A new law regulating the contribution by the private sector in electricity and water production in the Emirate of Dubai was issued by the Dubai government in April 2011 (the DEWA IPP Law).
Under the DEWA IPP Law, every public or private body carrying out activities in the electricity and water sector, other than the Dubai Electricity and Water Authority (DEWA), must obtain a licence from the Regulation and Supervision Bureau in Dubai (the Bureau). The Law will apply in the free zones and private development areas, as well as "mainland" Dubai.
Other noteworthy points in the DEWA IPP Law are:
- DEWA may establish joint ventures for its projects, including with non-UAE partners.
- If a licensee (which includes the joint venture) wishes to subcontract with any entity in relation to power generation or water production, it must disclose the subcontract upon application for the licence, or obtain prior consent from the Bureau.
- A licensee may dispose of its primary assets only with the prior written consent from the Bureau. This includes selling, leasing, granting security over such assets, or waiving or agreeing to rights in kind in relation to the assets.
- Contracts between the licensee and third parties, including dispute resolution clauses, can be governed by laws other than those of Dubai or the UAE.
- Contracts between the licensee and DEWA, or other local governmental authorities in Dubai, must be governed by Dubai law and the dispute resolution process must be in Dubai.
The significance of the DEWA IPP Law is that the Dubai government has shifted its strategy on its infrastructure and energy projects to encourage long term private sector investment in the development and operation of its assets, away from a direct procurement model using EPC contracts. This puts Dubai in line with the approach of the Abu Dhabi government.