AnnuAl RepoRt - rsb.gov.aersb.gov.ae/assets/documents/192448/rsb_ar16_en_4web.pdf · The regulation & Supervision Bureau Annual Report 2016 03 The regulation & Supervision Bureau

تتوافر نسخة باللغة العربية أيضًا

2016AnnuAl RepoRt

Late Sheikh Zayed Bin Sultan Al NahyanFounder of the United Arab Emirates

His Highness Sheikh Khalifa bin Zayed Al NahyanThe President of the UAE

His Highness Sheikh Mohamed bin Zayed Al NahyanThe Crown Prince of Abu Dhabi and Deputy Supreme

Commander of the UAE Armed Forces

0201 The Regulation & Supervision Bureau | Annual Report 2016The Regulation & Supervision Bureau | Annual Report 2016

Table of contentsChairman’s message �� 3

Director General’s message �� 4

Vision, Mission & Values �� 5

our people ��7Emiratization �� 7

Employees wellness, engagement, and happiness �� 7

Development programs �� 7

2016 key figures �� 7

Training and development �� 7

timeline ��9

performance highlights �� 11Annual production for 2016, installed capacity, system demand �� 11

Growth and production charts �� 13

economic regulation �� 16Framework of economic regulation �� 16

Key achievements �� 17

Generation and production �� 18

Network �� 19

Tariffs ��25

District cooling�� 28

technical ��30Electricity & water production ��30

Electricity �� 31

Drinking water ��32

Non-drinking water ��34

Waterwise & powerwise �� 36

Business Continuity Management (BCM) & Health, Safety, environment, and Quality (HSeQ) ��40

BCM ��40

HSEQ �� 41

legal and customer excellence perspective �� 42Compliance �� 42

License holders ��44

Public records of activities and documents �� 48

Financial statements �� 54


The LeadershipThe Bureau’s commitment to the leadership Vision is fully embraced in our strategy that we set ourselves, and the work that we do day to day to maintain a safe and sustainable electricity, water and wastewater Sector. The Bureau prides itself of driving continuous improvement to ensure our precious resources are utilised wisely in the interest of the Nation and our future generations.

2016 was a year of exciting developments in the Abu Dhabi Sector in progressing our sustainable agenda of driving clean energy and efficiency measures. Of note was the launch of Abu Dhabi’s largest solar photovoltaic (PV) electricity generation project which attracted huge international interest and resulted in one of the world’s lowest unit costs for solar power. Similarly, the continuous progress of a safe nuclear programme is core to Abu Dhabi’s clean energy programme. These are both excellent examples of how the Sector is building a legacy of high tech, high value knowledge base and career opportunities for our citizens and future generations.

Mission, Vision and Values The Bureau ensures to follow its core values of independence, objectivity, accountability and consistency where all our decisions are made only on facts and away from influence of vested interests.

In line with our commitment to the highest standards of transparency and accountability operated by in the Bureau, it is with great honour that we present to you the 2016 Annual Report where you will read more about the Bureau and the sector’s performance as well as insights on key achievements.

Chairman’s message

“the uAe leadership puts great emphasis on the wellbeing of its citizens as committed through the Vision 2021 and Abu Dhabi 2030 which set out the drivers for sustainable infrastructure whilst preserving the environment and ensuring an optimum balance between economic and social development�”

Sector Governance of Sustainable UtilitiesIn support of our duties, the Bureau continued with a comprehensive range of regulatory activities through 2016, all of which aim to promote the Abu Dhabi Sector as one of the “best in class” in the Gulf region. In the past year we delivered a number of key initiatives and developments to support the Vision. Examples of note are the development of a draft Regulatory Framework to govern the district cooling sector in consultation with the key stakeholders; the development of the Regulatory Framework for Electric Vehicle Charging Stations - the first of its kind in the country and GCC region; and also regulation framework governing the installation and commercial arrangements for small-scale solar photovoltaic (PV) panels in the Emirate of Abu Dhabi.

In terms of economic sustainability, the Bureau carefully considers recommendations to Government on the approach to reducing Government Sector subsidy for example as part of the recent 2017 Tariff reforms. Such recommendations are coupled with a balanced approach to drive the Sector’s own operational efficiency and continuous improvement through improved asset utilisation, ensuring economic dispatch of our generation fleet and competitive procurement of energy. This is in line with our objective of the efficient use of capital funds to provide utility services in a reliable and responsible manner and protecting the customers’ rights.

Human Capital & Emiratization Our ability to achieve our mandate is driven by the professionalism of our employees. We employ specialists with a strong track record of operating in a utility environment, with exceptional levels of expertise and the desire to succeed in a rapidly developing, multicultural environment. All employees are offered extensive professional development each year. In 2016, a total of 2,886 training hours were conducted on a variety of fields ranging from leadership skills to highly specialized training.

In support of the wider government objectives, and in line with the Abu Dhabi’s goal of effective participation of UAE nationals in the labour market, we at the Bureau implement a comprehensive program to attract, hire, develop and retain UAE nationals and our Emiratization percentages have been on a steady incline now reaching 59%. We continue to invest in our people as we truly believe that their development is key to our and the sector’s success.

In this report, you will read more about our operations and the sector’s performance and how 2016 was yet another year marked by success and how the Bureau maintained momentum in sector efficiency. I am pleased to share this report with you to give you an insight on the Bureau’s and the sector’s performance.

Director General’s message

“the Bureau is now well established since 1998 and we continue to deliver value by regulating and supervising the delivery of a safe, efficient and economic water, wastewater and electricity sector� the Bureau’s primary mandate in law being to ensure the security of supply and continued availability of electricity and water supply in the emirate of Abu Dhabi�”


Vision, Mission & Values

Visionto be an accountable, independent regulator recognised for objectivity and consistency�

MissionTo regulate and supervise the delivery of a safe, efficient and economic water, wastewater and electricity sector in the emirate of Abu Dhabi�

Values

We take our decisions

independently from undue external

influences.

We base our decisions only on facts and protect these decisions

from the influence of vested interests.

This is how we maintain our

independence.

We demonstrate our decisions

are independent, objective and

consistent by making ourselves accountable

and transparent to government, licensees

and customers.

We act in a predictable manner, in accordance with

our policies and procedures, and approach similar circumstances in similar ways to achieve similar

outcomes.

Independence Objectivity Consistency Accountability


Our people

Our employees are our real assets, and their development is a key investment strategy for the success of the sector. To achieve our objectives, fulfil the organization’s mission and maintain a sustainable growth in our workforce, it is our duty at the Bureau to provide the best environment, training and adequate resources to ensure that the employees perform their best in attaining our vision. Therefore, we will always offer a collaborative, engaging and favourable environment where employees have the chance to thrive and grow.

EmiratizationIn line with Abu Dhabi’s Economic Vision 2030, the Bureau is seeking to drive and cement its Emiratization target and strategy by recruiting potential Emiratis to fulfil the UAE’s Vision toward a knowledge-based economy. The Bureau marked a significant progress in its Emiratisation strategy which involved the implementation of a new development program aimed at maximizing the potential, support, and retention of the UAE nationals.

As a result, the Bureau was able to achieve an Emiratisation rate of 59% as compared to the previous years with rates of 31% and 49% respectively.

Employees wellness, engagement, and happiness To foster wellness, engagement and happiness the Bureau’s Human Resources team in partnership with the Internal Communication organize periodical employee activities and events throughout the year. These activities include Health Check-ups, Mother’s Day Initiative, happiness workshops and sport events.

Development programs Graduate Trainee Program As part of Bureau’s efforts to hire high calibre Emiratis, in 2010 a two-year comprehensive program for fresh graduates was launched to attract, hire and retain UAE nationals. The trainees are assessed through a presentation every two months presented to the management. The program is used to measure their abilities, aspiration, motivation, engagement and potential. They are then provided with instructive feedback to ensure that learning solutions are provided. By 2016, 10 graduate trainees have successfully completed their graduate trainee program.

2016 key figures

Training and development The Bureau facilitates the process of learning, training and development for its employees in line with individual Career Development Plans. We provide effective, efficient and timely training and development opportunities such as specialized external training courses and in-house training courses for all employees on an on-going basis to ensure that all employees have the necessary knowledge and skills to execute their roles in a professional manner.

“the real asset of any advanced nation is its people, especially the educated ones, and the prosperity and success of the people are measured by the standard of their education�” – Sheikh Zayed Bin Sultan Al Nahyan

31% 49% 59%

2014 2015 2016

59% emiratization of which 49% are female

25 new joiners

2,886training hours


JANUAry • On 1 January 2016, the

distribution companies applied the updated 2016 cost-reflective tariffs charged to expats for consumption in the red and charged to government for all consumption.

• On 31 January 2016, the first district cooling (DC) stakeholders’ workshop was held to present the DC Regulatory Framework project and to discuss the market challenges.

MArCH • On 22 March 2016, the

Bureau approved ADWEC’s exceptional charges under the Bulk Supply Tariff for the year 2015 for the last time, as the forward-looking correction factor mechanism will apply from 2016 onwards, as pre ADWEC’s licence.

APrIL • On 27 April 2016, the second

DC workshop was held to all key stakeholders to present the DC market challenges from technical, legal and technical perspectives.

• Following the Bureau’s regulatory advice to ADWEC on technical, commercial and financial issues relating to the tendering and development of a solar photovoltaic (PV) power plant at Sweihan, ADWEC/ADWEA issued a Request for Proposals (RFP) in April 2016 for a minimum capacity of 350 MW.

• Five price-controlled companies in the sector (AADC, ADDC, ADSSC, ADWEC and TRANSCO) submitted their 2015 audited Separate Business Accounts and Price Control Returns to the Bureau on time.

SEPTEMBEr • The Bureau conduct the third DC

stakeholders workshop to present the final DC Regulatory Framework along with its technical, legal and economic dimensions and regulatory impact assessment and completed DC Regulatory Framework project.

• For Sweihan solar PV project, ADWEC/ADWEA received six bids in September 2016 with the lowest levelised electricity cost (for 881 MW capacity) that was considered the lowest or one of the lowest solar energy cost in the World at the time�

• On 18 September 2016, the Bureau published the second consultation paper to set the RC1 controls for the four network companies for 2018-2021.

OCTOBEr • On 20 October 2016, following

extensive review and consultation between ENEC, ADWEA, ADWEC, RSB and other stakeholders via the Nuclear Task Force or otherwise, the Power Purchase Agreement (PPA) was signed for Barakah nuclear power project.

• The Bureau notified to the price-controlled companies the Q factors (financial bonuses or penalties), calculated based on the verified companies’ performance, that should apply to the companies’ maximum allowed revenues in 2016.

• Following review of ADWEC and TRANSCO detailed submissions, the Bureau approved the 2017 Transmission of Use charges and the 2017 Bulk Supply Tariff.

• Five price-controlled companies in the sector (AADC, ADDC, ADSSC, ADWEC and TRANSCO) submitted their 2016 Annual Information Submissions to the Bureau on time.

