DEWA, ACWA Power sign $478 million Hassyan desalination phase two

Summary

• DEWA and ACWA Power signed water purchase and shareholder agreements worth 1.76 billion dirhams Friday.
• Phase two adds 60 million gallons daily to the Hassyan reverse-osmosis complex in Dubai.
• The 30-year offtake deal locks in long-term revenue for ACWA Power and its project company.

The latest

Dubai is expanding its largest desalination site under a 30-year water purchase agreement worth 1.76 billion dirhams, about 478 million dollars, signed Friday between Dubai Electricity and Water Authority and ACWA Power. The deal covers phase two of the Hassyan seawater reverse-osmosis plant, adding roughly 60 million gallons a day. DEWA disclosed the agreements to the Dubai Financial Market.

Details

• The agreements: DEWA said it signed both a water purchase agreement and a shareholders agreement with ACWA Power for phase two of the Hassyan seawater desalination project, which uses reverse-osmosis technology. The combined value is 1.76 billion dirhams, about 478 million dollars, according to the disclosure filed with the Dubai Financial Market.
• Who signed: Saeed Mohammed Al Tayer, managing director and chief executive of DEWA, signed for the utility, and Mohammad Abunayyan, founder and chairman of ACWA Power, signed for the Saudi developer. Abunayyan said water security underpins sustainable economic growth and described the partnership as spanning more than a decade in Dubai's power and water sectors.
• The ownership split: The project company will handle development, financing, construction and operation of the plant, according to DEWA. The utility will hold a 60% stake and ACWA Power the remaining 40%, giving Dubai majority control of an asset built and funded by a private partner.
• The capacity: Phase two will produce around 60 million gallons of desalinated water a day, equal to 272,000 cubic metres, DEWA said. The volume is contracted for 30 years under the water purchase agreement, the mechanism that converts construction risk into a fixed long-term revenue stream for the developer and its lenders.
• Phase one: The first phase was developed with capacity of 180 million gallons a day at an investment cost of 3.357 billion dirhams, according to DEWA. It was the authority's first project under the independent water producer model, in which a private developer finances and operates the plant while the utility buys the output.
• The 2029 target: Once both phases are complete, Dubai's total water production capacity will rise to about 735 million gallons a day by 2029, DEWA said. The disclosure did not set a commissioning date for phase two, nor name the lenders financing the project company.
• The site's scale: Al Tayer said the added 60 million gallons will make Hassyan the world's largest seawater desalination site using reverse osmosis, with capacity reaching 240 million gallons a day. He said the signing reflects "our firm commitment to consolidating water security in Dubai from sustainable sources."
• The strategy frame: DEWA tied the project to the UAE Water Security Strategy 2036, the Dubai Clean Energy Strategy 2050 and the emirate's net-zero target for 2050. Reverse osmosis is the lower-energy alternative to thermal desalination, which Dubai has been steadily moving away from in its water mix.

Background

The independent water producer model shifts capital spending and operating risk to a private developer, which recovers its investment through a long-term offtake contract with the state utility. DEWA first applied it at Hassyan phase one; phase two extends the same structure to a second tranche of capacity.

Between the lines

The 30-year term is the commercial core of the deal. Guaranteed offtake for three decades converts a construction project into a predictable revenue line ACWA Power and its financiers can underwrite, while the 60% stake keeps majority control of strategic water capacity inside the emirate. Repeating the phase one structure signals the model cleared DEWA's internal test.

What's next

Watch for financial close on the project company, the construction timetable DEWA has not yet published, and whether the utility applies the same independent water producer structure to further Hassyan capacity before 2029.

Source: DEWA disclosure, Dubai Financial Market