REGULATION & SUPERVISION BUREAU
ANNUAL REPORT 2009
FOR THE WATER,WASTEWATER AND ELECTRICITY SECTOR
IN THE EMIRATE OF ABU DHABI
SWITCHED ON
We regulate the water, wastewater and electricity
industries in the Emirate of Abu Dhabi in the United
Arab Emirates. We enforce relevant laws through the
licensing of the companies who undertake regulated
activities in these industries.
Regulated activities include: generation, transmission,
distribution and sale of electricity; production,
transmission, distribution, sale of water and
collection, treatment and disposal of wastewater.
Once a licence is issued, we monitor activities,
produce and modify regulations where needed
and enforce the conditions of the licences.
We establish and monitor technical performance,
safety and customer standards.We also oversee
industry restructuring and have the power to
approve mergers and acquisitions.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 1
CONTENTS
2
3
4
6
8
10
11
12
13
14
16
17
19
23
33
Chairman’s introduction
Timeline
Performance highlights
The past decade
Customer support
and tariffs
Drinking water
Wastewater
Electricity
Training and safety
Economic controls
Sector governance
and Board of Directors
Licence holders
Public Record of Activities
and Documents
Financial Statements
Consultants
2 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
CHAIRMAN’S
INTRODUCTION
“Of particular importance
over the past decade is the
introduction of various
renewable energy schemes.”
All those involved with the water,
wastewater and electricity sector will
understand what an extremely busy
year it has been.The start of 2009
represented the Regulation and
Supervision Bureau’s first decade in
the overseeing and regulation of the
sector.
Since the unbundling of the sector in 1999, many
changes have taken place including; almost all power and
water production now in private sector hands; the
electrical connection of the Emirates National Grid and
many changes to staffing levels and working practices.
Indeed, the Bureau, at the start of its operations, had
fewer than ten staff and eight licence holders.Today, we
have nearly thirty licence holders and over forty staff.
Of particular importance over the past decade is the
introduction of various renewable energy schemes. To
date, we have issued two licences to the Abu Dhabi
Future Energy Company (ADFEC), otherwise known as
MASDAR. In addition, we are in the process of agreeing a
suitable tariff for their concentrated solar power (CSP)
project located at Madinat Zayed.This station seeks to
produce 110 MW from solar energy.With this landmark
project, we hope to be working with MASDAR and
other organisations to further renewable energy (RE)
projects over the coming years.
In addition, this year we were involved in the issue of a
range of new licences, especially to the wastewater sector
which has a need to install and operate temporary
wastewater treatment plants for on-site facilities for staff.
To this end, we created what are known as Development
Licences which are of a finite duration.
In addition to development licences, we have also issued
a new self–supply licence to EMAL, the major aluminium
smelter plant located at Port Khalifa Industrial Zone
(KPIZ).The company is licensed for the production
of 2,000 MW of electricity and the export of up to
250 MW to the transmission system, which can be
purchased by ADWEC, the single buyer.
While we continue to perform a wide range of work
streams, one of our most important functions is the
control of monopoly expenditure through our well
established economic price control mechanisms, in this
instance known as Price Control Four (PC4). At the close
of 2009, we had produced our Final Proposals for the
two distribution companies, the transmission company
and the major sewerage services company, all of which
are monopoly operators and therefore subject to
price controls.
Lastly, from an internal operational perspective, we have
made many changes, the most notable of which is our
relocation to new offices in the Abu Dhabi City.This has
proved to be extremely successful and has provided staff
and visitors alike with a range of meeting areas and a
modern productive working environment.
On behalf of all our Board Members and staff at the
Regulation and Supervision Bureau, welcome to our
2009 Annual Report.
MOHAMMED AHMED AL BOWARDI
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 3
TIMELINE
January
March
April
Self-supply licence
to ADFEC
Water Supply
Regulations 2009
come into force
Consultation on
Wastewater Regulations
ADFEC was issued a licence to build,
operate and maintain a 10MW solar
photovoltaic power plant, primarily
for internal consumption at Masdar
City but with the possibility to export
power to the ADDC network.
These regulations cover connection
arrangements between customers
and distribution companies to ensure
safe and secure supply connections
and prevent wastage and
contamination.
Issue of two consultation papers on
“Trade Effluent Control Regulations”
and “Wastewater Residuals Reuse
Regulations”. (See p11)
July
September
Amendments to
sector laws
Water Quality
Regulations 2009
Self-supply licence
to EMAL
Law No (12) of 2009, amending
Law No (17) of 2005, regarding the
reorganisation of ADSSC. (See p16)
Law No (9) of 2009, amending
Law No (2) of 1998, enabling the
Bureau to license a single entity to
undertake one or more regulated
activities. (See p16)
These regulations ensure the supply
of wholesome drinking water to
consumers throughout the Emirate.
(See p10)
EMAL was granted a self–supply
licence for water desalination and
electricity generation at the EMAL
Aluminium Smelter Development.
Electricity generation in excess of
self-supply requirements may be
offered for sale to ADWEC.
October
December
Fuel Storage Tank
Regulations 2009 come
into force
Launch of the GCC
link connection
Price Controls 4
final proposals
These regulations aim to prevent
spills, ensure early detection of any
spill, leak or discharge from fuel
storage tank systems and minimise
the risk to the environment and
public health.
GCC rulers launched the
interconnection project that will link
the six countries’ power grids.
(See p12)
Final proposals for revised price
controls for the monopoly network
companies for the 2010-2013 period
were issued. (See p14)
4 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
PERFORMANCE
HIGHLIGHTS
Demand for power during 2009
showed little sign of slowing down
and system peak demand was up
16 percent on the previous year.
With the continued building of new
properties, we expect to see this
trend continue.
Annual production
Installed capacity
Average unit costs
Electricity
Electricity
Electricity
43,163 GWh includes exports
fils per kWh
+14.8%
10,110 MW 24.9
Water (potable)
Water (potable)
Water
990,297 Ml (220,066 MG)
683 MGD
AED per 1,000 litres
or one cubic metre(34.2 AED per TG)
+4.8%
3,107 Ml/d 7.53
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 5
System demand
Sector turnover
Customers
Water quality
Electricity
Electricity
Electricity
Total tests
Hourly peak 7,680 MW
(exports of 1,285 MW at the peak)
Hourly peak for the Emirate of
Abu Dhabi: 6,395 MW (+11%)
AED
+16%
7,032 M
+6.7%
347,906
159,184
Water
Water
Water
Transmission peak
2,980 Ml/d (655 MGD) including
the supply to Northern Emirates
AED
+6.67%
5,929 M
+5.8%
257,930
Wastewater
Wastewater
Wastewater
634,000 m3/d average, received at
wastewater treatment plants
(139.5 MGD,); equivalent annual
total of 50,910 MG
AED
(estimated)
+8.9%
1,124 M
257,930
(17 August)
(5 October)
Note: the percentage variation is
as compared with the previous year
MW = megawatt;
GWh = gigawatt hour
TG = thousand gallons;
MG = million gallons (imperial);
MGD = million gallons (imperial) per day
Ml = million litres;
Ml/d = million litres per day;
m3/d = cubic metre per day
6 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
Ultimately, the success of the sector
is measured by the reliable delivery
of water, wastewater and electricity
services at an economic price.The
graphs below provide an overview
of price trends and sector output
over the recent past.
WATER PEAK SUPPLY
Unit costs
As consumption has continued to grow strongly,
operators have been able to reap economies of scale
and the unit costs of water and electricity have risen
slower than total costs. In real terms since 1999, the unit
cost of electricity has reduced more significantly than
water. Both of these trends show that the unit costs of
water and electricity are under control and falling, which
illustrates the success of unbundling, the introduction of
private operators and regulation.