NOVEMBEr • The Bureau issued

proposals to modify the licences for the distribution companies to include outputs-based approach for implementation of demand side management (DSM) based on their proposed DSM strategy, action plans and targets�

• The Bureau notified to the distribution companies the 2017 cost-reflective tariffs for electricity and water.

• On 16 November 2016, the sector announced the new electricity and water tariffs that will apply from 1 January 2017�

• On 1 November 2016, the Bureau submitted to GSEC the final report of District Cooling Regulatory Framework Phase II�

DECEMBEr • After two rounds

of consultations the Bureau issued the Guide to the Water Supply Regulations (third issue).

fEBrUAry• On 3 February the Bureau

approved ADDC and AADC Demand Side Management Strategies and action plans.

• On 4 February 2016, the Bureau commenced the review of price controls by publishing its first consultation paper to set the First Regulatory Controls (RC1) that will apply to the four electricity, water and wastewater network companies (AADC, ADDC, ADSSC and TRANSCO) for 2018 onwards�

Timeline

JUNE• On 30 June 2016, we

issued our draft proposals to set the new controls for ADWEC for 2017 onwards.

• The Bureau commenced its assessment (with the assistance of external consultants) of the RC1 operating expenditure forecasts and asset life assumptions for the four network companies.

JULy • The five price-controlled

companies started presenting to the Bureau a robust annual performance review, building on similar review carried out by the Bureau in 2015.

AUGUST • The Bureau published our

confidential annual report to the Government on the actual and forecast costs, tariffs and subsidies of the water, wastewater and electricity sectors.


Electricity

80,527 GWh

+ 1% year on year (includes exports)

Water (potable)

1,228,540 ML[270,241 MIG]

- 1.69%Water supply (Transmission peak)

794�5 MGD [3,612 MLD]

- 1.62% which occurred on 25 July 2016 including Northern Emirates demand�

Electricity ( Hourly peak)

14,234 MW (24 July 2016)

+ 4% year on year This includes export of 3,427 MW at the time of the peak. Hourly peak for the emirate of Abu Dhabi: 10,807 MW, up 3%

Wastewater

202 MGDaverage, received at wastewater treatment plants [917,000 m3/d]; treatment equivalent annual total of 73,819 MG

- 2% from previous year

Total tests

171,570PCV 96%SfM 99%

Electricity

15,220 MW

Water (potable)

4,128 MLD [908 MIGD]

Annual production

for 2016

System demand

Installed capacity

Water quality

Number of license holders

End 2014

47

End 2015

48

End 2016

61

2016 breakdown per license categoriesPermanent: 24Development: 31

Self-Supply: 1Self-Regulating: 5

Performance highlights

Emirate of Abu Dhabi customers

Total Electricityaccounts in AADC+ADDC

498,813broken down to Regions:Abu Dhabi = 323,048 Al Ain = 145,597Al Dhafra = 30,168

Water

369,150

+ 1.84%

Wastewater

369,880


Growth and production charts

Electricity demand growth (MW) Peak daily water supply (MIGD)

Electricity generation (GWh) Potable water gross production (MIG)

18,000 900

1,000

16,000 800

14,000 700

12,000 600

10,000 500

8,000 400

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

6,000 300

4,000 200

2,000 100

0 0

0 0

Peak demand (Emirate of Abu Dhabi) MIGD

2016 2015 2016

Peak demand (Northen Emirates) MIGD

2015

Available capacity MIGD

12,000 60,000

14,000

10,000 50,000

8,000 40,000

AM

PC

AP

C

ECP

C

RP

C

TAP

CO

SEM

BC

OR

P

FAP

CO

Sham

s 1

SAP

CO

SCIP

CO

GT

TP

C

6,000 30,000

4,000 20,000

2,000 10,000

RP

C

AP

C

FAP

CO

SEM

BC

OR

P

SCIP

CO

TAP

CO

AM

PC

GT

TP

C

ECP

C

Peak demand MW

Exports to Northern Emirates MW

Available capacity MW

200

0

1999

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016


Economic regulation

framework of economic regulation

In practice, our regulation involves incorporating competition where possible, driving efficiencies and influencing service quality by the sector companies.

The need for regulation arises due to the natural-monopoly status of many of the companies – specifically procurement, transmission, distribution and wastewater collection businesses of AADC, ADDC, ADSSC, ADWEC and TRANSCO. Importantly, when receiving services or products from a monopoly company, a customer has no real choice as to the provider. Therefore, regulation is the only real alternative to competition to deliver reasonable efficiency and

prices and to protect customer interests. In doing so, we employ the best practices that are common elsewhere in power and water utility regulation and, if necessary, tailor them to take account of the unique local factors. The multi-year CPI-X price controls and the design and implementation of intra-sector and final customer tariffs are key examples of such practices.

In contrast, the Independent Power and Water Producers (IWPPs) and Independent Sewage Treatment Providers (ISTPs) are subject to competition to enter respective markets. The prices of their outputs and services are obtained through competitive tendering and are set out in the respective off-take agreements (ie, PWPAs and STAs) between these companies and the relevant off-taker (ADWEC or ADSSC).

We are responsible for regulating and supervising the water, wastewater and electricity sectors in the emirate of Abu Dhabi� the sectors also export water and electricity to the neighbouring emirates and countries, if required�

Pr

OD

UC

TIO

N

Su

pp

ly –

Sal

es

Co

nn

ecti

on

Transmission Distribution

Transmission Distribution

Irrigation

Bio-solids

PWPA admin ADWEC Sells output to

supply business

WASTEWATEr

Co

llect

ion

Trea

tmen

t

Dis

po

sal

Economic regulationCompetition

figure 1: Sector structure and regulatory framework


Key achievements

During 2016, we oversaw and delivered a number of key economic and financial achievements during 2016, in particular:

• On the production side, we continued working with the stakeholders on developing the contractual, commercial and regulatory arrangements for Barakah nuclear power project, Sweihan solar power project and RASCO’s production assets in addition to new price controls for ADWEC.

• The year marked the start of our extensive consultation on the first regulatory controls (RC1) for the four network companies (AADC, ADDC, ADSSC and TRANSCO) to replace the existing PC5 price controls with effect from 1 January 2018. This consultation was supported by work streams relating to review of operating expenditure (opex) and asset life assumptions, and the engagement with stakeholders on aligning regulatory and funding arrangements and setting framework for adoption of utility infrastructure from mega developments. Implementing demand side management (DSM) incentives for distribution companies, and improvement, information collection and review of companies’ performance also made significant part of our work on the network side.

• The year also saw intensive work by the sector and us on the second wave of customer tariff reforms in 2017, where tariffs for many customer classes increased significantly and in some cases to cost-reflective levels. We notified updated cost-reflective tariffs for 2017 to the distribution companies for implementation. This was supported by our review and final approval of both the 2017 BST leaflet and the 2017 TUoS charges statement, and the establishment of an annual process for the distribution companies to submit MAR and Tariff Information (MTI statements).

• In 2016, we developed a draft regulatory framework to govern the district cooling sector in consultation with the relevant stakeholders, for consideration by the Government. From economics perspective, the framework encompasses both market competition and price regulation. If the Government amends the law and approves the framework, the regulation of this new sector will be a significant part of the Bureau’s work in future.

Generation and production

Price control review for ADWEC On 28 January 2015, we published our first consultation paper to set the new price control for the sector single-buyer ADWEC. However, the review was deferred on ADWEC’s request to extend its current price controls up to the end of 2016.

Following ADWEC’s completion of its organisational review early 2016, we resumed the price control review and issued our draft proposals on 30 June 2016 to set the new controls for ADWEC for 2017 onwards. The Bureau’s plan was to publish the final proposals in October 2016. However, this has now been delayed pending receipt of ADWEC’s response and important information.

Barakah nuclear power project Barakah nuclear power project with an aggregate capacity of 5,560 MW is planned to be commissioned in four phases between 2017 and 2020, with each phase having a capacity of 1,390 MW (gross). During 2016, the Bureau worked closely with the stakeholders particularly ENEC, ADWEA and ADWEC mainly via the Nuclear Task Force to finalise proposals to manage the programme, cost and tariff risks, develop mechanisms to incentivise cost reduction and capture these in the Power Purchase Agreement (PPA) that was signed in October 2016, and address outstanding issues.

Additionally, the Bureau was extensively involved in providing regulatory oversight and inputs on work undertaken by ENEC, its partners and the sector in order to increase the overall economic efficiency of the project. This included the O&M cost-fixing arrangements that were agreed to by ENEC and its partners. Financial close and the signing of the PPA took place in October 2016.

However, further important work remains to be done. This includes development of regulations for decommissioning fund and tendering for the Independent Charge Rate Auditor (ICRA). These work streams have implications for the final tariff that the sector will pay for nuclear, which in turn will affect bills for end-customers and the Government subsidy.

Timely delivery of the nuclear program is important for meeting the future capacity requirements of the sector. Accordingly, we will closely monitor progress of the programme and address any issues as and when required.

Suweihan solar power projectDuring 2016, we continued working with the stakeholders and provided regulatory advice to ADWEC on technical, commercial and financial issues relating to the tendering and development of a solar photovoltaic (PV) power plant at Sweihan. These issues were wide ranging covering the size, boundaries, interface, pre-qualification, tendering, project size and technology, financing structure, gearing, return on equity, tariff structure and bid evaluation.

ADWEC and ADWEA issued a Request for Proposals (RFP) in April 2016 for a minimum capacity of 350 MW and received six bids in September 2016 for higher capacities. The consortium Marubeni/Jinko emerged as the ‘first ranked bidder’ with a capacity of 881 MW at a levelised tariff that was one of the lowest solar tariffs in the world at the time. The project is planned to be commissioned in April 2019 with phases to supply early power to the sector.

future scope and structure for rASCOFollowing our initial consultation paper in November 2015, the Bureau issued a decision in February 2016 on the application of certain financial adjustments to RASCO’s maximum allowed revenue (MAR), and proposed to consult further on the proposed options for the future of RASCO, including transfer of RASCO’s assets to other parties. The financial adjustments included both:

a. a claw-back of the revenue unduly earned by RASCO by including production capacities/outputs owned by third parties in its MAR calculations during the period 2004-2014; and

b. the revised fixed notified value ‘a’ for water MAR for future years, to account for the changes in RASCO business landscape since the price control was originally determined in 2003.

In relation to the future scope and structure of RASCO, the Bureau issued a “minded to” position, and sought the stakeholder’s further views, on the options to revoke RASCO’s licence and transfer ownership of its relevant operative assets to AADC, ADDC, Al Mirfa Power Company (AMPC), and other licensees as per their geographic areas and functional domain.

figure 2: Economic regulation – Key work streams and achievements

Generation and production• ADWEC price control

• Barakah nuclear project

• Sweihan solar project

• RASCO

Tariffs• Electricity

and water tariffs

• BST and TUoS charges

• MTI statement

• CTS Report

Network• RC1 price controls

• RC1 opex and asset life

• Asset adoption

• Regulatory and funding alignment

• DSM

• Regulatory information

• Performance review

• Q factors notification

District cooling• Market competition

• Price regulation


Network

Price control review for network companiesIn 2016, the Bureau commenced the review of price controls that apply to the four electricity, water and wastewater network companies operating in the Emirate of Abu Dhabi (AADC, ADDC, ADSSC and TRANSCO), through a consultation process. The Bureau published its first consultation paper in February 2016, followed by the second consultation paper in September 2016 to set the Regulatory Controls 1 (RC1) for the four network companies for 2018 onwards.

