Interpreting Middle East Economic News and Analyzing Market Trends

Dubai government sees no reason to privatize DEWA and give up dividends

Dubai has no plans to privatize the Dubai Electricity and Water Authority (DEWA), the public utility.

 

The Dubai government has no intention to privatise the electricity and water sector, Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance and President of Dubai Electricity and Water Authority (Dewa), told the media on Tuesday.

“If we allow privatisation for this sector the prices of electricity and water would be more expensive,” Shaikh Hamdan said.

Read the full article from Gulf News.

 

Although this might be true, there is also another reason for not privatizing DEWA:

 

Operating profits totalled Dh7.5 billion ($2.04 billion) in 2012, an increase from Dh7.4 billion ($2.02 billion) the year before. Also, sales revenue was up seven per cent from 2011.

The Dubai government is due to receive Dh500 million ($136.2 million) from a dividend payment approved by Dewa’s board of directors.

Read the full article from Gulf News.

 
There is clearly no intention of privatizing a government cash-cow.  There are advantages to both sides (privatization vs. remaining in public hands), but the main reason for remaining public is the cash dividends.