Dubai to raise utility bills from January 2011

Slab tariffs to increase by about 15%, bills linked to energy prices

Electricity will reach Dubai's consumers at a higher cost come January.
Electricity will reach Dubai's consumers at a higher cost come January.

Dubai’s Supreme Council of Energy has decreed a rise in utility bills for expats, starting from January 2011, to reflect the price of energy on the international markets.

Slab tariffs will rise about 15 percent, according to the head of the council, while an additional charge will be leveled according to fluctuations in oil and gas feedstock prices.

Under the new tariff structure, one kilowatt hour (kWh) could cost between three to five fils more, depending on prior usage under the slab system.

Using the same system, one gallon of water would cost between 0.5 and 0.6 fils more.

Depending on oil and gas prices, a further increase could be leveled, which would be shown separately on the utility bills.
The decision had been taken in light of rising energy prices, said the council head.

“A limited revision of electricity and water consumption tariff to recognise the ongoing increase in fuel prices in world markets during the past few years, especially the price of gas, which is regarded as the main fuel source for power generation and water desalination units,” said Nejib Zaafrani, secretary general and CEO of the council, in a press statement.

The new tariffs amounted to an increase of around 15 percent, he told the Gulf News.

The increases only affect non-UAE residents, Emiratis will continue to receive water for free, and pay a nominal tariff of 7.5fils per kWhfor electricity.

Tariffs had last been changed in three years earlier.

Experts welcomed the announcement.

“It is the right move on the part of the Government to rationalise the prices of water and power, both of which are in high-demand in the region, and were posing a challenge in terms of supply keeping pace with demand,” said Abhay Bhargava, energy analyst at Frost & Sullivan.

Bhargava points to the benefits of higher revenues for the Dewa, whose net profits declined by almost nine percent to DHS1.5 billion in the first half of 2010, according to its bond prospectus issued earlier in this year.

“This will additionally contribute towards increasing the financial feasibility of new generation projects, and will also reflect positively on the case for renewables as a feasible source of energy in the Emirate,” he comments.


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