The two consultation papers identified five strategic challenges and objectives for the RC1:

• Treatment of government funding – highlighting the challenges arising from the lack of visibility and control over licensees’ funding arrangements, which in turn reduced both the incentive for the licensees to improve efficiency and the drive to respond to regulatory incentives under the price controls;

• Efficient use of capital funds – highlighting upward pressure on costs and investment due to the fast-paced growth of the Emirate, and the challenges with the backward-looking, ex-post approach to capex regulation over previous reviews;

• Cost controlling and revenue profiling – highlighting challenges from increasing costs and MAR over time, and methods and work streams which could effectively smooth costs and revenues;

• Sustainability – highlighting the need for greater transparency required from the sector on costs and level of efficiency, the work needed in areas such as DSM, and the role of incentives to deliver sustainable outcomes; and

• Customer services – highlighting that the measurement, quality and standard of customer services provided by network companies is an area that needs strengthening.

The consultation looked at the detailed scope, design, efficiency and performance incentive aspects of the regulatory controls, in particular those summarised in Figure 4. While the Bureau used in-house expertise to review all aspects of price control review including cost of capital, capital efficiency and allowances, and performance incentives, we took expert advice from an external consultant on the review of opex and asset life assumptions.

The Bureau received detailed responses to the first and second consultation papers from Abu Dhabi Department of Finance, ADWEA, its group companies and ADSSC in June 2016 and December 2016, respectively. The next stages are the publication of the draft and final proposals in 2017. The RC1 will become effective, upon acceptance of the final proposals by the network companies, from 1 January 2018 for four years (2018-2021).figure 3: rC1 strategic objectives and challenges

Figure 4: Review of scope, design, efficiency and performance incentives for RC1

figure 5: rC1 when agreed will apply for four years

Treatement of Government

funding

Efficient use of capital funds

Cost controlling and revenue

profiling

Sustainability Customer services

form of controls

Basic form

Scope and separation

Government funding

Pass-through arrangements

revenue drivers

Duration of controls

required revenue

Maximum allowed revenue

return on capital

Pass-through costs

Depreciation

Incentives

Operating cost

fixed term (a)

PC11999-2002

PC22003-2005

PC32006-2009

PC42010-2013

PC52014-2017

rC12018-2021

Variable term (b)


review of rC1 opex forecasts and asset life assumptionsThe Bureau engaged the support of Deloitte & Touche as the consultant to assess the reasonable and efficient operating expenditure (opex) and asset life assumptions for the RC1 period that we can use in the new price controls. The consultants commenced work in June 2016 and issued their inception and interim reports in 2016 to the Bureau and network companies for review

and comments. Consistent with PC5, the consultants used a seven-step hybrid approach to opex projections using both a high-level top-down approach and a more detailed bottom-up approach that uses various cost and efficiency benchmarks from the sector and elsewhere.

The consultant’s draft and final reports on both opex forecasts and asset life assumptions are due in 2017 to provide inputs to our RC1 draft and final proposals.

facilitating adoption of utility assets from mega developmentsDue to a requirement for fast-track development of the communities in alignment with the Abu Dhabi Economic Vision 2030, it was decided that selected developers would construct the associated utility infrastructure on behalf of the licensed network companies.

The Government directed Urban Planning Council’s (UPC) to lead on facilitating transfer of all assets to the relevant licensed operators. Complementing the UPC role, we issued our draft position paper with the objective to set out a set of agreed assets valuation principles and scenarios for water, wastewater and electricity sector to facilitate the successful adoption by the network companies. After meeting with stakeholders and comments on the draft paper, the Bureau is due to issue the final position paper during early 2017. The price controls already have a mechanism

to provide reasonable funding to the network companies for operation and maintenance of the assets so adopted.

Alignment of regulatory and funding arrangementsOn a Government directive during 2016, we developed proposals, in consultation with ADWEA and DoF for calculation of return on Government funding to the price controlled network companies through ADWEA. Once approved, these proposals will ensure consistent treatment of Government funding in both the price controls (which provide return on investments to the companies) and calculation of ADWEA’s return to the Government. The proposals are also likely to bring greater transparency on utilisation of funds.

Following our engagement with ADSSC and DoF during 2016-2017, ADSSC is currently developing a proposed agreement between ADSSC and DoF to settle full amount of ADSSC’s MAR. This agreement once signed will confirm ADSSC’s entitlement to receive full MAR but with an annual adjustment to provide return on Government funding, and help improve the financial position of the company.

Demand side management The two distribution companies, AADC and ADDC, submitted in December 2015 their revised DSM strategy and action plans, which included specific consumption savings targets to be delivered by the end of the PC5 period, in December 2017:

• AADC: 7% consumption savings in water and 5% in electricity by the end of 2017.

• ADDC: 4% consumption per capita savings in electricity and water, by the end of 2017.

The Bureau issued in February 2016 its decision to accept these strategy and action plan submissions and move to the implementation stage, subject to the commitment made by the distribution companies being reflected and accepted in their respective licences.

The Bureau decided on this basis to adopt an outputs-based approach for DSM implementation, whereby AADC and ADDC were to be monitored and assessed for performance on DSM (up to 2017) based on the consumption savings targets included in their respective DSM strategies and action plans. Accordingly, we issued in November 2016 the proposals to modify the licences for the distribution companies to include this approach.

In 2016, we established a DSM implementation workgroup with the distribution companies, which held several meetings during 2016 to progress the DSM implementation. We also established the principles for cost justification, analysis and recovery related with the implementation of DSM and reviewed two business cases for DSM initiatives submitted by ADDC in relation to ‘Water reduction initiative for Mosques’ and ‘Non-chiller and lighting initiative’.

regulatory information submissionsThe price controlled companies submitted their 2015 separate business accounts (SBAs) (including price control returns (PCRs)) and 2015 annual information submission (AIS) on time by 30 April and 31 October 2016 respectively. Robust information submission by companies is essential for effective regulation. The Bureau issues regulatory guidance to the companies to help them submit robust information.

During 2013, the Bureau issued regulatory accounting guidelines (RAGs) for the SBAs to streamline and enhance the information requirements for the SBAs. The RAGs were implemented in stages, achieving full implementation from 2014 SBAs submitted with the Bureau during April 2015. During 2016, the Bureau issued a supplement to the RAGs identifying and summarising key information requirements for the companies’ 2016 SBAs.

figure 6: Seven-step hybrid approach to developing rC1 opex projections

figure 7: Alignment of regulatory and funding arrangements deliver best outcome for sector, government and customers

regulatory arrangement

funding arrangement

2016

op

ex, A

eD

mill

ion

(20

16 p

rice

s)

2017 2018 2019 2020 2021 2022

Step 6:Determine proposed cost path (PCP)

Step 3:Develop top-down cost projections (TCP)

Step 5:Develop BEC projections (BECP) using cost drivers to calculate an aggregate opex/demand relationship basis

Step 4:Establish BEC

Step 2:CC roll forward

Step 1:Establish CC

rC1 period


Figure 8: Regulatory guidance and information submission facilitates effective regulation

rIGsrAGs

TA info pack

SBAsPCrsAIS

Effective regulation

The Bureau issued revised Regulatory Instructions and Guidance (RIGs) and templates for 2016 AIS to reflect recent Sector developments and to facilitate collation of information from the companies and the Technical Assessor (TA) assessment of the AIS. The Bureau also issued TA information and guidance packages for 2015 PCRs to facilitate the complete and accurate TA assessment of technical inputs to the audited PCRs.

2015 performance reviewThe enhanced information availability in the SBAs on implementation of RAGs enabled a detailed analysis of the price controlled companies’ performance in 2014 against the price control targets and previous year’s performance.

This year the companies, on the Bureau request, prepared and presented to the Bureau a robust performance review for 2015, building on similar review carried out by the Bureau in the previous year. Among many other benefits, this initiative promoted the culture of performance monitoring, assessment and initiatives for improvement of efficiencies in the sector.

For example, the robust information and analysis highlighted a number of trends in companies’ opex performance (with all figures in nominal prices):

• over the period of 2010-2015, AADC’s actual opex increased on average by around 2% a year. During this time, AADC did not meet the annual price control opex target except once in 2014;

• ADDC’s actual opex increased on average by almost 1% a year over the period of 2010-2015. ADDC did not meet the annual price control opex target during 2010-2013; however, it outperformed the targets during 2014-2015;

• TRANSCO’s actual opex increased on average by 3% a year over 2010-2015. Broadly, it met the annual price control opex targets over the period of 2011-2015, but marginally missed the 2010 target;

• ADSSC’s actual opex increased on average by almost 4% a year over 2010-2015. ADSSC did not meet the annual price control opex target during 2010-2014 but met the target during 2015;

• staff costs continued to constitute the largest or major part (57% to 61%) of the companies’ opex; and

• for both AADC and ADDC combined, the share of supply business costs in the total opex gradually decreased from 46% in 2010 to about 43% in 2015.

figure 9: robust information has facilitated better understanding and effective regulation

figure 11: Q adjusts a company’s allowed revenue up or down for good or poor performance

figure 10: Companies’ 2015 opex performance against previous years and price controls

Effective regulation

Better understanding of bussinesses

and issues

robust information

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Q factor notificationPrice controlled companies are incentivised to improve their quality of service, outputs and performance through a Performance Incentive Scheme (PIS) under the price controls. The companies’ performance continued to improve over time in response to financial bonus or penalty provided by Q-factors that adjust the companies’ MAR upward or downward.

In October 2016, the Bureau notified to the companies the Q factors, calculated based on companies’ performance verified by the TA or otherwise, that should apply to the companies’ 2016 MARs. However, the final Q-factors may be further revised by the financial auditor to ensure that any Q-factors should not exceed 0.5% of the company’s MAR.

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Tariffs

Water and electricity tariffs On 1 January 2016, the cost-reflective tariffs for water and electricity were updated and applied to the tariffs charged to residential expats in the red and government customers. Tariffs for all other customers remained unchanged from the tariffs implemented as part of the wider tariff reforms on 1 January 2015. Figure 12 shows the 2016 electricity and water tariffs paid by customers.

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Figure 13: 2017 BST and TUoS charges – profile over year and days

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2016 Electricity tarrifs

Electricity Water

2016 Water tarrifs

Bulk Supply Tariff (BST) AADC and ADDC are charged a BST, which varies across different time-periods in the year, for the electricity and water they purchase from ADWEC. Each year, ADWEC undertakes extensive amount of work to estimate various important inputs and calculate the BST for the next year as robustly as possible for the Bureau’s review.

