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Tuesday, 18 September 2007

Sewa planning to raise $3bn for power project

DUBAI: State-owned Sharjah Electricity & Water Authority (Sewa) plans to raise at least 10 billion dirhams ($2.72bn) to finance a power project in the UAE, the authority's director-general said yesterday. Sewa, which provides services in the UAE's third-largest member, could raise the funds by selling bonds or bonds that comply with an Islamic ban on the receipt of interest, Al Waleed Khaleed bin Khadem said. Demand for power and water in the Gulf region is surging as the population grows and businesses expand, spurred by a quadrupling in oil prices since 2002 that has fuelled economic growth. In Sharjah's neighbouring emirate, state-owned Dubai Electricity & Water Authority is planning to sell as much as $2.5bn of Islamic bonds to finance expansion, two people familiar with the matter said. "There is a lot of growth," bin Khadem said.
"We have to prepare now to meet the demand."Sewa plans to expand a 400mw power plant more than six-fold to 2,580mw by 2014 to meet demand surging as much as 9 percent a year, Bin Khadem said. "We will go to the banks and need above 10bn dirhams ... it could be through bonds or sukuk," he said. Sukuk are asset-backed Islamic bonds that pay holders a dividend rather than interest, which Islam equates with usury. Companies have until November 18 to bid for the contract to expand the power plant over several phases, a project which includes adding 120 million gallons per day of water desalination capacity, bin Khadem said. - (GD, 18 Sep 07)
Editor: Interestingly, "Sewa" means leasing (ijarah) in Malaysian language... perhap Sewa should consider ijarah sukuk.

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