The diagrams opposite show all costs in real terms
expressed in 2009 prices.
06
07
655
614
05
568
541.1
380
422
04
08
09
ELECTRICITY DEMAND GROWTH
1,285
6,395
5,286
4,790
901
Available capacity
864
Export
Actual peak demand
5,756
(MW, 000)
4,455
In the Emirate of Abu Dhabi, demand for electricity and
water is experiencing continuous and significant growth.
Over the period shown, annual consumption of water
has almost trebled. In that time, annual electricity
consumption has nearly doubled.
03
02
4,320
Annual consumption
01
4,134
As in previous years, the Emirate of Abu Dhabi
maintained its support of the Northern Emirates and
Sharjah, supplying up to 1,300 MW of electricity to
ensure domestic demand was met.
500
279
Electricity and water demand continued to increase
during 2009, maintaining growth rates similar to that of
the past decade. Operators have progressively increased
capacity to ensure that this demand is met in a safe and
secure manner.
Available capacity
Peak supply
332
(MGD, 000)
4,008
Output
3,723
THE PAST
DECADE
UNIT COSTS
Electricity (fils/kWh)
Water (AED/m3)
10
9
8
7
6
5
4
3
2
1
0 01
02
03
50
40
30
20
10
04
05
06
07
08
09
06
06
07
07
08
08
0909
Sector turnover
The significant increase in turnover for both water and
electricity reflects the growth of units produced.
Therefore, despite reductions in unit costs, sector
turnover will reflect an increase in units sold.
SECTOR TURNOVER
(AED M)
8
7
6
5
4
3
2
1
0 01 01
Water
02 02
0303
Electricity
0404
05
05
0
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 7
The Bureau is on track by ensuring the
companies it regulates are providing a range
of high–level service delivery to customers
and businesses in the Emirate. The arrival of
Formula 1 to Abu Dhabi in 2009 brought
with it the highest profile test yet to the
electricity, water and wastewater sector and
the network companies were required to
meet a range of deadlines to ensure the
event went off without any problems.
ON TRACK
8 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
CUSTOMER
SUPPORT AND
TARIFFS
“An independent audit of the
two distribution companies
completed in 2009 focused
on the companies adherence
to published Guaranteed
Customer Service Standards. ”
Service Standards
Customers’ options for paying bills
The audit found a range of inadequacies in both
companies monitoring and recording procedures.
We will continue our collaborative approach with both
companies in 2010 to assist them with:
In 2009, both distribution companies introduced new
payment options using credit cards, online and phone
payments.While there is still much work to do in this
area, our overall aim is to promote a reduction in the
need to maintain many customer service centres as
more customers pay their bills by other means.This
aim will result in considerable operational savings.
• strengthening and effectively documenting their internal
procedures
• improving the quality and confidence in the monthly
data reported to the Bureau
Bulk Supply Tariff
The Code of Practice of Guaranteed Customer
Service Standards will also be revised to more
accurately reflect international benchmarking of
customer service delivery levels, as well as addressing
some interpretation problems.
The Bulk Supply Tariff (BST) is essentially the wholesale
tariff whereby customers connected to the transmission
grid can purchase bulk supplies of electricity and water by
paying a demand charge and a unit charge.The demand
charge is part of the “Peak Settlement Period” which,
until 2009, looked at the average of three system peaks
that a customer’s demand covered at the time of the
system peaks.
Lastly, in this regard we continued our work with the
Abu Dhabi Sewerage Services Company to bring their
new guaranteed customer service standards and customer
complaint handling procedures to their customers.
Customer service licence obligations
To help the distribution companies draft customer
service codes and procedures, the Bureau set up
a joint customer services working group in 2009.
A customer-friendly Supply Agreement, a Code of
Practice on Disconnection for Non-Payment and
Customer Complaint Handling Procedures were
produced and will be operational, following consultation
with customers, in 2010.
For the 2010 BST onwards, the definition of the Peak
Settlement Period was changed from the average of
three system peaks to the average of the 10 highest peak
demands in the year (each separated by three days,
as before).
The primary reason for implementing such a change was
to reduce the risk to the sector of a large user avoiding
one of the system peaks and potentially saving a third
of their maximum demand charge.While there were
just two distribution companies connected to the sector
this situation was not possible, but with the connection
of more large users then the dynamics are changed
considerably.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 9
“The Bureau regards the
development of cost-reflective
tariffs for large users as an
important tool in providing
incentives for such users to
manage their demands away
from system peaks.”
Large-user tariffs
During 2009, we worked with various large users to
develop tailored tariffs which are free from any form of
Government subsidy and therefore truly cost reflective.
Under certain circumstances such tariffs are extremely
attractive to end users and are based on the following
components:
• BST demand charge,Transmission Use of System
(TUoS) charge and Distribution Use of System (DUoS)
charge – all levied according to the customer's demand
at the time of peak electricity system demand; and
• BST System Marginal Price (SMP) charges and supply
cost component – both levied accordingly to the
customer's consumption over the year.
Such a tariff offers a strong incentive for customers to
manage their electricity demand away from peak demand
periods, and has the potential for making significant cost
savings for customers who are able to do so.
Therefore, a customer can benefit in terms of lower bills
while the sector benefits in terms of lower customer
demands and hence lower future requirements for
additional production and transmission capacity than
would otherwise be the case.
10 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
“All drinking water in the
Emirate is produced by some
form of desalination.
Therefore, such a valuable
product needs to be
protected by the constant
updating of regulations. ”
95%
08
96%
09
95%
Sampled Parameter (SP)
07
94%
08
Drinking Water Safety Plans (DWSP)
51,909
95%
08
09
08 09
08 09
08 09
APC
ECPC
GTTP
AMPC
08 09
08 09
SCIPCO SEMBCORP
TAPCO
Peak supply
03
422
04
05
06
Available capacity
568
541.1
02
500
01
07
08
655
614
(PEAK IN MGD)
Unaccounted-for water
We provided transmission and distribution companies
with a new water balance methodology, based on
the International Water Association (IWA) model.
The companies will use these new templates for
future Annual Information Submissions to the Bureau.
08 09
WATER PEAK SUPPLY
380
Sampling Frequency Measure (SFM)
In our effort to minimise the risk of drinking water
contamination in water supply systems, in line with the
WHO recommendations on best practice, we issued
a guide for the development of DWSP’s to all affected
licence holders.We reviewed their produced submissions
over the remainder of the year and are now satisfied that
plans appear adequate for the risks involved.
332
92%
279
09
The consultation process concluded with an agreement
in principle that ADFCA will act as the lead regulator in
the development and issuing of regulations for bottled
water.The Bureau will retain a consultative role in the
drafting of such regulations.
41,835
07
WATER PRODUCTION BY COMPANIES (MG)
33,706
Sampling Frequency (SF)
31,845
94%
91%
33,997
08
09
We reviewed two laws concerning bottled drinking
water: Law No (2) of 1998 concerning the Regulation
of the Water and Electricity Sector in the Emirate of
Abu Dhabi, and Law No (2) of 2008 in respect of Food
within the Emirate of Abu Dhabi. Both laws authorise
the Bureau and Abu Dhabi Food and Control Authority
(ADFCA) to regulate the quality of water leading to
an overlap in regulatory authority.
32,940
94%
26,042
07
Bottled drinking water
25,954
94%
Prescribed Concentration Value (PCV)
17,264
09
In addition, both major distribution companies have
begun installing zonal, district and customer metering in all
areas, along with active leakage control systems, to enable
the continuous monitoring of leakages.This programme
will be intensified when control centres are installed to
manage and analyse data. Such measures will enable
these companies to identify losses more accurately and
drive down water network losses.
