The regulation argument

Tawfiq Abu Soud believes that more regulation is needed.

With the economic crisis playing havoc with the local district cooling industry, many companies are starting to become more vocal about the ways they feel that regional authorities can assist the sector.

One of the most strident calls for change has come from the well-known Tawfiq Abu Soud. As executive director of Drake & Scull International (DSI)’s infrastructure, power and water operations, Abu Soud has masterminded the company’s emergence as an integrated utilities giant.

DSI’s association with the district cooling business began in 2000, when it was awarded three projects within the space of a month in Dubai and Abu Dhabi.

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In 2003, the company carried out its first design-and-build district cooling contract at the Jumeirah Beach Residence (JBR), at the time the largest single plant in the world.

“Since then, we’ve been expanding and developing to reach the stage we are at now,” explains Abu Soud.

“We can provide advisors to assist clients on the best solutions, capacities and phasing, and we also conduct the construction on an open-book basis as well, so that we don’t take advantage of either the client or the end user.”

One of the hottest topics in the industry most recently has been the issue of regulation, with most senior executives expounding the benefits a mandated set of guidelines would offer the sector. What is Abu Soud’s opinion on the issue?

“I’m a big advocate of regulation, and I was very pleased that Dubai Municipality has said that each and every district cooling plant is required to have a thermal storage tank, and that the water being used should be treated sewage effluent,” he explains.
“As you know, district cooling requires a lot of water, and if you’re using potable water, you’re putting a lot of strain on that network." As the DSI director points out, the availability of treated sewage effluent can be tricky in some locations, or at the right quantity.

But it is clear that Abu Soud think that the local authorities need to do more to push regulation forwards. “This doesn’t work through talks, seminars and presentations, this works through mandates,” he argues. “They need to create a committee for this in order to drive the issue. At the end of the day, the lack of legislation impacts the end-user.”

“For a utility provider, the main challenge is the occupancy rates in the development,” explains Abu Soud. “Because you have to cater for a 100% occupancy in any given project, and what can then happen is that you build a plant that you are not fully utilising. But you still need to recover your costs somehow, so you will be forced to recover the investment from the 40-50% occupants in the development, so the rates get higher.”

Unoccupied apartments, shops and facilities are ‘dead assets’, according to Abu Soud, and it seems that there’s no easy fix to the conundrum.

“It requires marketing and engineering to work hand in hand to determine the level of occupancy in each development and in each hotel. If you have apartments that are not occupied, that creates major problems.”

DSI’s District Cooling Projects

Hadeed District Cooling Project:
Location: Saudi
Client: Al Zamil Industrial
Award date: Q1 08
Completion date: 2010

Wahat Al Khartoum District Cooling Project:
Location: Khartoum, Sudan
Client: Wahat al Khartoum Urban Development
Company
Start Date: Jan 2009

Durrat Al Bahrain District Cooling Plant:
Location: Bahrain
Award Date: 2009
Completion Date: 2013

Meydan District Cooling
Client: Meydan
Start Date: Q1 08
Completion Date: 2009