UAE Law and Practice Contributed by: Brendan Hundt, Dan Feldman, Sam Anastasiou and Saiesh Kamath, King & Spalding LLP
ty-led. Sharjah Electricity, Water and Gas Authority (SEWA), a state-owned enterprise established by Emi- ri Decree No 1 of 1995, serves Sharjah. Etihad Water and Electricity (EtihadWE), a state-owned enterprise established by Federal Decree Law No 31 of 2020, and the Federal Regulatory Bureau, set up under the Federal Ministry of Energy and Infrastructure, are responsible for the Northern Emirates. This allocation of responsibilities remains important in practice because a project that is viable in one emir- ate may have a different procurement route, regulator, connection approval and tariff treatment in another. For this reason, when considering a development opportunity in the UAE, developers should map the relevant emirate utility, the competent authority, the grid owner and any federal law that applies to the power solution to be deployed, particularly where the project involves distributed renewable generation. 1.2 Principal State-Owned or Investor-Owned Entities The Federal Ministry of Energy and Infrastructure is the principal federal policy body for the energy sec- tor, while the Federal Regulatory Bureau for Electricity and Water sits under the Ministry and has functions relating to electricity and water trade and sector co- ordination. As noted in 1.1 Law Governing the Structure and Ownership of the Power Industry : • in Abu Dhabi, the Department of Energy is the principal sector regulator, with statutory functions covering policy, licensing, monitoring, technical standards and tariff-related proposals. EWEC is the sole procurer and supplier of water and electricity in Abu Dhabi and carries out planning, forecast- ing, purchasing and system dispatch functions. TAQA-related network entities, including TAQA Transmission and TAQA Distribution, are central to the regulated network segment. TAQA, through its generation business, assumes a 60% “local share- holder” ownership interest on thermal IPPs and independent water producer (IWP) projects, while Masdar, a local entity owned by TAQA, Mubadala and ADNOC, assumes a 60% ownership inter-
est on renewable energy IPPs and, more recently, BESS-related projects; • in Dubai, DEWA is Dubai’s exclusive power and water provider and remains the principal electricity entity for generation, network operation and end- user supply, with private-sector generation struc- tured through Dubai’s specific IPP and licensing framework; • EtihadWE is the sole procurer responsible for elec- tricity and water services in the Northern Emirates; and • SEWA is the principal utility for water, electricity and piped gas in Sharjah. 1.3 Foreign Investment Review Process General Position Foreign investors have a long history of participating in power projects in the UAE, particularly in utility-scale generation, but participation is normally channelled through the relevant emirate procurement, licensing and utility-connection framework rather than through an open market right to develop power infrastructure. The UAE has historically operated a “negative list” of sectors closed to majority foreign ownership under the Foreign Direct Investment Law (Federal Decree Law No 19 of 2018), and “water and electricity services” have consistently been treated as a restricted/strate- gic sector on that list. In Abu Dhabi, foreign sponsors most commonly par- ticipate through project companies, which are 40% owned by such foreign sponsors with, as noted above, the balance of the ownership held by TAQA or Masdar, depending upon the nature of the project and technol- ogy. These project companies are granted generation or production (as the case may be) licences under the Department of Energy framework. In Dubai, foreign participation in generation is typi- cally structured through DEWA-led IPP procurement and the Dubai private-sector participation regime for electricity and water production. UAE company law reforms permit full foreign ownership in many main- land business activities, but strategic-sector, licensing and project-specific approval requirements are most appropriately reviewed for any power-sector invest- ment on a case-by-case basis.
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