16,929
93%
46,151
93%
08
In July 2009, we completed a two-year consultation
process on the Water Quality Regulations and issued
revised regulations for implementation on 1 January
2010.These Regulations reflect the new requirements
included in the third edition of the World Health
Organization (WHO) water quality guidelines.
Unaccounted-for water and physical losses will be
reported and audited from 2010 onwards in order to
understand and reduce water loss within the transmission
and distribution systems.
43,696
07
Water Quality Regulations Revision 3
11,421
SECTOR’S OVERALL COMPLIANCE
WITH WATER QUALITY
REGULATIONS MEASURES
10,543
DRINKING
WATER
09
Report
Report
20092009
The The
AbuAbu
Dhabi
Dhabi
Regulation
Regulation
& Supervision
& Supervision
Bureau
Bureau
Annual
Annual
11 11
WASTE WATER
“We continue to seek to drive
up wastewater standards in the
Emirate. By 2010, new regulations
will be in force to control what
enters the system and how
wastewater companies deal
with their waste products”
Wastewater regulations
Al Ain groundwater study
During 2009, we completed a Regulatory Impact
Assessment (RIA) that began in 2008 and ran a public
consultation concerning draft regulations for managing
trade effluent discharges and wastewater residual reuse.
The two draft regulations titled “Trade Effluent Control
Regulations” and “Wastewater Residuals Reuse
Regulations” were published in April and a four-week
consultation process sought views from a range of
stakeholders throughout the Emirate.
The Wastewater Team completed an investigation of
the cause of rising groundwater in the city of Al Ain
during 2009.Working with Dornier Consulting, the
team concluded that the issue was not exclusively
wastewater related, with over-irrigation with desalinated
water and groundwater key contributory factors.
Recycled wastewater from treatment plants was found
to form a small part of the water balance in the city and
an extensive sampling programme found no evidence
of contamination of groundwater reserves.
A significant number of responses were received from
government agencies, wastewater service providers
and developers. Respondents supported the proposed
framework for controlling trade effluent discharges,
commented on the scope of regulations for residual
wastewater reuse, and raised the need for a clarification
of regulatory responsibilities.Working with key
stakeholders, we reviewed the comments and began
redrafting the regulations.They are to be issued in Q2
2010.The “Wastewater Residual Reuse Regulations”
are to be renamed the “Recycled Water and Biosolids
Regulations”.
Further work in conjunction with the Abu Dhabi
Environment Agency will be undertaken in 2010.
12 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
ELECTRICITY
“By 2012, all member nations
of the Gulf Co-operative
Council will be connected to
a high voltage electricity grid.”
ABU DHABI DISTRIBUTION
COMPANY POWER INTERRUPTIONS
07
135
07
130
08
139
08
137
09
174
09
186
280
07
173
08
YAS Island Formula 1 security review
Phase one of the high voltage Gulf Cooperation Council
(GCC) grid (which links the Kingdom of Saudi Arabia
(KSA), Kuwait, Bahrain, and Qatar) was commissioned in
February 2009 and was energised on 26 July 2009.
On 6 May 2009, the first inter-country power transfer
between KSA and Qatar commenced successfully with
power transfer of 60MW through a converter station.
The Bureau carried out a review of the security of
electricity, water and wastewater arrangements at Yas
Island, in preparation for the Formula 1 event held on
1 November 2009. A report recommending improvement
measures was issued to the project developer and the
operator of the racetrack facilities.These were
successfully implemented prior to race day.
The general agreement establishing the interconnection
was signed on 23 March 2009 and the Power Exchange
and Trade Agreement (PETA), which sets out the terms
of energy transfer, was signed on 7 July 2009.This 400kV
GCC interconnection will improve the security of each
country’s transmission system by providing support
during emergencies, reduce generation reserve requirements,
and enable a common GCC electricity market.
AL AIN DISTRIBUTION COMPANY
POWER INTERRUPTIONS
07
Commissioning of GCC Interconnection
276
1.54%
09
1.90%
Maintenance
Contruction
Users
Faults
4,373
3,156
08 09
08 09
08 09
AMPC
APC
ECPC
GTTP
08 09
08 09
SCIPCO SEMBCORP
Actual peak demand
Available capacity
Export
02
03
04
05
864
5,756
901
4,455
01
5,286
4,320
6
3
4
Number of incidents
4,134
1
2
Energy lost MWh
4,008
4
4,790
3
09
0
TAPCO
(MW, 000)
3,723
08
08 09
ELECTRICITY DEMAND GROWTH
TRANSMISSION SYSTEM INCIDENTS
07
6,123
8,034
10,041
8,027
6,269
08 09
1,275
08
6,395
The review identified a lack of formalised documents
defining ownership boundaries, control of customer
connection procedures and responsibilities. Subsequently,
an international utility services consultant was appointed
to review the connections procedures for ADDC
and highlight gaps and bottlenecks.The consultants’
report was issued at the end of 2009 and their
recommendations are expected to be implemented
in 2010.
1.10%
4,080
TRANSMISSION SYSTEM
UNAVAILABILTY
6,548
The procedures and systems used by distribution companies
to provide new customer connections to their networks
were reviewed in 2009 due to a range of customers
experiencing delays in their final connection.
SAIFI interruptions/customer x 100
SAIDI mins lost/customer
07
9,183
261
09
(MW, 000)
Connections review
3,899
278
ELECTRICITY GENERATION
752
09
9,795
The next phase will connect to the UAE via the Emirate
of Abu Dhabi, planned for 2012, and lastly to Oman.
221
492
08
5
06
07
08
09
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 13
TRAINING
AND SAFETY
“Training and the establishment
of our registered engineer
programmes are key elements
in promoting compliance with
safe electrical installations.”
Training
Sector safety
Electricity Wiring Regulations training
During 2009, the Bureau compiled and analysed incident
data from all network and production companies.
The health and safety performance data includes overall
trends and statistics such as lost time days per million
man hours worked, including contractors. During the
period, there were five fatalities and 21 Lost Time Injuries
(LTI’s), which is an increase on previous years.
A training program for private contractors was designed
by the Bureau and delivered regularly by two nominated
training companies. It consists of five days of practical tests
plus theory and candidates are required to pass an
examination to enter the Bureau’s Registered Engineer
database.
Registered engineers
During 2009, 75 registered engineers successfully
completed the Bureau-designed training course.They
are listed on our website.The aim of this course is to
improve the skills of electrical contractors in the Emirate
and to streamline procedures for approval and testing
of new building wiring.
Safety audits
ADSSC health and safety
management and operational review
Following a number of serious health and safety
incidents during 2006-2009, the Bureau instructed
Lloyds Register EMEA (a global best-practice Health,
Safety and Environmental consultancy) to conduct a
management and operational review of ADSSC’s
health and safety practices.
A detailed final report was presented to ADSSC in
September. It included an action plan to be used to
drive improvements in performance with regard to
health and safety.
The majority of these serious incidents related to work
carried out by contractors on behalf of the licensed
companies. In 2010, the Bureau will develop strategies
to improve contractor management procedures.
Lloyds Register EMEA
We appointed Lloyds Register EMEA to provide health
and safety and environmental (HSE) advice on all sector
related HSE issues on a fixed time and fee basis. Using the
global services of Lloyds, through a permanent Lloyd’s
representative based in our offices, enables a more
knowledge-based provision of HSE services given Lloyds
international standing, skills and expertise.
