirmed
that three new metro lines Blue, Gold and Purple would be up and running by
2030 and that the current Red and Green lines would be extended. The expansion
of the metro will be carried out in three phases 2020, 2025 and 2030. The first
phase will see the construction of a 24.1km-long corridor with 12 stations.
The Green line extension will connect Jadaf to Dubai Academic City with 11
stations, covering a distance of 20.6km. This will bring Dubais metro network to a
total length of 1,009km with more than 70 stations. Work on phase 2 is estimated
to cover 91km with 58 stations and cost an estimated AED45bn. Once Dubais
urban population hits an estimated 4.5 million by 2025, work on the Gold and
Purple lines is to begin.
By 2030, there will be an assessment of the completed projects, and depending
on the passenger uptake of the metro lines, work on the final phase will begin. If
the emirates population exceeds 6 million, a further 221km of lines and 69
stations could be added.

Table 22: The existing Dubai Metro

Red line
Elevated section length (km)

Green line
44.1

14.6

Underground section length (km)

4.7

7.9

At grade section length (km)

3.3

Total length (km)

52.1

22.5

Number of stations

29

18

Travel time (minutes)

67

37

Source: MEED Insight

6.4.2 Rail
About 30 per cent of visitors to the Expo are expected to come from within the
UAE. Many of those might choose to travel from neighbouring emirates using the
federal railway, which is due for completion in 2018.
Etihad Rail is developing a 1,200-km national rail network, which will link major
industrial and urban centres across the UAE as well as providing onward links to
planned lines in Saudi Arabia and Oman. The early focus was on developing the

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7. Power & desalination

7.1 Power
Table 27: Dubai power sector key facts, 2012
Installed capacity (MW)
Peak demand (MW)
Peak demand growth (%)
Installed capacity requirement by 2020 (MW)

9,646
6,637
7
14,840

Source: MEED Insight

Dubais success in winning the right to host the Expo 2020 will result in a number
of infrastructure and real estate projects that stalled during the recession starting
up again, and will ensure that a number of previously proposed schemes such as
the extension of Dubai metro and full expansion of the new Sheikh Maktoum
airport go ahead. The governments forecast that Expo 2020 will create 277,000
new jobs over the next seven years should also lead to sharper population growth,
and, as a result, greater demand for power. In addition to the demand from an
increased population, it is estimated that over 25 million visitors will attend the
Expo event, with 70 per cent of these foreign arrivals. As a result, Dubai is
planning to double the emirates current hotel capacity, which will put an
unprecedented strain on the electricity grid.

Dubai is
planning to double
current hotel capacity,
which will put an
unprecedented strain
on the electricity grid

In order to ensure that Dubai has enough power to cover demand for new projects
and population growth, it will be imperative that the countrys utility provider Dubai
Electricity & Water Authority (Dewa) delivers planned projects on time and has
contingency plans in place if the rate of demand growth for power is greater than
expected.
Dubais power sector has experienced contrasting fortunes over the past decade.
A population explosion in the period 2005-08, driven by a rapidly expanding
economy and a property boom, led to double-digit demand growth and placed
considerable strain on the emirates power and desalination infrastructure.
However, the late 2008 collapse in the real estate market, coupled with the
emirate commissioning significant new power and desalination capacity, has
transformed the situation with Dewa now having significant spare capacity.
The growing surplus was one of the main factors in Dewa opting to cancel in April
2012 the states first private power project despite being on the verge of selecting
a preferred bidder. However, as peak demand growth rebounded to reach almost
7 per cent in 2012, Dewa announced in August 2013 it was planning to move
forward its maiden independent power project (IPP) scheme as a clean coal-fired
power plant. With the winning of the right to host the Expo, Dewa may have to
launch more projects to cope with a growth in demand over the next seven years.

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Figure 22: Dubai peak demand growth, 2005-12

16
14
12

10
8
6
4
2
0
2005

2006

2007

2008

2009

2010

2011

2012

Source: Dewa

The fluctuating fortunes of Dubai and its power sector are clearly illustrated by
recent peak demand growth. Up until 2003, growth was relatively modest
averaging about 4 per cent a year. However, the 2002 decision to allow non-GCC
nationals to own property in the emirate resulted in a surge in population,
construction activity and power demand growth, which averaged 13 per cent a
year in the period 2005-08. The unprecedented growth was brought to an abrupt
halt in 2009 when, following the bursting of the property bubble, it fell to 6.5 per
cent. Despite a recovery in 2010, when it rose to 9.6 per cent, peak demand
growth slumped to a 12-year low of just 0.7 per cent in 2011 before recovering to
6.9 per cent in 2012 when peak demand hit 6,637MW.
To accommodate the high demand growth in the period 2005-08, Dewa embarked
on a major capacity building programme which resulted in installed capacity
almost doubling to 7,000MW. Despite the crash building programme, demand
came very close to outstripping supplies in 2006, when the capacity surplus was
just 86MW. This forced Dewa to import 400MW of power from Abu Dhabi through
the Emirates national grid for the first time.
Since 2006, Dubais capacity surplus has gradually widened, with its reserve
margin reaching 20 per cent in 2009, which allowed Dewa to halt imports of Abu
Dhabi electricity the following year. Indeed, by 2012 and with the full
commissioning of M station, Dubai was in a position to export power, given that it
had a capacity surplus of over 3,000MW and a reserve margin of more than 31 per
cent.
However, as economic growth accelerates and the population grows, Dubai could
see a return of the kind of growth rates seen in the 2005-2008 period. Demand
can be managed somewhat through increases to consumer tariffs thanks to the
fact that the majority of customers are non-nationals. Yet regardless Dewa faces
the prospect of having to invest in more capacity than it may have originally
planned.

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72

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