During 2016, we worked closely with ADWEC over many months to review the inputs, calculations and outputs of the 2017 BST before approving it in November 2016. Overall, the BST charges for 2017 have increased 10% for water and 6% for electricity. ADWEC’s 2017 BST, along with TRANSCO’s 2017 TUoS charges and the distribution companies’ 2017 MTI statements, provided key inputs to our cost-reflective tariffs for final customers.

Transmission Use of System (TUoS) charges TRANSCO apply the TUoS charges to both its licensed customers (AADC and ADDC) and unlicensed customers (entities or customers supplied by ADWEC) for the use of its electricity and water transmission systems. In terms of structure, TUoS charges are set in a similar way to the BST, as shown in Figure 13.

Following its review of TRANSCO’s inputs and calculations, the Bureau approved the 2017 TUoS charges in October 2016.

TUoS electricity charges for 2017 declined 8% from last year, while those for water increased 10%.

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MAR and Tariff Information (MTI) statementsThe Bureau worked with both AADC and ADDC in 2016 to establish an annual process for the submission of information from the distribution companies, which is required to set the annual cost reflective electricity and water tariffs. The main information required in the MTI statement is:

• consumption forecasts by customer category;

• demand profiles by customer category;

• Maximum Allowed Revenue (MAR) forecast; and

• non-tariff revenue forecast.

AADC and ADDC are required to submit the MTI statement to the Bureau in October each year. This provides sufficient time for the Bureau to calculate the cost-reflective tariffs and provide notification of these to AADC and ADDC, to facilitate timely implementation of any changes and appropriate communication to customers.

In 2017, the Bureau will continue to work with AADC and ADDC to further refine this process and make it even more robust. In addition, the Bureau also plans to work with ADSSC to establish an ongoing annual process for submission of a wastewater MTI statement to facilitate the calculation of cost reflective wastewater tariffs.

CTS reportIn August 2016, the Bureau published its confidential report to Government on cost, tariffs and subsidy of the water, wastewater and electricity sectors. This covers a 10-year historical analysis, in addition to a 5-year future forecast. The report also included sensitivity analysis on future fuel prices and nuclear timing.

Figure 14: Key inputs to cost-reflective tariffs

figure 15: Economic dimension of DC regulatory framework

figure 16: Economic regulation of DC sector – mapped to four unique phases

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District cooling

Following the initial assessment in 2014 on Government request of the need to regulate the district cooling (DC) sector, the Government in 2015 requested us to proceed and develop a draft regulatory framework to govern the DC sector. This second phase entailed the preparation of a detailed draft of the proposed regulatory framework as well as an assessment of its impact on the district cooling sector and on the key market stakeholders.

The Bureau conducted the Phase II detailed review during 2016, and submitted a final report, containing our recommendations and the draft proposals for the DC regulatory framework to the Government in October 2016. The proposed regulatory framework is expected to be implemented in mid-2017, following the Executive Council approval.

The DC regulatory framework comprises technical, legal and economic dimensions. The Economic dimension relates to market competition regulation and price regulation and its main objectives are to:

• Increase fairness and transparency in the market as well as enhance service levels for end-users;

• Ensure for new schemes that DC price is lower than the cost of the best alternative conventional cooling solution;

• Ensure that DC benefits are properly reflected in end-users’ tariffs;

• Foster sector profitability and enable DC providers’ cost recovery; and

• Ensure that the price control process is easy to implement and sustainable in the long term.

Both market competition regulation and price regulation have been mapped to four unique phases as summarised in Figure 16.

DC Procurer’s RFP meets minimum requirements

DC Procurer to award contract to DC Provider with the lowest DC levelised cost (lower than conventional cooling cost)

RSB to receive and assess licence application and issue licence to DC Provider

Recurring assessment of customer charges and windfall profits

Pre tendering phase Tendering phase Licensing phase Monitoring phase


Technical

Electricity & water production

Mirfa International Power and Water CompanyA recognizable delay existed in the overall schedule of the project during 2016. This is mainly due to the delay in completion of the RO plant, diesel oil system and new potable water tanks.

Further issues were identified pertaining to mobilisation of enough resources by the main contractor and other logistic related issues.

The project failed to deliver early power (6 units, 850 MW in total) as planned before summer 2016.

By the end of December 2016, the progress of construction phase was reported as 94.88% against 99.48% planned.

It was anticipated that the PCOD would be achieved by 30 June 2017 while the RO COD will be on 10 April 2017.

It was also forecasted that a net capacity of 360 MW will be available to the sector by the end of April 2017.

Nuclear ENEC continued its progress towards delivery of a safe and reliable nuclear program with overall prime contract actual construction progress on all four units of 76% as of the end of December 2016, the program has overcome several challenges which slightly affected its original schedule to deliver power to the Sector. The construction progress of each Unit was as follows:

• Unit 1 was 93% complete;

• Unit 2 was 81% complete;

• Unit 3 was 67% complete and

• Unit 4 was 38% complete.

The Power Purchase Agreement (PPA) document was signed between Barakah One Company and Abu Dhabi Water and Electricity Company (ADWEC) in October 2016. Further work on technical appendices of the PPA is underway for completion in Q1 2017.

SuweihanThe work continued to develop Suweihan solar photovoltaic project during 2016. ADWEA started the process of the selection of the developer of the project amongst six submitted bids. A consortium of China’s JinkoSolar Holding and Japan’s Marubeni has won the contract to develop the project.

A special-purpose company – owned by Marubeni (20 per cent), JinkoSolar (20 per cent) and ADWEA with a 60 per cent stake – will construct, own, operate and maintain the PV plant.

It is expected that PPA will be signed in Q1 2017 with the operation of the plant scheduled in April 2019.

the following summary provides a brief overview of key sector developments and milestones in respect of electricity generation and water production capacity through 2016�


Electricity

Transmission and distribution The technical performance of Abu Dhabi Emirate’s electricity transmission system compares favorably with others worldwide. The two primary performance measurements used are “system unavailability” and “energy lost”. System unavailability decreased significantly in 2016, as shown in the graph below. Analysis of the data indicates that there was a decrease in transmission system unavailability in most categories (maintenance, construction and users) in 2016 compared to 2015.

The impact of loss of supply for transmission incidents is quantified in terms of “energy lost” which is calculated by taking into account the size and duration of the demand lost, expressed as MWh. In 2016 there were eight transmission incidents, resulting in the loss of 329.87 MWh (an increase of approximately 225.68 MWh from the previous year), which is shown in figure 18 below.

Distribution Company performance

Ensuring a good quality of supply for end-users requires high performance in all three stages of electricity supply: generation, transmission and distribution. However, distribution is by far the most significant of these in determining quality of supply. The Bureau closely monitors the distribution network performance of AADC and ADDC. The Bureau also requires that an independent audit of annual performance data be carried out by a technical assessor each year. After reviewing the findings of the 2016 audit, the Bureau noted improvements in the performance of both distribution companies. The Bureau uses the following two key performance indicators (KPIs) to measure the performance and reliability of ADDC and AADC distribution systems:

• the system average interruption duration index (SAIDI), calculated from the total number of customer minutes lost (CML) in any one year, divided by the total number of connected customers (at year-end);

• the system average interruption frequency index (SAIFI), calculated from the total number of customer interruptions (CI) in any one year, divided by the total number of connected customers (at year-end).

The performance of the two Distribution Companies during 2016, in terms of SAIFI, marginally improved. The percentage of improvement year on year was the lowest since 2011. SAIFI decreased by 1.3% for ADDC and 2.9% for AADC. In comparison to 2015, SAIDI in 2016 only changed slightly in both ADDC (increased by 0.6%) and AADC (decreased by 0.2%).

The limited improvements in 2016 performance is attributed mainly to the impact of the abnormal weather in March 2016, whereby the number of HV customer interruptions during that period show a significant increase demonstrating a severe impact on the networks of both Distribution Companies. Furthermore, AADC has an additional exceptional event due to severe weather in September 2016. Consequently, 2016 was the first year whereby the Bureau has considered a request by the Distribution Companies for Exceptional Event claims and with the recommendation of the Technical Auditor, the interruptions caused by these Exceptional Events were excluded from the SAIDI and SAIFI calculations based on the Customer Interruption Reporting Regulatory Instructions and Guidance (second edition) .

figure 17: Transmission system unavailability

figure 19: ADDC power interruptions

figure 21: Sector overall compliance with the WQr performance measures

figure 20: AADC power interruptions

figure 18: Transmission system incidents

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Drinking water

The nine desalination companies’ gross production in 2016 was 270,241 MIG (1,228.54 million m3). In the region of 1.0% of the annual gross production was consumed internally by the production plants (i.e. auxiliary consumption).

The potable water transmitted from the Transmission System to the Licensed Distribution Operators (ADDC and AADC) in addition to FEWA and SEWA was 258,586 MIG (1,175.56 million m3.) In the region of 1,869 MIG (8.50 million m3) of potable water was dispatched from Fujairah Plants to FEWA network directly. Thermal desalination accounted for 89% of the drinking gross water production in Abu Dhabi (72% by MSF and 17% by MED), with the remaining 11% produced

by SWRO. In 2016, the total installed production capacity was 908 MIGD.

Water qualityA total of 171,570 water tests were undertaken by sector’s companies in 2016 out of 172,201 required tests, 77 separate quality determinants has been examined. Bromate (BrO3, Residual Chlorine (RCL2), TDS and LSI are accounted for the majority of the test failures. Overall compliance with the sampling frequency measure (SFM) was 99%, while prescribed concentration or value (PCV) compliance was 96%.

The chart below (source: WQRRS) illustrates the sector performance against the required number of samples and compliance against the Water Quality Regulations (WQR) prescribed concentration or values.

Notes: SF – sampling frequency in accordance with Schedule II of the WQRPCV – prescribed concentration or value in accordance with Schedule I of the WQR SP – number of parameters tested SFM – sampling frequency measure which is the average of SP and SF

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Wastewater flowThe chart below shows the increase in trend of wastewater collected by ADSSC.

There was a 2.6% decrease in wastewater collected by the sector in 2016 from 2015.

Major activitiesTankering regulationsThe Bureau carried out a public consultation on the provision of water and wastewater services by tankers between October and November 2014 to all relevant licensees and stakeholders. The consultation confirmed that there is need to review and reinforce the existing regulatory frameworks and this work must be carried out in consultation with key stakeholders to provide effective, economic, secure, safe and integrated service to customers establish fair and transparent pricing mechanism, improve technical standards for tankers and associated infrastructure. This proposal was accepted and on 15 September 2015 the government instructed the Bureau to commence the development of relevant regulations in accordance with the proposed principles and in consultation with all concerned entities. On November 2016 the Bureau has published the first consultation document (The Tankering Regulation) and working on developing technical Guides to these Regulations. The tankering management work stream is led by ADWEA in connection with Discos, and ADSSC who will eventually implement and oversee the management mechanism.