14 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
ECONOMIC
CONTROLS
“In terms of turnover, some
40 percent of expenditure
rests with monopoly
companies so how they
manage their costs is
important. Price controls are
how the Bureau controls such
companies financially. ”
2009 Price Controls Review
During 2009, we completed a review of the price
controls applicable to each of the sector’s four monopoly
network companies i.e. AADC, ADDC, ADSSC and
TRANSCO.The primary purpose of price controls is to
determine the Maximum Allowed Revenue (MAR) that
each company may recover each year from its licensed
activities.
Issued in November 2009, our review proposed revised
price controls to apply from 2010 onwards.This period is
known as “PC4”, as it is the fourth price control period
since price controls were first introduced in 1999.The
price controls are set to allow the companies an efficient
level of operating and capital costs. In setting them, the
Bureau assesses the efficiency of the licensees’ operating
expenditure.We also set provisional allowances for
capital expenditure for the same four–year period.
As renewable energy tends, at present, to be more
expensive than conventional generation, the Bureau must
ensure that the electricity prices paid to renewable
energy producers are appropriate for the given
technology.
To this end, during the year, we contributed to a study
by independent consultants to determine the economic
price of electricity for the 110 MW concentrated solar
power (CSP) plant to be developed by ADFEC (Masdar)
at the city of Madinat Zayed in al Gharbia (western
region). Much work has been completed on this project
and we expect construction to start in 2010.
PC4 OPEX PROJECTIONS – FINAL PROPOSALS
(AED 000m 2010 prices)
Our proposals in respect of operating expenditure and
provisional capital expenditure are summarised in the
charts opposite, alongside the companies’ own
projections.While these price control allowances attempt
to constrain the current rate of cost increases, the
increasing trend will continue with the growth in demand.
4
Actual
PC projections
Companies forecast
Final proposals
Draft proposals
3
2
The Single Buyer (ADWEC)
1
The Bureau also commenced a price controls review for
ADWEC, the monopoly company responsible for
procuring electricity and water produced in the Emirate.
We decided on a separate review process for ADWEC,
as it has few capital assets and the issues of concern are
very different to those of the network companies.
During the year, we issued two consultation papers
relating to the ADWEC price controls review, and expect
to publish our proposals for ADWEC in the first half
of 2010.
Renewable energy – economic price review
The Government of Abu Dhabi strongly supports the
development of renewable energy technologies as an
important component of the strategy for meeting the
Emirate’s future electricity demand.
99
00
01
02
03
04
05
06
07
08
09
10
11
12 13
10
11
12 13
PROVISIONAL PC4 CAPEX ALLOWANCES
(AED 000m, 2010 prices)
4
Actual Capex
Companies forecast
Final proposals
Draft proposals
3
2
1
99
00
01
02
03
04
05
06
07
08
09
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 15
ON TARGET
The Bureau is on target with the direction
the sector takes regarding regulation.
Enabling measures include the issue
of regulations and licences to sector
participants and the provision of a number
of consents.We also consult widely with the
sector so as to ensure our decision making
is understood and fair. This year we issued a
number of new licences including a self–supply
licence to a major industrial metals company.
16 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
SECTOR
GOVERNANCE
AND BOARD
OF DIRECTORS
Changes to Law No (2) of 1998
The Board
The governing law for the water and electricity sector is
Law No (2) of 1998 Concerning the Regulation of the
Water and Electricity Sector in the Emirate of Abu Dhabi,
and its amendments. In 2009, Law No (2) of 1998 was
amended by a new law:
In mid 2008, the Bureau's Board of Directors was changed
to represent more clearly the new reporting structure
brought about by a change in Law No (19) of 2007.
• Law No (9) of 2009, effective from 31 July 2009, made
amendments enabling the Bureau to license a single entity
to undertake one or more regulated activities.
The Board of Directors for the period 2008-2013 was
appointed by His Highness Sheikh Mohamed Bin Zayed
on 9 April 2008 as follows:
HE Mohamed Ahmed Al Bowardi
For example, the Bureau has licensed Abu Dhabi Future
Energy Company to undertake the generation of
electricity and the treatment and disposal of sewage
and wastewater.
HE Hamad Al Hurr AL Suwaidi
ADSSC reorganisation
HE Mohamed Abdullah Bin Sahoo Al Suwaidi
The governing law for sewerage and wastewater is Law
No (2) of 1998 together with Law No (17) of 20051
Concerning the Establishment of the Abu Dhabi
Sewerage Services Company (ADSSC), as amended.
HE Falah Mohamed Al Ahbabi
Mr Ibrahim Mubaydeen
In 2009, Law No (17) of 2005 was amended by Law
No (12) of 2009, which reorganised ADSSC and gave the
former ADWEA group company direct reporting lines
to the Executive Council.The shares in ADSSC are now
100 % owned by the Abu Dhabi Government.
1
As at the date of preparing this Annual Report (2009)
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 17
LICENCE HOLDERS
We grant licences to “Persons” (undertakings, companies,
organisations) to carry out certain activities. Collectively,
these Persons are known as licence holders.
Licences are structures which confer rights and
obligations on a licence holder in order for them to
undertake regulated activities.
Our primary annual funding is derived from licence
holders via the application of fees.
Distribution
Abu Dhabi Distribution Company (ADDC) distributes
and sells water and electricity to around 240,000
customers in the old Municipality area of Abu Dhabi.
Al Ain Distribution Company (AADC) distributes and
sells water and electricity to around 109,000 customers
in the old Municipality area of Al Ain.
Fujairah Asia Power Company (FAPCO), (F2) is the
second Fujairah licensed operator, situated at the Qidfa
complex.The plant is currently under construction, due
for completion by 2010. FAPCO is licensed to produce
up to 2,000 MW of electricity and 130 MGD of
desalinated water.
Gulf Total Tractebel Power Company (GTTPC), (T1) is
licensed to produce 84.8 MGD of desalinated water and
1,600 MW of electricity at its Al Taweelah plant. GTTPC
was the first IWPP in the Emirate to adopt existing assets.
Ruwais Power Company (S2) is licensed to produce up
to 100 MGD of water and 1,500 MW of electricity at
the Shuweihat site – currently under construction.
Shuweihat CMS International Power Company
(SCIPCO), (S1) is licensed to produce up to 1,500 MW
of electricity and 100 MGD of desalinated water at its
Shuweihat Plant.
Generation/ water production
Abu Dhabi Future Energy Company (ADFEC) is licensed
to produce up to 40 megawatts (MW) of electricity by
Embedded Generation Unit(s) using wind turbines
located in the Al Gharbia Municipality and connected to
a Distribution System. ADFEC’s first wind turbine, on
Sir Bani Yas Island, has a capacity of 850kW. ADFEC is
also licensed to produce up to 10 MW of electricity
at its solar photovoltaic power plant located at the
Masdar City Development.
Al Mirfa Power Company (AMPC) operates three
power stations at Al Mirfa, Madinat Zayed and Al Ain with
a total licensed capacity of 636 MW.Water production of
up to 38.7 MGD is at the Al Mirfa station only.
Taweelah Asia Power Company (TAPCO), (T3) is
licensed to produce 160 MGD of water and 2,000 MW
of electricity at the old Taweelah B and B2 plants.
Tourism Development and Investment Company PJSC
(TDIC) has a licence to extract and desalinate seawater
for non-potable and potable purposes on Saadiyat island.
Umm Al Nar Power Company (UANPC) owns Baniyas
power station with a licensed capacity of 120 MW,
currently not in production.
Multi-licensed
Arabian Power Company (APC) is licensed to generate
2,200 MW of electricity and 160 MGD of desalinated
water at its Sass Al Nakheel plant.
