A renewed focus on developing the tourism and industrial sectors has driven a construction boom in Ras Al Khaimah (RAK) and led to the development of a host of industrial, residential, commercial and retail spaces. To support this growth, the government has at the same time invested in basic electricity, water and sewer networks.
Like other northern emirates, RAK has historically faced a shortage of electricity and water, and has begun investing in new generation facilities to support its economy. The Arab Petroleum Investment Corporation estimates that by 2017 the UAE will have invested nearly $76bn in energy projects. The utilities sector in RAK will reap some of the benefits of these. According to Khoie Properties, a UAE real-estate developer, investments in energy and infrastructure constitute more than AED 38billion of total ongoing projects in the Emirate.
The government of RAK is also pushing through reforms to stimulate the sector’s growth and encourage private investment. Emiri decree No. 4 of 2013 established the RAK Electricity and Water Authority (RAKEWA), which is to take over most of the functions currently under the purview of the Federal Electricity and Water Authority.
According to the RAK municipality, RAKEWA’s mandate will be to regulate water and electricity, supervise the administration of electricity generation and water desalination, oversee water rights and monitor the prices of water and power services. It is not yet clear, however, whether the authority’s mandate will extend to overseeing investment funds allocated by the UAE’s Federal National Council to build core power and water infrastructure in the emirate.
A number of projects are under way to boost the emirate’s power and water supply. RAK is currently constructing a water desalination plant to meet increasing demand from residents and industry, with a production capacity of 15m gallons a day.
One company that has invested in RAK’s utilities sector is Utico Middle East. After making significant investments in water and power generation, Utico has grown into the biggest private-sector player in the sector: the company currently manages a desalination plant with a capacity of 160,000 cu metres a day, a 120-MW gas power station and almost 350 km of transmission and distribution lines.
These utilities serve more than 150,000 people and over 600 industries across RAK, according to the company. Major areas of service include the Al Hamra Village, Mina Al Arab, the Saqr and Al Jazeera sea ports, Al Ghail industrial zone, RAK Maritime City, and major hotels such as the Waldorf Astoria, Hilton Al Hamra, Banyan Tree, and Bab Al Bahar.
In October 2012, Utico signed a deal with Shanghai Electric, a Chinese maker of power generation and electrical equipment, to build a 270-MW power station in RAK Maritime City for Dh1.5bn ($408m).
More recently, Utico announced plans to build the world's largest solar-powered desalination plant in RAK. The new plant, which was put to tender in November 2013, will produce more than 22m gallons of potable water a day and have a power generating capacity of 40 MW. The desalination and power production operations will be managed under separate contracts, and several other Transmission and Distribution and other generation tenders, with a total value of more than $450m.
Cleaner and greener
The new solar-powered desalination plant and clean-coal power plant are expected to reduce CO2 emissions by more than 1m tonnes a year, according to Utico. However, the company sees more opportunities for reducing emissions and generating greener power and water in RAK.
“Power generation and consumption needs to go greener in RAK,” Richard Menezes, managing director and vice president of Utico, told OBG. “The change needs to come first from the community, from the way that energy is consumed. Once we become more efficient as a community, the industry will adapt to provide more efficient means of generating power.” Once the clean-coal power plant and the solar-powered desalination plant starts construction, the company expects to put a number of other projects to tender as well.
These ongoing developments in RAK’s utilities sector are critical to supporting economic growth in the emirate. Federal authorities, too, are focused on securing power and water supply in the northern emirates. In March 2011, the Federal National Council committed an estimated $1.5bn to improve utility functions in the northern emirates, which include RAK. However, the rate of economic expansion is likely to require increased focus on investing in core power and water infrastructure to meet demand going forward.
Follow Oxford Business Group on Facebook, Google+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.