Development of regulatory framework of district cooling (DC) – Phase IIIn September 2016 The Bureau has completed Phase II of District Cooling Regulatory Framework (DC RF) with the aim of detailing the Phase I of DC RF along with detailed Technical, Legal and Economic dimensions (including: mandating of District Cooling, Technical

Codes, Licensing Schemes, Contractual Agreements, Price Regulations and Market Competition) and assessing its regulatory impact upon implementation.

Moreover, the Bureau along with the consultants, held numerous discussions with key market stakeholders from both public (Abu Dhabi Housing Authority, Musanada, UPC, and Department of Municipal Affairs) and private entities (Real Estate developers, DC providers, Billing & Collection entities). Those discussions happened in one to one meetings between the Bureau and the entities, and also through three stakeholders’ comprehensive workshops.

Final submission of DC RF along with DC Regulatory Impact Assessment was communicated to GSEC in 1st November 2016.

fourth revision to the water supply regulations In 2015, as part of regular review and update of the current Regulations, the Bureau started reviewing the Guide to the Water Supply Regulations to ensure that all new requirements are covered e.g. revised water demands, customer water storage tanks, Abu Dhabi Civil Defense requirements etc. There was also a need to strengthen the enforcement of these Regulations.

The proposed revisions to the Guide went through two consultation stages and all the valuable feedback received from stakeholders had been used to produce the final version which was issued and published in December 2016.

Non-drinking water

In 2016 the Bureau had three major wastewater licensees:

• Abu Dhabi Sewerage Services Company (ADSSC);

• Al Etihad Biwater Waste Water Company (EB); and

• Al Wathba Veolia Besix Waste Water Company (VB).

EB and VB hold treatment only licences and provide treatment capacity to support ADSSC’s operations in Abu Dhabi and Al Ain.

There were 40 wastewater catchments operated by the three major licensees across the Emirate in 2016 comprising 7,770km of sewers, 40 STPs and 490km of recycled water network. These catchments served an estimated 370,000 customers including 92 trade effluent customers.

The total number of small scale licensees at the end of 2016 was 31 and this group of licensees operated 57 sewage treatment plants at remote locations such as worker accommodation, hotels and industrial sites. The total licensed capacity for small scale licensees was 25,665 cubic meters/day.

The table below sets out the sector performance measures related to major wastewater activities and illustrates any changes in performance between 2016 and 2017.

Number of collapses per 100km Number of blockages per 100km Percentage of reported flooding incidents resolved within 8hrs

Year 2014 2015 2016 2014 2015 2016 2014 2015 2016

Data 0.79 0.48 0.84 19.37 13.47 12.5 98 96 92

Percentage of Recycled Water dispatched to reuse

Percentage of Biosolids dispatched to reuse

Catchment and treatment energy use per unit volume (MWhr/Ml)

Year 2014 2015 2016 2014 2015 2016 2014 2015 2016

Data 61 51 54 0 0 0 0.96 0.889 0.590

Percentage compliance of Micro Biological samples

Percentage compliance of Sanitary samples

Percentage compliance of Trace elements samples

Year 2014 2015 2016 2014 2015 2016 2014 2015 2016

Data 96 96 98 99 99 99 89 98 89

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figure 22: ADSSC collected wastewater

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rW reuseThe table below shows the amount of recycled water produced and reused by region.

recycled water produced and reused in 2016

region rW produced (Ml) reuse (Ml) Environmental (Ml) % reuse

Abu Dhabi Region 247,115 100,534 146,577 40.68

Al Ain 65,412 63,798 1,623 97.53

Western Region 13,481 11,670 1,563 86.57

Total 326,008 176,002 149,763 53.99

Major activitiesIn line with our commitment to improving customer service and protecting the environment, three initiatives were delivered in 2016.

Non-drinking water divisionsThe Bureau submitted this framework for EC approval on November 2016. Importantly, this framework includes both the licence application process and the draft licence for the distribution and supply of recycled water.

ADWEA has also submitted a report to the EC, also on November 2016. This reflects studies undertaken by sub-groups for Policies, Projects, Assets, Legislation and HR. The sub groups are resuming their work to deliver the required information in 2017.

The Bureau is working with sector companies to help in the development of a framework to manage recycled water and assigning the responsibility of distributing treated wastewater to ADWEA (ADDC and AADC). The effective date for the recycled water related activities in the distribution companies will commence in 2018.

Annual compliance assessment cycle for small scale wastewater licenseesThe Bureau implemented an annual compliance assessment cycle for small scale wastewater licensees in 2016. The cycle requires the provision of an annual information submission in Q1, a site visit programme between Q2 and Q3 and the close out of any compliance issues in Q4.

Waterwise & Powerwise

End use efficiency incentive scheme – demand side management strategiesPrice Controls 5 (PC5) – effective between 2014 and 2017 – established a performance incentive scheme on water and electricity end use efficiency for the distribution companies. The incentive scheme includes a requirement for ADDC and AADC to submit a Demand Side Management (DSM) Strategy and action plans with specific targets and milestones on improving the efficient use of water/electricity by their customers to the satisfaction of the Bureau by 31 December 2014 along with a binding commitment to implement such a strategy and action plan. The aim of the incentive scheme was to align the sector with the Emirates wider objectives of resource efficiency and drive both distribution companies to promote water and electricity efficiency to their customers.

Both companies submitted their initial DSM strategies in 2014. The Bureau issued Regulatory Instructions and Guidance in 2015 to assist the companies in delivering their revised strategies that were submitted in December

2015. In 2016, the Bureau assessed and approved the revised Demand Side Management (DSM) Strategies and action plans submitted by ADDC and AADC and initiated the start of the implementation phase.

During the year, the Bureau worked with both distribution companies on further developing the regulatory framework for DSM. This included setting out the high level principles for cost recovery for DSM initiatives and proposing a governance framework through modifying ADDC and AADC’s licenses to include a DSM license condition in addition to reviewing DSM initiatives Business Cases.

Despite the effort, both distribution companies have been facing challenges in their 1st year of implementation of the DSM action plans. The Bureau will continue to work closely with both companies throughout 2017 in delivering their DSM initiaitves to achieve the sustainability of our precious resources for generations to come.


regulatory framework of Electric Vehicle Charging SystemsIn December 2016, the Bureau concluded the development of the Regulatory Framework of Electric Vehicle Charging Stations in the Emirate of Abu Dhabi deemed to be the first of its kind in the country and GCC region. The subject framework includes technical regulations of electric vehicle charging stations in the Emirate of Abu Dhabi in addition to the installation guideline.

Electric vehicles have recently witnessed developments in terms of technical aspects and energy-saving systems around the world, leading to the increase of demand for electric vehicles in lieu of internal combustion engine vehicles. The aim of the technical regulation of electric vehicles charging stations is to set the minimum technical requirements as well as the minimum inspection and connection requirements to ensure compliance with the sector standards, especially those related to the safety of the users of charging stations and safety of the public. The subject regulatory framework ensure the suitable environment for installing electric vehicle charging stations in the Emirate of Abu Dhabi to help promote the availability of the required infrastructure to accommodate the increasing demand for electric vehicles in the Emirate.

The aforementioned technical regulation defines four modes of charging electric vehicles; noting that the technical regulations bans the first mode in the Emirate of Abu Dhabi due to its low protection characteristics which could form a potential risk on the vehicle and people. Further, the technical regulation has also defines different types of charging connectors.

On the other hand, the guideline of installing electric vehicle charging stations includes detailed information to guide owners and contractors as to the installation of charging stations, including the related physical and electrical requirements as well as installation, connection, inspection, testing and maintenance requirements for various types of electric vehicle charging stations at homes, public areas like parks, fuelling stations, shopping malls, and others.

In addition, the guideline provides information on the process of installing electric vehicle charging stations, starting with consulting the manufacturers and suppliers of charging equipment and electrical contractors, choosing suitable charging equipment and its locations, preparing and submitting the design documents of electric charging equipment to the Distribution Company for review and approval, then comes the installation phase. Afterwards, the Distribution Company inspect all connections prior to supplying electricity, as per the Electricity Wiring Regulations (Third Edition).

Consultation with eV manufacturer and

eVSe supplier

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figure 23: General installation process for an EVSE in a public location


Small-scale solar photovoltaic (PV) energy netting regulationIn December 2016, the Bureau concluded the development of a regulatory framework for installation of small-scale solar photovoltaics (PV) panels in Abu Dhabi. The framework comprises of the Small-scale Solar Photovoltaic Energy Netting Regulation, which provides terms and technical requirements for installation of solar PV panels, and a Solar PV Installation Guidance Document detailing general information and technical guidelines for designers, contractors, and customers wishing to install solar PV systems.

The regulatory framework allows connection of small-scale roof-mounted solar PV installations in Abu Dhabi Emirate to the grid. The framework is made up of licensing requirements and connection technical requirements. Licensing requirements include issuance of self-regulating generation license, aiming at establishing a regulatory system for adequate control that does not create undue financial, technical or

administrative barriers. Under technical requirements, for a solar PV installation to be connected to the grid, it must be compliant with relevant standards and technical requirements under the Bureau’s Electricity Wiring Regulations (Third Edition). The Electricity Wiring Regulation includes general principles for PV panels, protection, isolation, switching, labelling, inspection and testing requirements.

Further, the regulatory framework aims to promote electricity generation through roof-mounted solar PV installations in Abu Dhabi Emirate. To this end, the framework includes energy netting regulations, applicable to all ADDC and AADC customers. The regulations provide a mechanism under which customers can export surplus electricity generated from their solar PV installations to the grid. The surplus is metered and credited to the customer’s account and can then be used net-off against future electricity consumption in subsequent billing cycles. This will translate into reduction of premises consumption bills.

In July 2016, the Bureau had issued a self-regulating generation license to the Italian Embassy in the UAE allowing the embassy to generate electricity from solar PV panels installed on roofs and car park shields inside the embassy premises in Abu Dhabi. The combined capacity of the installed system is 28 kW; which approximately generates a total of 45.36 MWh annually. The Italian embassy, intending to operate its system this year, is the first embassy in Abu Dhabi to utilize solar PV energy.

More than 30 PV systems have already been erected on roofs of Abu Dhabi buildings with a combined peak capacity of 3.8 MW, with more projects in progress.

Self-regulation Generation (Solar PV) Licence Process flow Chart

Solar PV System Process

1 2

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Prospective PV Owner submits application with

Licence Application Fee (no additional

fee for re-submission)

• Select an approved Solar PV System Integrator from the list of Licensed Contractors available with the Distribution Company

• Responsible: Owner

• Get a Project design proposal for premises roof location

• Responsible: Onwer and Solar PV System Integrator

• Approach RSB to request for a Self-Gathering License Note: See details in Chapter 5

• Responsible: Owner or Solar PV System Integrator on behalf of the owner

• Approach RSB to request for a Self-Gathering License Note: See details in Chapter 5

• Responsible: Owner or Solar PV System Integrator on behalf of the owner

• Apply for installation / connection of Solar PV System to Grid in ADDC/AADC

• Responsible: Solar PV System Integrator

• After Installation of the system, before connecting the Solar PV System to the Grid: Commissioning test to be conducted by Solar PV System Integrator. Approval & final Inspection required from ADDC/ADDC

• Responsible: Solar PV System Integrator• Get As-Build Drawings, O&M manuals and relevant training from the System integrator.

