Moody's publishes updated analysis report on Dubai Electricity and Water Authority

According to the report, DEWA's A1 ratings reflect the central role that the company plays in Dubai's growth strategy and the strong support it would expect to receive from local and federal governments. At the same time, ratings are constrained by the expectation of rising debt on the back of a large-scale capacity expansion programme.

Philipp Lotter, Senior Vice President at Moody's Middle East Limited in Dubai (DIFC) and lead analyst for DEWA, says:

"In 2008, DEWA benefited from a government tariff increase and more stable fuel procurement sources from Qatar, which significantly improved the company's margins and underlying financial performance."

"The major near term challenge is the company's refinancing plan, which involves addressing a $2.2bn loan maturity by April next year," Lotter adds.

Moody's report highlights that DEWA continues to execute an ambitious investment plan, which is expected to add 15.5 gigawatt (GW) of additional generation capacity by 2017.

It also underlines the close ties - both operationally, strategically and politically - that exist between DEWA and the government of Dubai, given the overriding importance of stable power and water supply in the context of the Emirates' ambitious expansion plans. Indeed, Moody's believes that DEWA may benefit in the event of a temporary slow-down of Dubai's growth, as the new capacity it will be required to install could be phased over a longer period.

It is worth mentioning that DEWA is the state-owned monopoly provider of electricity and water in Dubai, where it serves more than 480,000 customers. The company operates as a vertically integrated multi-utility, with business activities including electricity generation, transmission and distribution as well as water desalination and distribution.