Emirates Aluminium Company Limited PJSC (EMAL)
has a self-supply licence for desalination of water and
generation of electricity at the EMAL Aluminium Smelter
Development. Electricity generation in excess of selfsupply requirements may be offered for sale to ADWEC.
Emirates CMS Power Company (ECPC), (T2) is the first
IWPP in the Emirate. It is licensed to produce 50 MGD
of water and generate 763 MW of electricity at the old
Taweelah A2 site.
Abu Dhabi Company for Servicing Remote Areas
(RASCO) is licensed to generate, desalinate, transmit,
distribute and sell electricity and water in remote areas,
not connected to either of the distribution networks.
Procurement
Abu Dhabi Water and Electricity Company (ADWEC)
is the single buyer of water and electricity output and
capacity from producers under various Power and
Water Purchase Agreements and charges the distribution
companies for water and electricity, under a Bulk
Supply Tariff.
Transmission
Emirates Sembcorp Water and Power Company
(Sembcorp), (F1) is licensed to produce up to 100 MGD
of water and 861 MW of electricity at its plant located at
Qidfa in Fujairah, one of the Northern Emirates of the
UAE. Majority of the water produced is delivered to the
Emirate of Abu Dhabi via a transmission pipeline owned
and operated by TRANSCO.
Abu Dhabi Transmission and Despatch Company
(TRANSCO) is responsible for all transmission voltages
at 400, 220 and 132 kV including despatch of generation
units, water balancing and the bulk movement of water
throughout the Emirate.
18 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
LICENCE HOLDERS
CONTINUED
Wastewater
Abu Dhabi Sewerage Services Company (ADSSC) is
responsible for the collection, treatment and disposal of
wastewater throughout the Emirate of Abu Dhabi.
ALDAR Properties PJSC is licensed to collect, treat and
dispose of 9,000 cubic metres of wastewater per day for
a period of five years on the Yas Island Development.
Al Etihad Biwater Waste Water Company, (W1) is
licensed to treat wastewater at Al Wathba-Abu Dhabi
(up to 345,000 cubic metres per day) and at Al Saad-Al
Ain (up to 92,000 cubic metres per day).
Al Wathba Veolia Besix Waste Water Company, (W2)
is licensed to treat wastewater at Al Wathba-Abu Dhabi
(up to 300,000 cubic metres per day) and at Alhamah-Al
Ain (up to 130,000 cubic metres per day).
Archirodon Construction (Overseas) Co. S.A. is licensed
to collect, treat and dispose of 1,000 cubic metres of
wastewater per day for a period of three years.
Higher Corporation for Specialized Economic Zones
(ZonesCorp) is licensed to collect, treat and dispose of
up to 40,000 cubic metres of wastewater per day on the
site of the Industrial City – Abu Dhabi (ICAD).
LOCATION OF LARGE SCALE LICENSED
GENERATION AND DESALINATION COMPANIES
Sembcorp
ù ù
ùù ù
TAPCO
ECPC
GTTPC
ù
APC
T1
F1
FAPCO
T3
T2
Dhaid
Dubai
F2
Taweelah
A
RPC
AMPC
ùù ù
SCIPCO
S2
S1
Jebal Dhana
Abu Dhabi
M
Al Mirfa
Liwa
ù
ù
Plant under
construction
Existing
plant
Al Ain
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 19
PUBLIC RECORD OF
ACTIVITIES AND DOCUMENTS
In law we have a duty to maintain a Public Register.
This section of our Annual Report is constructed so as
to list documents which are part of our Public Register.
For the purpose of satisfying the law we maintain
our Public Register using our website, where all
Public Register documents are available for free view
and download.
Licensing
New licences
Aldar Properties PJSC
01 May 2009
ED/L07/003
Sewerage, wastewater treatment and disposal licence
Ruwais Power Company
28 Aug 2009
ED/L01/021
Water desalination and electricity generation licence
Al Wathba Veolia Besix Waste Water Company
01 Sep 2009
ED/L01/022
Sewerage, wastewater treatment and disposal licence
Archirodon Construction (Overseas) Co. S.A.
12 Nov 2009
ED/L07/001
Sewerage, wastewater treatment and disposal licence
Derogations
Derogations are issued by the Bureau to a licensed
operator for a period and on terms specified in
the derogation, from the performance of particular
licence conditions.
Abu Dhabi Water and Electricity Company (ADWEC)
16 Feb 2009
ED/L06/006
Maximum Allowed Revenues for 2009 for the Electricity
Procurement Business
Abu Dhabi Sewerage Services Company (ADSSC)
16 Feb 2009
ED/L06/007
Maximum Allowed Revenues for 2009 for the Sewerage
Services Businesses
Revocations
A revocation is the cancellation of a licence by the Bureau.
Emirates Aluminium Company Limited PJSC
01 Sep 2009
ED/L08/002
Water desalination and electricity generation self-supply
licence
Tourism Development and Investment Co PJSC (TDIC)
01 Sep 2009
ED/L07/004
Water desalination development licence
Higher Corporation for Specialized Economic Zones
23 Nov 2009
ED/L01/023
Sewerage, wastewater treatment and disposal licence
Modifications
Modifications to a licence are made subject to agreement
by the appropriate licence holder.
Al Mirfa Power Company
05 Jan 2009
ED/L01/001
Water desalination and electricity generation licence
Aldar Properties PJSC
09 Jun 2009
ED/L07/003
Sewerage, wastewater treatment and disposal licence
Bainounah Power Company PJSC (BPC)
20 Feb 2009
ED/L05/001
Revocation of Water Desalination and Electricity
Generation Licence
ALDAR Laing O’Rourke Construction LLC
09 Jun 2009
ED/L05/002
Revocation of Sewerage,Wastewater Treatment and
Disposal Licence
Consents
Consents confer rights and obligations on licence holders.
Please note revisions or renewal of consents are listed for
the sake of completeness.
Abu Dhabi Distribution Company (ADDC)
02 Apr 2009
ED/L03/038
Purchase of electricity from embedded generators
Arabian Power Company (APC)
16 Apr 2009
ED/L03/032
Sale of demineralised water to Consolidated Contractors
International Company
20 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
PUBLIC RECORD OF
ACTIVITIES AND DOCUMENTS
CONTINUED
Consents (continued)
Arabian Power Company (APC)
22 Apr 2009
ED/L03/009
Sale of demineralised water to specified customers
Taweelah Asia Power Company (TAPCO)
22 Apr 2009
ED/L03/033
Transfer of assets from TAPCO to TRANSCO
Abu Dhabi Transmission Company (TRANSCO)
01 Jun 2009
ED/L03/039
Disposal of certain assets
Emirates Sembcorp Water and Power Company
14 Jul 2009
ED/L03/040
Sale of potable water to Dolphin Energy
Taweelah Asia Power Company (TAPCO)
23 Jul 2009
ED/L03/041
Sale of demineralised and distilled water to EMAL
Abu Dhabi Distribution Company (ADDC)
30 Jul 2009
ED/L03/042
Sale of non-potable water to the TDIC
Abu Dhabi Transmission Company (TRANSCO)
11 Oct 2009
ED/L03/043
Disposal of certain assets
Abu Dhabi Transmission Company (TRANSCO)
11 Oct 2009
ED/L03/044
Extension of consent for the disposal of assets
Consents for relaxation of TDS and conductivity limits
specified in the Water Quality Regulations:
Al Mirfa Power Company (AMPC)
18 Oct 2009
ED/L03/045
Arabian Power Company (APC)
18 Oct 2009
ED/L03/046
Gulf Total Tractebel Power Company (GTTPC)
18 Oct 2009
ED/L03/047
Shuweihat CMS International Power Company
18 Oct 2009
ED/L03/048
Taweelah Asia Power Company (TAPCO)
18 Oct 2009
ED/L03/049
Abu Dhabi Transmission and Despatch Company
18 Oct 2009
ED/L03/050
Emirates CMS Power Company (ECPC)
18 Oct 2009
ED/L03/051
Al Ain Distribution Company (AADC)
18 Oct 2009
ED/L03/052
Abu Dhabi Distribution Company (ADDC)
18 Oct 2009
ED/L03/053
Emirates Sembcorp Water and Power Company
25 Nov 2009
ED/L03/056
Abu Dhabi Transmission Company (TRANSCO)
11 Nov 2009
ED/L03/054
Disposal of certain assets
Abu Dhabi Distribution Company (ADDC)
24 Nov 2009
ED/L03/055
The provision of call centre services to third parties
Consultation papers
Consultation papers are designed to seek views from a
range of stakeholders and other interested parties on
matters which may have a significant impact on licence
holders or customers.