• Responsible: Owner and Solar PV System Integrator

RSB processes the application

Application Complete and

Accurate

PV owner sends signed/completed Licence template

(no need for EWR Cert/PV Test

Report)

RSB issues Licence if all information

in order

PV Owner will present Licence

to AADC/ADDC in order for final energisation

RSB will make public notification at least

28 days prior to required start date

of license (or earlier) and issues blank

Licence Template to PV Owner for

signing

Business Continuity Management (BCM) & Health, Safety, Environment, and Quality (HSEQ)BCMCompliance with Business Continuity Management and cyber security standards

Business Continuity ManagementThe Bureau continued its efforts to support sectors’ companies in related to Business continuity compliance. The Bureau after issuing the BCM regulations in end of 2014 along with its guides, started workshop sessions in 2015, which has been continued in 2016 to ensure the awareness and understanding of BCM requirements by the companies’ teams in the sector.

In 2016, the Bureau effectively followed up BCM programs progress of the licensees through progress meetings and also conducting BCM workshops.

The Bureau set a BCM compliance due date for all sector’s licensees on 31st August 2016, where 83% of licensees fully complied with the Bureau timetable to deliver different modules. Rest of licensees 17% (3 companies) are planning in 2017 to comply with BCM regulations by carry out BCM consultancy services project to build and complete BCM program. The Bureau also granted MIPCO derogation to MIPCO with regard to compliance with the Business Continuity Management Regulations due to operational status and MIPCO has committed to completing their BCM Plans by the end of 2018.

It is worth mentioning that the Bureau makes several efforts within the Government’s directives to comply with the business continuity standards issued by The National Emergency Crisis and Disaster Management Authority (NSEMA) in 2014 and the Circular No.4 for 2014 issued by Executive council. The Bureau has also prepared a plan for 2017 to ensure continuous follow-up of sector companies to develop and improve business continuity programs through conducting quarterly BCM forums, issuing quarterly sector BCM Report and the Bureau will conduct also Sector BCM Audit project.

In 2016, the Bureau issued Arabic version of BCM regulations and guides which are available on RSB website.

Cyber securityAs per circular No.15 for 2016, Executive Council instructed all government entities to Comply With NESA policies, standards and national frameworks, adopt second version of Abu Dhabi Government policy and standard as guidance for information security, Develop plan to comply with national standard with coordination with ADSIC with periodic reporting, prepare and execute plans of risks management on information and systems security with periodical reporting of progress. The Bureau worked closely during 2016 to follow up with sector companies to ensure that companies are starting to put plans and programs to comply with

figure 24: Sector companies – BCM progress (%)

100

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0

Pla

nn

ed

pro

gre

ss

Sham

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MIP

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Self-regulation generation (Solar PV)

Licence Process flow Chart

Solar PV System Process

STEP

STEP

STEP

STEP

STEP

STEP

STEP

12

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5

67


NESA standards in terms of Information security and operational technology systems (OTs) standards. ADWEA, ADDC, AADC and TRANCO are preparing plans to be executed in 2017 to meet requirements. The Cyber security is considered an important input to BCM recovery plan and mitigation measures.

HSEQ

HSE baseline surveyThe Regulation and Supervision Bureau (the Bureau) recognises its duties under Law No (2) of 1998 Concerning the Regulation of the Water and Electricity Sector, to establish, maintain, review and monitor safety standards for the water, electricity and sewerage services sector and to monitor and enforce compliance with such safety standards.

In keeping with the Bureau’s vision, the Bureau has initiated a Health, Safety and Environment (HSE) baseline review project to assist licensees in improving HSE performance across the sector. This project started in 2014 by organizing a number of workshops and attended by a representatives from the licensees and completed in 2015 by issuing the final reports with specific improvements action plans for every licensee. In 2016 the Bureau conducted several follow up audits to the licensees to close out the action plans.

The objectives of the Project are to:

• build strong working relationships across the sector between the Bureau and its licensees, providing opportunities to share industry best practice;

• supervise licensed activities and raise the HSE profile in the sector and improve awareness of legal requirements through hands-on engagement with Licensees; and

• assess the level of management of hazards and risks at licensee facilities and develop improved HSE guidelines for a consistent approach to risk Management and performance monitoring.

The RSB will continue in monitoring and ensuring the action plans are well implemented.

Quality managementFor the realization of our Vision and Mission at the Bureau the management has issued the following Quality policy statement:

In the framework of the Regulation and Supervision Bureau to perform its mission, which states “To regulate and supervise the delivery of a safe, efficient and economic water, wastewater and electricity sector in the emirate of Abu Dhabi.

And in our tireless efforts to achieve the vision which is “To be an accountable, independent regulator recognized for objectivity and consistency” So we always strive to work with identified stakeholders, at every level, to establish quality standards and clear expectations to deliver against our legal mandate.

All RSB personnel are responsible for the quality of their work and commitment to delivering our services to our defined standards.

To achieve the requirements and expectations of all stakeholders, the Bureau continuously monitors their satisfaction to be our guide in determining the quality objectives in the continuous improvement of the quality of our services and provide the level that exceeds their expectations.

RSB will provide the necessary Material and Knowledge resources, training and systems in a happy work environment that encourages creativity and innovation to assist all personnel to achieve the standards required. It shall be the responsibility of all Directors to ensure quality requirements are effectively communicated to personnel within their teams

All the documents including this policy, processes, procedures and templates necessary to achieve the required standards are controlled documents described in our Quality Management System, and subject to revision and continuous improvement, Also Quality objectives are defined within our Forward plan.

The Quality Manager shall be responsible for ensuring the effective awareness of our quality system requirements and ensuring the effective monitoring of the quality system and shall report regularly to the RSB Top management on the system’s implementation, status and effectiveness.”

Legal and customer excellence perspective

In line with Abu Dhabi’s Economic Vision 2030 and Law No (2), the Bureau during 2016 issued regulations, codes of practice and other guidance to the Sector, as well as working with the Sector, government entities, the private sector, NGOs and other parties on initiatives to safeguard our energy and water resources and protect public health, the environment and consumers.

As part of its function and duties, the Bureau grants licences to entities authorising them to conduct and engage in a wide range of regulated activities and to supervise the manner in which such regulated activities are undertaken. The Bureau’s licensing activities include:

• the issuance of new licences;

• the modification of existing licences;

• consents or derogations issued in connection with existing licences;

• exemptions issued (with prior Executive Council consultation); and

• the revocation of licences

As a regulator, the Bureau is responsible for monitoring and reviewing compliance with the Licences and Regulations it issues. Where appropriate the Bureau will carry out targeted reviews or investigations and take appropriate supervisory, remedial or enforcement action as necessary against those licensed entities operating in the Sector. At the end of 2016, the Bureau was actively regulating 61 licensees.

Compliance

During 2016 the Bureau:

• Actively and continuously monitored, measured and reported licence compliance against 36 licensees.

• Issued 27 Improvement Notices requiring specific improvements to ensure better Licence compliance and one Final Order

• Completed the two-year testing and development of comprehensive licence compliance monitoring and reporting processes for the majority of its licensees; and

• initiated compliance reviews of the Electricity Wiring, Recycled Water and Biosolids and Trade Effluent Control Regulations.

The licence compliance trends, for the Bureau’s major Licensees, from the end of 2015 through 2016 are shown below:

the Bureau is an independent regulator of the water, wastewater and electricity Sector in the emirate of Abu Dhabi� Its powers, duties and functions are set out by law no (2) of 1998 (as amended)�

30

25

20

15

10

5

0

figure 25: Enforcement notices

2014 2015 2016

Improvement notices

Final orders

Statutory notices for information


figure 26: Price-controlled companies – Licence compliance performance

Figure 27: Licence compliance – IWPPs / IPPs / ISTPs

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95%

90%

85%

80%

75%

70%

65%

60%

AM

PC

AP

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EMA

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ESW

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FAP

CO

GT

TP

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SAP

CO

SCIP

CO

SHA

MS

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CO

Etih

ad

Veo

lia

License holders

We grant licences to “Persons” (undertakings, companies, organisations) to carry out certain activities. Collectively these Persons are known as licence holders. Licences confer rights and obligations on a licence holder, so they can undertake regulated activities. Our primary annual funding is derived from licence holders via the application of fees.

Generation and desalination1

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.

Arabian Power Company (APC)

is licensed to generate 2,450 MW and produce 157 MGD of water at its Umm Al Nar plant.

Emirates CMS Power Company (ECPC) (T2)

with licensed capacities of 763 MW and 50 MGD of water at Taweelah.

Emirates Sembcorp Water and Power Company (Sembcorp) (f1)

licensed to produce 861 MW and 130 MGD of water, of which 67 MGD is produced via reverse osmosis, at its plant located at Qidfa in Fujairah, one of the Northern Emirates of the UAE.

fujairah Asia Power Company (fAPCO) (f2)

is situated at the Qidfa complex in Fujairah and licensed to produce 2,000 MW and 130 MGD of water of which 30 MGD is produced via reverse osmosis.

Gulf Total Tractebel Power Company (GTTPC) (T1)

with licensed capacities of 1,600 MW and 84.8 MGD of water at Taweelah.

Mirfa International Power & Water Company (MIPCO)

has a licence to generate electricity of 1,728 MW and desalination of 24 MGD seawater at Al Mirfa.

ruwais Power Company (rPC) (S2)

with licensed capacities of 1,511 MW and 100 MGD of water at Shuweihat in the Western Region.

Shuweihat Asia Power Company (SAPCO) (S3)

with a licensed capacity of 1,600 MW at Shuweihat – currently under construction.

Shuweihat CMS International Power Company (SCIPCO) (S1)

with licensed capacities of 1,500 MW and 100 MGD of water at Shuweihat.

Taweelah Asia Power Company (TAPCO) (T3)

with licensed capacities of 2,000MW and 160 MGD of water at Taweelah.

Umm Al Nar Power Company (UANPC)

owns Baniyas power station with a licensed capacity of 120 MW, currently not in production.

Generation – renewable energy

Abu Dhabi future Energy Company (ADfEC or Masdar)

is licensed to produce up to 40 MW of electricity by Embedded Generation Unit(s) using wind turbines located in the Western Region. ADFEC is also licensed to produce up to 50 MW of electricity from solar power generation in the Emirate of Abu Dhabi and is authorised to sell output to ADWEC.

Shams Power Company PJSC is licensed to generate electricity by the use of a solar thermal plant up to 110 MW at a site south of Madinat Zayed in the Western Region.

1 Unless otherwise stated, potable water is produced by thermal desalination

Compliance % - 2015 Compliance % - 2016

100%

95%

90%

85%

80%

75%

70%

65%

60%

55%

50%

45%

40%

2014

88%

88%

77%

84%

68%

76%

59%

56%

61%

46%

46%

80%

68%

76%

82%

2015 2016

ADWEC TRANSCO AADC ADDC ADSSC


Self-regulating

Abu Dhabi Judicial Department

is licensed to generate power using solar photovoltaic panels mounted on the roof-top of its courthouses on Al Khaleej Al Arabi Street, Abu Dhabi.

