Abu Dhabi’s Electricity Tariff Incentive Program for industrial investors expected to boost growth
ETIP is part of a broader line-up of national initiatives that have been developed according to ADDED’s continuing commitment to help accelerate Abu Dhabi’s economic growth and increase its global competitiveness
The Electricity Tariff Incentive Program (ETIP), recently launched in line with the Abu Dhabi Development Accelerators Programme ‘Ghadan 21,’ is expected to contribute in the increasing of companies’ capitals, which will enable them to further develop their industrial products, enhance their business value, and improve competitiveness across the local and wider markets, a senior UAE government official has revealed.
Saif Mohamed Al Hajeri, Chairman, Abu Dhabi Department of Economic Development (ADDED) said that, with the new tariffs, companies will now have an option to re-allocate the additional funds saved from their lower power bills to other worthwhile parts of their operations, like research and development (R&D), operational and market expansions, and new outputs and industrial products.
Al Hajeri added that this programme was launched by ADDED during the recently concluded Abu Dhabi Private Sector Forum, which falls in line with the strategies and objectives of the department’s Industrial Development Bureau (IDB), the section responsible for the planning, implementation, supervision and overseeing of Abu Dhabi’s industrial sector, a key pillar of Abu Dhabi’s economic ecosystem.
Al Hajeri’s statement was part of his speech given at a workshop organized today (Date) at ADDED’s headquarters by IDB for industrial investors, which was aimed at helping increase their awareness and understanding about the new program. The workshop witnessed the participation of representatives from Abu Dhabi and Al Ain distribution companies.
Al Hajeri stated that the ‘Electricity Tariff Incentive Program’ took effect at the start of July 2019, while the reduced costs will be applied retroactively from April 1, 2019, for the benefit of concerned companies. He pointed out that this program falls in line with ADDED’s vision to enhance the business environment and create new horizons for further growth and sustainability, which in turn, will provide key support for these companies’ efforts to be competitive across the local, regional and global levels.
“ADDED’s launch of ETIP reflects its commitment towards following Abu Dhabi Government’s strategic directives to enhance and solidify the emirate’s position as an attractive regional and international destination for investors, as well as boosting the local economy based on innovation, knowledge and sustainable diversification,” he said.
“In line with this, the IDB is also now in the process of developing detailed and clear guidelines on the new electricity tariffs for the targeted companies operating in the industrial sector.”
ETIP is part of a broader line-up of national initiatives that have been developed according to ADDED’s continuing commitment to help accelerate Abu Dhabi’s economic growth and increase its global competitiveness.
Rashed Abdul Karim Al Balooshi, Acting Undersecretary of ADDED, pointed out that the ‘Electricity Tariff Incentive Program’ is a critical element in the move to achieve the objectives of Abu Dhabi Strategic Plan, which seeks to increase the local economic share of the industrial sector through transparent pricing and offering of preferential prices in terms of electricity usage in line with the emirate’s move to establish an integrated and diverse economy.
Al Balooshi reiterated the importance of collaboration, communication and knowledge exchange between government stakeholders and the private sector, noting that the program is a collective effort among ADDED’s IDB and Abu Dhabi and Al Ain Distribution Companies.
He added that industry experts had carefully developed ETIP after thoroughly evaluating the usage, needs, and implications of various tariff ranges across key categories. Additionally, the program will not only protect investors from energy price fluctuations but will also ensure that the domestic industrial sector remains a major economic growth engine.
The workshop was attended by representatives of more than 120 investors operating within the industrial sector. The event started with participants being given an overview about Abu Dhabi’s industrial sector followed by a presentation highlighting IDB’s achievements. A presentation was also made about the many benefits and advantages to be gained from complying with the new program.
Ahmed Hilal Al Bloushi, Acting Executive Director, IDB, explained that the aim of the workshop was to highlight the outcomes of the program recently launched by ADDED in cooperation with Abu Dhabi and Al Ain Distribution Companies during the Abu Dhabi Private Sector Forum. The new program looks towards enhancing the industrial sector’s economic impact in Abu Dhabi as well as enhancing the industrial facilities’ productivity in Abu Dhabi and improve power usage efficiency.
Al Bloushi added that the program falls in line with ‘Ghadan 21’ programme and follows three key criteria--economic impact, productivity – value addition and distribution companies’ eligibility criteria, in addition to three other identified categories for industrial facilities’ evaluation.
He pointed out that the new tariff is calculated based on their respective categories based on the three identified criteria, starting from AED 0.17 for category ‘A,’ which requires the facility to score more than 80 points, noting that this tariff increases when evaluating the company under category ‘B,’ requiring between 60 to 80 points and category ‘C,’ requiring between 50 to 59 points based on the fact that the program will contribute to reducing electricity cost by 40 per cent.
He added that the economic impact criteria will take investment in Abu Dhabi into consideration, also including other components like Emiratization, spend on training (development) and expatriate contribution. He pointed out that the weight of this criteria represents 40 per cent of the total evaluation and achieving it would require the submission of documents and forms.
As per the productivity criteria, Ahmed Al Bloushi explained that it refers on how well the facility converts inputs into outputs, as well its capabilities in reducing the risk of costly errors and improving the ways of doing business. The criteria will also look into the value addition made by the manufacturing entity based on the total number of employees.
With regards to the distribution companies’ criteria, Al Bloushi stated that points will be calculated based on the connection and supply agreement for power signed with the distribution companies. He clarified that 20 points will be scored for the facility if its site is ‘distribution connected for power’ and the connection load is greater than five megawatts. However, if the site is a ‘transmission connected customer,’ it will automatically score 20 points.
Al Bloushi further revealed that industrial facilities can submit their applications through ADDED’s official website, www.ded.abudhabi.ae/en/idb. Documents need to be downloaded, filled up and submitted for evaluation by certifying authorities based on set standards. A report will be later issued including the final results stating the facility’s eligibility to benefit from the program.
ETIP forms part of the IDB’s vision to create an ideal environment needed for the development of the industrial sector and contribute to the emirate’s efforts to achieve a sustainable and diverse economy. This also reflects the Abu Dhabi Government’s bid to strengthen the industrial sector through a development and organizational process that aims at promoting its local products and attracting more investments.
Distribution companies from Abu Dhabi and Al Ain earlier conducted a technical evaluation before issuing a recommendation on optimal tariff levels. The recommended tariffs is expected to help improve the industrial sector, support its investors and enhance the role of the industrial sector in contributing to Abu Dhabi’s Gross Domestic Product (GDP).
By reducing the electricity tariffs, Abu Dhabi’s industrial sector is expected to attract more investments, boost the emirate’s knowledge-based economy, encourage more local manufacturers, increase efficiency, bolster exports, and accelerate the transfer of intellectual and technological innovations to consolidate the emirate’s competitiveness across local and regional levels. The program also contributes in the move to protect investors and support industrial projects serving as a catalyst in the sector’s growth and achieving the diversification plans within the national economy.
ETIP aims to reinforce the industrial sector’s value, increase exports and improve productivity. The program is also aligned with the government’s commitment to raise the sector’s competitiveness through minimized energy consumption as per the requirements of the distribution companies.
The program serves as a catalyst to enable the Abu Dhabi Industrial Strategy and complements the goals and objectives of the ‘Ghadan 21’ program, the first of its kind accelerator program in the region aimed at driving economic development, innovation and ease of doing business in order to make Abu Dhabi’s economy more dynamic and globally integrated..