Regulations
Second Consultation on Water Quality Regulations Revision 3
CD/R01/013
For the provision of wholesome drinking water to
consumers by licence holders
Wastewater Residual Reuse Regulations 2009
Public Consultation
CD/T06/004
Proposals for the safe and economic management of
recycled water and biosolids
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 21
Trade Effluent Control Regulations 2009
Public Consultation
CD/T06/003
Proposals for managing industrial and commercial inputs
to the wastewater collection system
Publications
Annual work plan 2009
ER/P01/012
Price Controls Review
Water and electricity sector overview
ER/P01/013
Second consultation paper (network companies)
CR/E02/033
Annual report for 2008 – Arabic
ER/P02/017
Second consultation paper (ADWEC)
CR/E02/034
Annual report for 2008 – English
ER/P02/018
Draft proposals (network companies)
CR/E02/035
Guide for developers and licensed entrants to the
water, wastewater and electricity sector in the Emirate
of Abu Dhabi 2009
ER/P01/009
Final proposals (network companies)
CR/E02/036
Guide to Water Supply Regulations 2009
ER/P04/003
General
Scale of Charges and Services 2009
ER/E01/003
Proposed Water Quality
Performance Indicator for Network Companies
CP/T03/004
A number of key parameters for the management
and quality of water through the transmission and
distribution phases of the water supply process
Methodology of Charges for Connection
to the Water Distribution System
CD/C01/015
Proposals for distribution companies’ method of charging
for new connections to their distribution system
Reports
Reports are produced either by Bureau staff or externally
appointed consultants.They are not necessarily in the
public domain.
Audit reports
Three audits were completed by our staff to review
network performance measures (2005 – 2007) for:
Al Ain Distribution Company (AADC)
ER/T03/027
Regulations
The Water Supply Regulations 2009
ER/P04/003
Cover connection arrangements between customers
and distribution companies to ensure safe and secure
supply connections and prevent wastage, contamination
and over-consumption.
Abu Dhabi Transmission and Despatch Company
(TRANSCO)
ER/T03/028
Abu Dhabi Distribution Company (ADDC)
ER/T03/029
Reviews
The Water Quality Regulations 2009
ER/R04/003
For the provision of wholesome drinking water to
consumers by licence holders
The Fuel Storage Tank Regulations 2009
ED/R01/015
For the prevention and early detection of any spill, leak or
discharge from fuel storage tank systems
Policy Statement for Market Share Regarding Desalination
and Generation Licence in the Emirate of Abu Dhabi
ED/S02/002
Guidance on our overall approach to market share and
market dominance
Review of Power Supply Security for Yas Island
(Formula 1 Event)
IR/T02/001
Review of Water and Wastewater Services for Yas Island
(Formula 1 Event)
IR/T02/002
TRANSCO Contract Cost Analysis
ER/T03/031
Operational Procedures Review – AADC
ER/T04/004
Operational Safety Procedures Review – ADDC
ER/T04/005
22 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
ON RECORD
The Bureau is on record in terms of
managing its internal affairs and continuously
seeking to drive down costs and therefore
licence fees. However, given the need to keep
up with new sector developments we have
been required to increase staff numbers and
also moved to a new office. Under these
circumstances we have still managed to
keep fees increases below the rate of UAE
inflation and have continued to meet an ever
greater workload.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 23
INDEPENDENT AUDITORS’ REPORT TO THE BOARD MEMBERS
OF THE REGULATION AND SUPERVISION BUREAU
We have audited the accompanying financial statements of Regulation and Supervision Bureau (“the Bureau”), which
comprise the statement of financial position as at 31 December 2009 and the statements of funding and expenditure
and accumulated deficit and cash flow statement for the year then ended, and a summary of significant accounting
policies and other explanatory notes.
Management’s Responsibility
for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards.This responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit
in accordance with International Standards on Auditing.Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements.The procedures selected depend on the auditors’ judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bureau as of
31 December 2009 and the results of its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards.
ERNST & YOUNG
30 JUNE 2010
ABU DHABI
24 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
STATEMENT OF FINANCIAL POSITION
At 31 December 2009
Balance Sheet
2009
AED
2008
AED
3
7,751,921
226,715
7,978,636
2,093,715
306,989
2,400,704
4
5
7,210,568
27,016,985
2,924,291
4,067,321
34,227,553
6,991,612
42,206,189
9,392,316
Notes
Assets
Non-current assets
Furniture and equipment
Advance to employee
Current assets
Prepayments and other receivables
Bank balances and cash
Total assets
Surplus and liabilities
Accumulated surplus (deficit)
Accumulated surplus (deficit)
1,754,765
(197,448)
Non-current liability
Employees’ end of service benefits
7
8,516,300
6,468,501
Current liabilities
Accounts payable and accruals
6
31,935,124
3,121,263
Total liabilities
40,451,424
9,589,764
Total surplus and liabilities
42,206,189
9,392,316
Mohammed Al Bawardi
CHAIRMAN
Nick Carter
DIRECTOR GENERAL
The attached notes 1 to 11 form part of these financial statements.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 25
STATEMENTS OF FUNDING AND EXPENDITURE AND ACCUMULATED SURPLUS
Year ended 31 December 2009
2009
AED
2008
AED
44,162,951
401,115
376,600
32,236,825
450,000
92,245
44,940,666
32,779,070
36,898,704
1,454,044
1,156,899
517,038
139,320
475,569
2,346,879
28,431,050
290,445
1,101,907
326,924
402,123
382,837
1,677,853
42,988,453
32,613,139
Surplus for the year
1,952,213
165,931
Statement of accumulated surplus
Balance at 1 January
Surplus for the year
(197,448)
1,952,213
(363,379)
165,931
Balance at 31 December
1,754,765
(197,448)
Notes
Statement of funding and expenditure
Funding
License fees
Other income
Interest income
Expenditure
Salaries and staff related costs
Depreciation
Rent expense
Publicity
Recruitment
Professional fee
Others
The attached notes 1 to 11 form part of these financial statements.