Emirates Identification Authority

has a self-supply licence for generation of electricity through the use of photovoltaic (PV) solar panels.

German International School is has a self-supply licence for generation of electricity through the use of photovoltaic (PV) solar panels.

The Zoo and Aquarium Public Institution in Al Ain

is licensed to generate power using solar PV panels mounted on the roof-top of the Sheikh Zayed Desert Learning Centre at the Al Ain Wildlife Park & Resort.

Self-supply

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 in Taweelah. Electricity generation in excess of self-supply requirements may be offered for sale to ADWEC, the sector’s single buyer.

Transmission

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.

Distribution and supply

Abu Dhabi Distribution Company (ADDC)

distributes and supplies water to approximately 279,000 customers and electricity to around 347,000 customers in the central and western regions of the Emirate of Abu Dhabi.

Al Ain Distribution Company (AADC)

distributes and supplies water to approximately 84,000 customers and electricity to around 140,000 customers in the eastern region of the Emirate of Abu Dhabi.

Multi-licensed

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.

Wastewater – major

Abu Dhabi Sewerage Services Company (ADSSC)

is responsible for the collection, treatment and disposal of wastewater throughout the Emirate of Abu Dhabi.

Al Etihad Biwater Waste Water Company (W1)

is licensed to treat wastewater at Al Wathba-Abu Dhabi (up to 345,000 m3/d) and at Al Saad-Al Ain (up to 92,000 m3/d).

Al Wathba Veolia Besix Waste Water Company (W2)

is licensed to treat wastewater at Al Wathba-Abu Dhabi (up to 300,000 m3/d) and at Alhamah-Al Ain (up to 130,000 m3/d).

Higher Corporation for Specialized Economic Zones (ZonesCorp)

is licensed to collect and dispose of wastewater at the Industrial City – Abu Dhabi (ICAD) (Up to 40,000 m3/d).

Wastewater – small scale

Al Husam General Contracting Establishment

is licensed to collect, treat and dispose of 41 m3/d of wastewater at the labour camp in Asab.

Al Jaber Catering Services L.L.C.

is licenced to collect treat and dispose of wastewater up to 5,300 m3/d at the labour camps in Al-Dhahera, Tarif, Ghayathi, Habshan, Saadiyat Island, Shah and Sweihan.

Al Mansoori Specialized Engineering Co L.L.C.

is licensed to collect, treat and dispose of 34 m3/d of wastewater at the labour camp in Bu Hassa.

ALSA Engineering & Construction Co. L.L.C.

is licenced to collect, treat and dispose of wastewater up to 460 m3/d at the labour camps in Asab, Ghayath and Habshan.

Arabian Construction Company W.L.L.

is licensed to collect, treat and dispose of 600 m3/d of wastewater at the labour camp in Liwa.

Arabian Nights for Travel and Tourism L.L.C.

is licensed to collect, treat and dispose of 100 m3/d of wastewater at the Arabian Nights Desert Village in Al Khatem.

Barari forest Management L.L.C.

is licensed to collect, treat and dispose of 250 m3/d of wastewater in Baynounah.

Bin Sari Specialized Technologies

is licensed to collect, treat and dispose of 40 m3/d of wastewater at the labour camp in Bu Hassa.

Brookfield Multiplex Construction L.L.C.

is licensed to collect, treat and dispose of 44 m3/d of wastewater in Masdar City.

Consolidated Contracting Engineering & Procurement Company – Sal Offshore (CCEP)

is licensed to collect, treat and dispose of 500m3/d of wastewater at Welfare Facilities at the ADAC Midfield Terminal Building.

Dhafra Beach Hotel is licensed to collect, treat and dispose of 500 m3/d of wastewater generated at the Dhafra Beach Hotel and Danat Jebel Al Dhanna Hotel in Jebel Al Dhanna in the Western Region.

Dodsal Engineering & Construction PTE Limited

is licensed to collect, treat and dispose of 1,100 m3/d of wastewater generated at its two labour camps at habshan and Shah-Hameem in the Western Region.

Dolphin Energy Ltd is licensed to collect, treat and dispose of 17 m3/d of wastewater at Taweelah site.

Emdad L.L.C. is licensed to collect, treat and dispose of 50 m3/d of wastewater at Habshan facility.


Emirates Aluminium Company Limited PJSC (EMAL)

is licensed to collect, treat and dispose of 700 m3/d of wastewater at the EMAL aluminium smelter site in Taweelah.

Ghantoot Transport and General Contracting Establishment

is licenced to collect treat and disposal of wastewater up to 230 m3/d at the labour camp serving the south of Shamkha.

Granite Construction Company L.L.C.

is licenced to collect treat and dispose of wastewater up to 650 m3/d at the labour camps in Asab, Habshan and Ruwais.

Hyundai Engineering and Construction Ltd

is licensed to collect, treat and dispose of 5,960 m3/d of wastewater at the Baraka Nuclear Power Plant.

International Mechanical and Electrical Company W.L.C.

is licensed to collect, treat and dispose of 600 m3/d of wastewater at the labour camp in Ghayathi.

Manazel real Estate PJSC is licensed to collect, treat and dispose of 1,500 m3/d of wastewater on the Al Reef Villas Development in Shahama.

National Catering Company L.L.C.

is licensed to collect, treat and dispose of 96 m3/d of wastewater at the labour camp in Ghayathi.

Premier Inn Hotels L.L.C. is licensed to collect, treat and dispose of 20 m3/d of wastewater generated at its hotel at the Abu Dhabi International Airport.

royal Catering Services L.L.C. is licensed to collect, treat and dispose of 1500 m3/d of wastewater at the labour camp in Ruwais.

Samsung Corporation is licensed to collect, treat and dispose of 500 m3/d of wastewater at two labour camps serving the construction of the S2 power plant in Ruwais.

Shams Power Company PJSC is licensed to collect, treat and dispose of 21 m3/d of wastewater from the Solar Power Plant in Madinat Zayed.

Telecommunications regulatory Authority (TrA)

is licensed to collect, treat and dispose of 40 m3/d of wastewater at the TRA – HQ in Abu Dhabi.

The Zoo & Aquarium Public Institution in Al Ain

is licensed to collect, treat and dispose of 12 m3/d of wastewater at the Sheikh Zayed Desert Learning Centre at Al Ain Wildlife park and Resort Project in Al Ain Zoo at Al Ain City.

Tourism Development and Investment Company PJSC (TDIC)

is licensed to collect, treat and dispose of 620 m3/d of wastewater at its Qasr Al Sarab desert resort near Hameem in the Western Region.

Tourism Development and Investment Company PJSC (TDIC)

is licensed to collect, treat and dispose of 4,500 m3/d of wastewater at its Workers’ Construction Village on Saadiyat Island.

Wadi Adventures L.L.C. is licensed to collect, treat and dispose of 50 m3/d of wastewater at its White Water rafting Centre at Jebel Hafeet, Al Ain.

Wafra real Estate Company – Abu Dhabi

is licensed to collect, treat and dispose of 30 m3/d of wastewater at the Wafra Commercial Tower, Reem Island.

Public records of activities and documents

In law we have a duty to maintain a Public Register. This section of this 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.

LicensingUnder Law No (2), the Bureau is the only organisation that can authorise persons to carry out certain regulated activities specified in Article (71). Licensing provides a regulatory mechanism for the Bureau to monitor, regulate and supervise licensees. All Licences issued by the Bureau are published on the Bureau’s website – at the end of 2016, there were 48 licensed entities in Abu Dhabi. The Bureau’s licensing activities include:

• the issuance of new licences;

• the modification of existing licences;

• consents or derogations issued in connection with existing licences;

• exemptions issued (with prior Executive Council consultation); and

• the revocation of licences.

New licensesWhen issuing a Licence, the Bureau must be satisfied that the applicant has the requisite financial resources and technical and managerial competences, as required under Article 86 of Law No (2) thirteen new licenses have been issued by the Bureau for the year 2016:

Telecommunications regulatory Authority (TrA)Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 40 (m³/d) of wastewater generated at the Welfare Facilities at the TRA – HQ in Abu Dhabi.

20-Jan-16 ED/L07/113

royal Catering Services L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 1500 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Ghayathi.

16-Mar-16 ED/L07/114

Dolphin Energy LtdSewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 17 (m³/d) of wastewater generated at the Welfare Facilities at Taweelah site.

27-Mar-16 ED/L07/115

Emdad L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 50 (m³/d) of wastewater generated at the Welfare Facilities at Habshan facility.

04-Apr-16 ED/L07/116

International Mechanical and Electrical Company W.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 600 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Ghayathi.

12-Jun-16 ED/L07/117

National Catering Company L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 96 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Ghayathi.

12-Jul-16 ED/L07/118

Al Husam General Contracting EstablishmentSewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 41 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Asab.

20-Jul-16 ED/L07/119


Brookfield Multiplex Construction L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 44 (m³/d) of wastewater generated at the Welfare Facilities in Masdar City.

21-Jul-16 ED/L07/120

Arabian Construction Company W.L.L.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 600 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Liwa.

28-Jul-16 ED/L07/121

Barari forest Management L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 250 (m³/d) of wastewater generated at the Welfare Facilities in Baynounah.

28-Jul-16 ED/L07/122

Al Mansoori Specialized Engineering Co L.L.C.Sewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 34 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Bu Hassa.

28-Jul-16 ED/L07/123

Bin Sari Specialized TechnologiesSewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 40 (m³/d) of wastewater generated at the Welfare Facilities at the labour camp in Bu Hassa and Habshan..

30-Aug-16 ED/L07/124

Wafra real Estate Co – Abu DhabiSewerage, wastewater treatment and disposalfor the collection, treatment and disposal of up to 30 (m³/d) of wastewater generated at the Welfare Facilities at the Wafra Commercial Tower, Reem Island.

30-Aug-16 ED/L07/125

Licence modifications From time to time, it may be necessary to modify a Licence. Article 101 of Law No. (2) requires that any Licence modifications are either agreed between the Bureau and the Licence holder or ordered by a panel of arbitrators. A total of eight agreed license modifications were issued in 2016.

APCRevision 3 (Extension & decreased capacity)

01-Jan-16 ED/L01/013

Hyundai Engineering & Construction CoRevision 4 (Increased capacity)

01-May-16 ED/L07/012

Dodsal Engineering and Construction Revision 2 (Extension & decreased capacity)

12-Jul-16 ED/L07/105

Al Jaber Catering Services L.L.C.Revision 2 (Wastewater treatment plant relocation)

12-Jul-16 ED/L07/108

Ghantoot Transport and General Contracting EstablishmentRevision 1 (Extension)

30-Aug-16 ED/L07/107

Al Mirfa Power Company Electricity Generation LicenceRevision 3 (Extension)

16-Oct-16 ED/L01/001

Hyundai Engineering & Construction CoRevision 5 (Extension)

12-Oct-16 ED/L07/012

Manazel real Estate PJSCRevision 2 (Extension)

22-Dec-16 ED/l07/006

revocationsWhere a Licensee advises the Bureau that it intends to discontinue carrying out regulated activities or where the limited term of a licence reaches its natural expiry without a request for a modification of the term, an expiration or revocation of the licence occurs. In 2016, the Bureau revoked only one licence.

