UAE Law and Practice Contributed by: Brendan Hundt, Dan Feldman, Sam Anastasiou and Saiesh Kamath, King & Spalding LLP
The project developer may obtain surface rights from the state/utility by grant or long-term lease, and the “compensation” is the consideration (in the form of rent/lease terms) agreed with, or set by, the state/util- ity. For example, in Dubai, DEWA may grant leases or other proprietary rights over its land to project companies for up to 99 years. In Abu Dhabi, project companies are similarly provided with the site by the state within the offtake structure. The land is typically allocated as part of the government-directed procure- ment rather than bought on the open market. The terms (including any rent, or a nominal/pepper- corn arrangement) are a matter of the project agree- ments between the utility and the project company, negotiated within the PPA framework. 3.5 Decommissioning a Generation Facility There appears to be no single UAE-wide statutory decommissioning funding regime for all generation facilities, although it is worth noting that a number of the UAE’s early plants developed under the I(W)PP model, which was instituted at the turn of the century in the case of Abu Dhabi, are now reaching the end of their useful lives and this is becoming an increasingly important and relevant topic. Unlike nuclear plants (see below), conventional/renew- able power plants have no formal decommissioning regime at law, although under the power purchase agreements applicable to such plants, consistent with the “BOO” model that underpins IPPs in the UAE, the responsibility for decommissioning and dismantling plants rests with the project companies. Environmen- tal site-restoration and waste obligations under Fed- eral Law No 24 of 1999 will apply. For nuclear power plants, decommissioning is a licensed “Regulated Activity” under Federal Decree Law No 6 of 2009, requiring a FANR licence, and is governed by FANR Regulation on the Decommission- ing of Facilities (FANR-REG-21), which addresses planning from siting/design through to licence ter- mination, financing, emergency arrangements and radioactive-waste management. FANR-REG-21 also requires the operating licence applicant to give “rea- sonable assurance” that funds will be available and met through contributions to the Decommissioning
Trust Fund (a body to be established by a Cabinet Resolution). Funding is accumulated progressively over the facility’s operating life via annual contribu- tions. 4. Transmission Lines and Associated Facilities 4.1 Constructing and Operating Transmission Lines and Associated Facilities Public transmission infrastructure in the UAE is gener- ally owned and controlled by the relevant state-owned or government-backed network utilities, rather than by private-sector developers. Private-sector participa- tion is usually limited to EPC contracting, equipment supply, engineering, testing, commissioning and, in some cases, operation and maintenance support, and does not normally extend to ownership of the pub- lic transmission network. In Abu Dhabi, transmission infrastructure is held through the incumbent trans- mission network entity, TAQA Transmission; in Dubai, DEWA owns and operates the transmission system; and similar utility-led models apply in Sharjah and the Northern Emirates. There is no single, unified federal statute governing the ownership, construction and operation of trans- mission lines and associated facilities in the UAE. The framework is split between federal rules and emir- ate-level regimes, and transmission and distribution activities generally require licences from the relevant authority. At the federal level, Federal Decree Law No 31 of 2020 regarding Union Water and Electricity Company is relevant to transmission and distribution in the Northern Emirates, while Federal Decree Law No 17 of 2022 regulates connection of distributed renewable energy production units to the grid and defines distribution networks to include lines, cables, substations and similar electrical infrastructure. In Abu Dhabi, Law No 2 of 1998 concerning the regu- lation of the water and electricity sector, as amended, was the foundation of Abu Dhabi’s unbundled single- buyer model and originally assigned responsibility for transmission and distribution to separate entities (ADDC and AADC as distribution companies). These entities have since been consolidated under TAQA
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