9
3
26 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
STATEMENT OF CASH FLOWS
Year ended 31 December 2009
2009
AED
2008
AED
1,952,213
165,931
2,047,799
(376,600)
25,106
1,454,044
5,102,562
2,928,204
(92,245)
–
290,445
3,292,335
(4,286,277)
28,813,861
75,886
1,652,290
29,630,146
–
5,020,511
(106,121)
29,630,146
4,914,390
(7,138,165)
809
376,600
80,274
(1,877,280)
–
92,245
(221,997)
Net cash from (used in) investing activities
(6,680,482)
(2,007,032)
Increase (decrease) in cash and cash equivalents
22,949,664
2,907,358
4,067,321
1,159,963
27,016,985
4,067,321
Notes
Operating activities
Surplus for the year
Adjustments for:
Provision for employees’ end of service benefits
Interest income
Furniture and fixtures written off
Depreciation
7
3
Working capital adjustments:
Prepayments and other receivables
Accounts payable and accruals
Cash from (used in) operations
Employees’ end of service benefits paid
7
Net cash from (used in) operating activities
Investing activities
Purchase of furniture and equipment
Proceeds from the disposal of furniture and equipments
Interest received
Advance to employees
3
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The attached notes 1 to 11 form part of these financial statements.
5
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 27
NOTES TO THE FINANCIAL STATEMENTS
At 31 December 2009
1 Activities
Regulation and Supervision Bureau (“the Bureau”) was
established under Law no. (2) of 1998 to regulate the
water and electricity sector in the Emirate of Abu Dhabi.
The Bureau is funded by the payment of licence fees by
those entities awarded licences and is a not for profit
organisation.
The Bureau’s registered office is at P O Box 32800,
Abu Dhabi, United Arab Emirates.
The financial statements of the Bureau for the year ended
31 December 2009 were authorised for issue by the
management on 30 June 2010.
The adoption of the above standards and interpretations
did not have any effect on the financial performance or
position of the Bureau. However, the adoption of certain
standards and interpretations resulted in certain
disclosures in the financial statements as described below:
IAS 1 Presentation of Financial Statements
The revised standard separates owner and non-owner
changes in equity.The statement of changes in equity
includes only details of transactions with owners,
with non-owner changes in equity presented in a
reconciliation of each component of equity. In addition,
the standard introduces the statement of comprehensive
income: it presents all items of recognised income
and expense, either in one single statement, or in two
linked statements.The Bureau has elected to present
one statements.
2.1 Basis of preparation
The financial statements are prepared under the historical
cost convention as modified for the measurement at fair
value of derivative financial instruments and available for
sale investments.
The financial statements have been presented in United
Arab Emirates Dirhams (AED), which is the functional
currency of the Bureau.
Statement of compliance
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International
Accounting Standards Board (IASB).
2.2 Changes in accounting policies and disclosures
The accounting policies adopted are consistent with
those of the previous financial year except as follows:
The Bureau has adopted the following new and amended
IFRS and IFRIC interpretations as of 1 January 2009:
• IFRS 2 Share-based Payment:Vesting Conditions and
Cancellations effective 1 January 2009
• IFRS 7 Financial Instruments: Disclosures effective
1 January 2009
• IFRS 8 Operating Segments effective 1 January 2009
• IAS 1 Presentation of Financial Statements effective
1 January 2009
• IAS 23 Borrowing Costs (Revised) effective 1 January
2009
• IAS 32 Financial Instruments: Presentation and IAS 1
Puttable Financial Instruments and Obligations arising
on Liquidation effective 1 January 2009
• IFRIC 13 Customer Loyalty Programmes effective
1 July 2008
• IFRIC 16 Hedges of a Net Investment in a Foreign
Operation effective 1 October 2008
Improvements to IFRSs (May 2008)
IFRS 7 Financial Instruments: Disclosures
The amended standard requires additional disclosure
about fair value measurement and liquidity risk. Fair value
measurements are to be disclosed by source of inputs
using a three level hierarchy for each class of financial
instrument. In addition, reconciliation between the
beginning and ending balance for Level 3 fair value
measurements is now required, as well as significant
transfers between levels in the fair value hierarchy.The
amendments also clarify the requirements for liquidity
risk disclosures with respect to derivative transactions
and assets used for liquidity management.The fair value
measurement disclosures are presented in note 10.
The liquidity risk disclosures are not significantly impacted
by the amendments and are presented in note 11.
IAS 23 Borrowing Costs
The standard has been revised to require capitalisation of
borrowing costs on qualifying assets.The adoption of this
amendment did not have any impact on the financial
position or performance of the Bureau.
Improvements to IFRSs
In May 2008 and April 2009 the IASB issued omnibus
of amendments to its standards, primarily with a view to
removing inconsistencies and clarifying wording.There
are separate transitional provisions for each standard.
The adoption of the following amendments resulted
in changes to accounting policies but did not have
any impact on the financial position or performance
of the Bureau.
28 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
At 31 December 2009
2.3 Significant accounting judgement, estimates
and assumptions
The preparation of the Bureau’s financial statements
requires management to make judgements, estimates
and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the
disclosures of contingent liabilities, at the reporting date.
However, uncertainty about these assumptions and
estimates could result in outcomes that could require a
material adjustment to the carrying amount of the asset
or liability affected in the future periods.
Furniture and equipment
Furniture and equipment are stated at cost less
accumulated depreciation and any impairment in value.
Depreciation is calculated on a straight line basis over the
estimated useful lives of the assets as follows:
Computer equipment
over 3 years
Office equipment and furniture over 5 years
Motor vehicle
over 3 years
The key assumptions concerning the future and other
key sources of estimation uncertainty at the reporting
date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:
The carrying values of furniture and equipment are
reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be
recoverable. If any such indication exists and where the
carrying values exceed the estimated recoverable
amount, the assets are written down to their recoverable
amount, being the higher of their fair value less costs to
sell and their value in use.
Useful lives of property, plant and equipment
The Bureau’s management determines the estimated
useful lives of its property, plant and equipment for
calculating depreciation.This estimate is determined after
considering the expected usage of the asset or physical
wear and tear. Management reviews the residual value
and useful lives annually and the future depreciation
charge would be adjusted where management believes
that the useful lives differ from previous estimates.
Expenditure incurred to replace a component of an
item of furniture and equipment that is accounted for
separately is capitalised and the carrying amount of
the component that is replaced is written off. Other
subsequent expenditure is capitalised only when it
increases future economic benefits of the related item of
property, plant and equipment. All other expenditure is
recognised in the statement of funding and expenditure
as the expense is incurred.
2.4 Summary of significant accounting policies
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in the
statement of funding and expenditure in the year the
asset is derecognised.
Estimation uncertainty
Funding
Licence fees funding from the licensees in respect of the
current year are accounted for in the statement of
funding and expenditure based on the amount of the
cash expenditure incurred during the year. Any funding
received in excess of the cash expenditure is refunded
back to licensee in every two years. Short funding is
recovered from licensee in every two years.
Interest income
Interest revenue is recognised as the interest accrues
using the effective interest method, under which the rate
used exactly discounts estimated future cash receipts
through the expected life of the financial asset to the
net carrying amount of the financial asset.
Capital work in progress
Capital work in progress is recorded at cost and
represents costs based on contractual payments for the
design, development, procurement, construction and
commissioning of the plant and overhead expenses and
those incurred during the development stage directly
attributable to the construction of the plant.The capital
work in progress is transferred to the appropriate asset
category and depreciated in accordance with the
Authority’s policies when construction of the asset
is completed and commissioned
Accounts payable and accruals
Liabilities are recognised for amounts to be paid in the
future for goods or services received, whether billed by
the supplier or not.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 29
Impairment and uncollectibility of financial assets
An assessment is made at each statement of financial
position date to determine whether there is objective
evidence that a specific financial asset may be impaired. If
such evidence exists, any impairment loss is recognised in
the statement of funding and expenditure. Impairment is
determined as the difference between the present value
of future cash flows discounted at the current market
rate of return for a similar financial asset.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash in hand, bank balances,
and short-term deposits with an original maturity of
three months or less, net of outstanding bank overdrafts.
