Dubai has indefinitely postponed its plans to build the $1.3bn Hassyan power and water project.
State owned Dubai Electricity and Water Authority (DEWA) cited increased efficiency at existing plants amid weaker demand.
“The Hassyan power plant project can be deferred until a later date,” DEWA said in the statement.
The project was Dubai’s first use of the public-private partnership (PPP) model to fund construction of a project, and had generated great amount of interest from banks. The project had a planned capacity of 900 mw of power and 720m gallons per day of desalinated water.
Major companies in the four consortia that bid for the project included Abu Dhabi’s Taqa, Marubeni Corporation, SK E&S Co. Ltd; GS Engineering & Construction Corp, the International Company for Power & Water Projects, Kepco, Samsung C&T, QEWC, QPI, and Siemens Project Venture.
The consortium companies expressed disappointment over the decision with one official from the international companies that bid for the project saying that future bidders may think twice in future.
The PPP model plant was planned to be 51% cent owned by Dewa and 49% by the winning party.
“We are still waiting to hear the consequences of this decision from them,” said Taqa spokesman said on Thursday, without elaborating.
Dubai government has reassed many of its projects due to the economic downturn. As per the latest report from Investment bank Exotix, Dubai government-related entities still have $12.2 billion in bank debt negotiations outstanding.
Rising energy costs and the need to look for alternative energy has forced Dubai to invest in solar energy.
In January this year, Dubai announced its plans to build a solar park with a potential capacity of 1,000 MW to help reduce its energy imports. The first solar plant in the park will have a capacity of 10 MW and is planned to commence operations by end of 2013.
“We have a plan to diversify the energy sector in Dubai and to increase solar power to 1 per cent by 2020 and 5 per cent by 2030,” said Saeed Al Tayer, the vice chairman of the Supreme Council of Energy.