Accounts receivable
Accounts receivable are stated at original invoice amount
less a provision for any uncollectible amounts. An
estimate for doubtful debts is made when collection of
the full amount is no longer probable. Bad debts are
written off when there is no possibility of recovery.
Employees’ end of service benefits
The Bureau provides end of service benefits to its
expatriate employees.The entitlement to these benefits is
usually based upon the employees’ length of service and
completion of a minimum service period.The expected
costs of these benefits are accrued over the period
of employment.
With respect to its national employees, the Bureau makes
contributions to Abu Dhabi Retirement Pension and
Benefit Fund calculated as a percentage of the employees’
salaries.The Bureau’s obligations are limited to these
contributions, which are expensed when due.
Financial instruments
Financial instruments include receivables, bank balances
and cash, bank overdrafts, payables and certain other
assets and liabilities.
Fair values of financial instruments are based on
estimated fair values using such methods as net present
values of future cash flows.
2.5 Future changes in accounting policies –
standards issued but not yet effective
Standards issued but not yet effective up to the
date of issuance of the Bureau’s financial statements are
listed below
• IFRIC 17 Distributions of Non-cash Assets to Owners
• IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments
• IFRS 2 Share based payments: Group cash-settled
share based payment transactions
• IFRS 3 Business Combinations (Revised) and IAS 27
Consolidated and Separate Financial Statements
(Amended)
• IFRS 9 Financial Instruments
• IAS 24 Related Party Disclosures
• IAS 39 Financial Instruments: Recognition and
Measurement – Eligible Hedge items
• Improvements to IFRS (April 2009)
In the opinion of management, the adoption of the above
standards and interpretations will have no impact on the
financial position or performance of the Bureau.
30 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
At 31 December 2009
3 Furniture and equipment
Work in
progress
AED
2009
Cost:
At 1 January 2009
Additions
Transferred from work in progress
Disposals during the year
Office
equipment
and furniture
AED
Total
AED
74,000
168,000
–
–
1,441,865
3,465,496
4,978,394
(40,684)
–
242,000
9,845,071
–
–
–
9,732
76,677
–
886,143
1,377,367
(14,769)
895,875
1,454,044
(14,769)
At 31 December 2009
–
86,409
2,248,741
2,335,150
Net carrying amount:
At 31 December 2009
–
155,591
7,596,330
7,751,921
–
1,473,725
–
74,000
1,112,310
329,555
1,112,310
1,877,280
1,473,725
74,000
1,441,865
2,989,590
–
–
–
9,732
605,430
280,713
605,430
290,445
At 31 December 2008
–
9,732
886,143
895,875
Net carrying amount:
At 31 December 2008
1,473,725
64,268
555,722
2,093,715
At 31 December 2009
Depreciation:
At 1 January 2009
Depreciation charge for the year
Relating to disposals
2008
Cost:
At 1 January 2008
Additions
At 31 December 2008
Depreciation:
At 1 January 2008
Depreciation charge for the year
1,473,725
3,504,669
(4,978,394)
–
Motor
vehicle
AED
2,989,590
7,138,165
–
(40,684)
10,087,071
Total construction commitment of the Company at 31 December 2009 is nil (2008: AED 3,021 thousands).
4 Prepayments and other receivables
Prepaid staff rent
Other prepayments
Amounts due from related parties (note 8)
Other receivables
2009
AED
2008
AED
2,130,310
896,700
3,959,824
223,734
7,210,568
1,663,198
1,179,071
–
82,022
2,924,291
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 31
5 Bank balances and cash
Included in bank balances and cash of AED 27,016,985 (2008: AED 4,067,321) are bank deposits of AED 25,586,240
(2008: AED 1,687,476) with a commercial bank in Abu Dhabi.These are denominated in UAE Dirhams, short term in
nature, with effective interest rate of 2.07% (2008: 2.2%).
6 Accounts payable and accruals
Accounts payable
Accrued expenses
Licence fees received in advance from ADWEA
Amounts due to related parties (note 8)
2009
AED
2008
AED
2,054,368
1,359,736
28,521,020
–
1,822,401
426,689
125,000
747,173
31,935,124
3,121,263
7 Employees’ end of service benefits
Movements in the provision recognised in the statement of financial position are as follows:
2009
AED
2008
AED
Balance at 1 January
Provided during the year
Employees’ end of service benefits paid
6,468,501
2,047,799
–
3,646,418
2,928,204
(106,121)
Balance at 31 December
8,516,300
6,468,501
8 Related party transactions
Related parties represent associated companies, shareholder, directors and key management personnel of the Bureau.
Pricing policies and terms of these transactions are approved by the Bureau’s management.
Amounts due from and due to related parties are disclosed in notes 4 and 6, respectively.
Compensation of key management personnel
The remuneration of the members of key management during the year was as follows:
Salaries
Accommodation allowance
Other benefits
Related to employees’ end of service benefits
2009
AED
2008
AED
5,246,200
1,475,812
661,458
845,657
5,439,768
1,556,123
700,478
1,385,068
2009
AED
2008
AED
72,558,971
32,361,825
125,000
(28,521,020)
44,162,951
–
(125,000)
32,236,825
9 Licence fees
Licence fees received during the year, net
Licence fees received in advance, net of receivable fees:
Beginning balance
Ending balance
32 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
At 31 December 2009
10 Fair values of financial instruments
Financial instruments comprise of financial assets and financial liabilities.
Financial assets consist of cash and bank balances and financial liabilities consist of payables.
The fair values of financial instruments are not materially different from their carrying values.
11 Risk management
Interest rate risk
The Bureau is exposed to interest rate risk on its interest bearing bank deposits.
Interest rate risk table
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables
held constant, of the Bureau’s deficit (through the impact on floating rate deposits).
Assumed change in interest rates
0.50%
Impact on deficit from increase in interest rates:
2009 (AED)
2008 (AED)
127,931
8,437
Impact on deficit from decrease in interest rates:
2009 (AED)
2008 (AED)
(127,931)
(8,437)
Credit risk
The Bureau collects licence fees from its related parties. Licence fees are collected based on an annually forecast budget.
The Bureau limits its credit risk with regard to bank deposits by only dealing with reputable banks.
Credit risk is limited to the carrying values of financial assets in the statement of financial position.
Liquidity risk
The Bureau limits its liquidity risk by monitoring its current financial position in conjunction with its cash flow forecasts
and close communication with ADWEA on a regular basis to ensure funds are available to meet its commitments for
liabilities as they fall due. Accounts payable are normally settled within 30 days of the date of purchase.The contractual
payment terms of all financial liabilities of the Bureau as at 31 December 2009 were less than three months.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 33
CONSULTANTS
Given an ever increasing workload, we employed both
local and international consultants to undertake a range
of work streams.
The consultants listed below were employed in 2009.
Alpha Data
IT infrastructure Review
GHD Global Pty Ltd.
Regulatory Impact Assessment (RIA) for Introduction of
Wastewater Regulations
Dornier Consulting
Al Ain Groundwater Study
International Centre for Training and Development
Training and examination on the Wiring Regulations 2007
in Al Ain
Lloyds Register EMEA
ADSSC Health and Safety Management Review
Middle East Management and Economical Development
Training and examination on the Wiring Regulations 2007
in Abu Dhabi
WS Atkins & Partners Oversees
Chlorination System Evaluation Project
Technical evaluation of existing chlorination systems at
production and network companies’ chlorination dosing
sites: project duration 6 months
(ER/P02/020)
The Regulation & Supervision Bureau
Tel +971 2 4439333
Fax +971 2 4439334
PO Box 32800 Abu Dhabi
United Arab Emirates
Email bureau@rsb.gov.ae
www.rsb.gov.ae