Private Property Management EstablishmentSewerage, wastewater treatment and disposal for the collection, treatment and disposal of 2,500 m3/d of wastewater generated at Al Forsan International Sports Resort in Khalifa City in Abu Dhabi..

03-May-16 ED/L05/104

Derogations Under Article 97 of Law No. (2) the Bureau can issue specific and general derogations which operate to excuse the relevant Licensee(s) from performance of a particular obligation in its licence. In 2016, the Bureau issued a total of 9 Derogations:

AADC – ADDC – ADSCC – TrANSCODerogation (general) in respect to PC5 Opex Adjustments to MAR in PCRs.

03-Mar-16 ED/L06/126

Al Wathba Veolia Besix Wastewater CompanyDerogation (specific) in relation to the BCM regulations.

09-Oct-16 ED/L06/127

Al Etihad Bi-waterDerogation (specific) in relation to the BCM regulations.

09-Oct-16 ED/L06/128

MIPCODerogation (specific) in relation to the BCM Regulations.

01-Oct-16 ED/L06/129

AADCDerogation (specific) in respect of the maximum allowed revenue for 2017 for the distribution and supply business.

12-Dec-16 ED/L06/130

ADDCDerogation (specific) in respect of the maximum allowed revenue for 2017 for the distribution and supply business.

12-Dec-16 ED/L06/131

ADSSCDerogation (specific) in respect of the maximum allowed revenue for 2017 for the sewerage services business.

12-Dec-16 ED/L06/132

ADWECDerogation (specific) in respect of the maximum allowed revenue for 2017 for the procurement business.

12-Dec-16 ED/L06/133

TrANSCODerogation (specific) in respect of the maximum allowed revenue for 2017 for the transmission business.

12-Dec-16 ED/L06/134


ConsentsEach Licence provides that a certain activity or action may only be carried out with the Bureau’s prior written consent. In 2016, the Bureau issued a total of 14 consents.

AADCRelaxation of TDS & residual chlorine for drinking water tankers

01-Feb-16 ED/L03/118

ADDCRelaxation of TDS & residual chlorine for drinking water tankers

01-Feb-16 ED/L03/119

Emirates Sembcorp Water and Power Company Supply of demineralised water to VTTI Fujairah Terminals Limited FZC

02-Mar-16 ED/L03/120

AADCRelaxation of LSI

10-Mar-16 ED/L03/121

ADWECProcure and sell electricity and water outside the Emirate of Abu Dhabi with Oman Power and Water Procurement Company

01-May-16 ED/L03/122

ECPCRelaxation of TDS

05-Jun-16 ED/L03/123

GTTPCRelaxation of TDS

07-May-16 ED/L03/124

ADSSCDisposal of Masdar City Wastewater Treatment Plant

25-Aug-16 ED/L03/125

APCSupply and sale of demineralised water to specified customers

18-Sep-16 ED/L03/009

TrANSCODisposal of the de-aerator at the Jabal Hafeet pumping station

29-Sep-16 ED/L03/126

APCRelaxation of LSI

08-Nov-16 ED/L03/117

TAPCORelaxation of TDS

29-Nov-16 ED/L03/127

AADCUndertake billing and collection services of municipality fees for Al Ain Municipality

19-Dec-16 ED/L03/128

ADDCUndertake billing and collection services of municipality fees for Abu Dhabi and Western Region Municipalities

19-Dec-16 ED/L03/129


financial statements

report on the Audit of the financial Statements

OpinionWe have audited the financial statements of Regulation and Supervision Bureau (“the Bureau”), which comprise the statement of financial position as at 31 December 2016, and the statement of financial performance, statement of cash flows, and notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bureau as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS).

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bureau in accordance with International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

responsibilities of Management and Those Charged with Governance for the financial StatementsManagement is responsible for the preparation and fair presentation of the financial statements in accordance with IPSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bureau’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Government of Abu Dhabi either intends to liquidate the Bureau or to cease operations, or has no realistic alternative but to do so.

Those Charged with Governance are responsible for overseeing the Bureau’s financial reporting process.

Auditors’ responsibilities for the Audit of the financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

H.E. the Chairman of the BureauRegulation and Supervision BureauAbu Dhabi - United Arab Emirates


Abdulla Bin Mohammed Al HamedChairman

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bureau’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bureau’s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bureau to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicated with those charged with governance, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

KPMG Lower Gulf Limited

Fawzi AbuRassRegistration No.: 968Abu Dhabi, United Arab EmiratesDate: 15 Mar 2017

Non-current assetsProperty and equipmentIntangible assetsPrepayments and receivablesSecurity deposit

Current assetsPrepayments and receivablesCash and cash equivalents

Total assets

Non-current liabilities Due to licenseesEmployees’ end of service benefits

Current liabilitiesDue to licenseesPayables and other liabilities

Total liabilities

Assetsnote

Liabilities

1,203,011116,919

485,3001,318,800

3,124,030

112,044,394 155,058,367

267,102,761

270,226,791

66,152,82315,525,307

81,678,130

173,425,34715,123,314

188,548,661

270,226,791

2016AED

567

78

910

911

2015 AeD

Statement of financial position as at 31 December

The notes on pages 59 to 68 are an integral part of these financial statements.The independent auditors’ report is set out on page 54.

Mohamad Kamil Al AliActing Head of

Finance and Accounts

Saif Saeed Al Qubaisi Director General

5,574,769322,837

1,019,7101,318,800

8,236,116

13,456,81497,205,249

110,662,063

118,898,179

39,889,54916,601,667

56,491,216

45,552,59616,854,367

62,406,963

118,898,179

The financial statements were approved and authorised for issue on 15 March 2017 by:


License feesOther income

Personnel expensesProfessional feesRent expenseDepreciationAmortisationOther expenses

Net result for the year

revenue

Expenses

note

110,510,089624,566

111,134,655

91,875,6403,722,5647,632,9234,474,798

205,9183,222,812

111,134,655

-

2016AED

9

12

56

108,833,077208,244

109,041,321

86,673,7704,717,2387,632,9234,946,282

684,5874,386,521

109,041,321

-

2015 AeD

Statement of financial performancefor the year ended 31 December


Adjustments for:Interest incomeDepreciationAmortisationLoss / (gain) on disposal of property and equipmentProvision for employees’ end of service benefits

Change in prepayments and receivablesChange in due to licenseesChange in payables and other liabilitiesAdvance paid to employeeEmployees’ end of service benefits paid

Net cash from operating activities

Acquisition of property, plant and equipmentAcquisition of intangible assetsProceeds from disposal of property, plant and equipmentInterest received

Net cash used in investing activities

Net increase in cash and cash equivalentsCash and cash equivalents at 1 January

Cash and cash equivalents at 31 December

Cash flows from operating activities

Cash flows from investing activities

note

-4,474,798

205,91813,469

2,784,465

7,478,650

(98,587,580)154,136,025

(1,731,053)534,410

(3,860,825)

57,969,627

(124,821)-

8,312-

(116,509)

57,853,11897,205,249

155,058,367

2016AED

56

10

10

56

8

8

2015 AeD

Property plant & equipment statementfor the year ended 31 December

(3,913)4,946,282

684,587(3,481)

3,063,810

8,687,285

2,691,25056,180,459(5,177,220)

-(4,263,903)

58,117,871

-(96,040)52,000

3,913

(40,127)

58,077,74439,127,505

97,205,249



Notes to the financial statements

1. Legal status and principal activities

Regulation and Supervision Bureau (“the Bureau”) was established under Law no. (2) of 1998, to regulate the water, wastewater and electricity sector in the Emirate of Abu Dhabi. The Bureau is regulated by the Executive Council of Abu Dhabi (“the Executive Council”).

The Bureau is funded by the payment of license fees by those entities awarded licenses and is a not for profit organization.

The Bureau’s registered office is at PO Box 32800, Abu Dhabi, United Arab Emirates.

The Board of Directors of the Bureau was dissolved in March 2014 and the Chairman of the Board (“the Chairman”) is currently entrusted with the duties of the Board, as per the directive of the Executive Council.

2. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with International Public Sector Accounting Standards (“IPSAS”) as issued by International Public Sector Accounting Standards Board (IPSASB). Where IPSAS do not address a particular issue, the requirements of International Financial Reporting Standards (“IFRS”) have been applied.

These financial statements were authorized for issue by the Chairman (Entrusted with the duties of the Board of Directors) on 15 March 2017.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) functional and presentation currency

These financial statements are presented in UAE Dirhams (“AED”), which is the Bureau’s functional currency.

(d) Use of estimates and judgements

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Bureau’s accounting policies and the reported amounts of assets, liabilities, income, expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in these financial statements are described in note 15 to the financial statements.

3. Significant accounting policies

The accounting policies set out below, which comply with IPSAS, have been applied consistently to all periods presented in these financial statements in dealing with items which are considered material in relation to these financial statements.

(a) foreign currencies

Transactions in foreign currencies are translated into AED at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in the statement of financial performance. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

(b) revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Bureau and revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts and rebates.

License fees funding from the licensees in respect of the current year is accounted for in the statement of financial performance based on the expenses incurred for the year less income received from other sources during the year. Any funding received in excess of / short of the expenditure incurred by the Bureau, is refunded to / recovered from licensees every two years.

(c) Employees’ end of service benefits

The Bureau provides end of service benefits to its employees. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period. The expected costs to these benefits are accrued over the period of employment.

An actuarial valuation is not performed on staff terminal benefits as the net impact of the discount rate and future salary and benefits level on the present value of the benefits obligations are not expected by management to be significant.

Monthly pension contributions are made in respect of UAE National employees, who are covered by Law No. 2 of 2000. The pension fund is administered by the Government of Abu Dhabi, Finance Department, represented by Abu Dhabi Retirement Pensions and Benefits Fund.

The contributions are treated as payments to a defined contribution pension plan. A defined contribution plan is a pension plan under which fixed contributions are paid into a separate pension fund. The Bureau has no legal or constructive obligations to pay further contributions if the pension fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(d) Property and equipment

Recognition and measurementItems of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.

Cost includes expenditure that is directly attributable to the acquisition or construction of the asset.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Gain or loss on disposal of an item of property and equipment is determined by comparing the proceeds from disposal with the carrying amount of property and equipment and is recognised net within other income / other expenses in the statement of financial performance.

Subsequent costsThe cost of replacing a component of an item of property and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the component will flow to the Bureau and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property and equipment are recognised in the statement of financial performance as incurred.

Capital work in progressThe Bureau capitalises all costs relating to assets as capital work in progress, until the date of completion and commissioning of these assets. These costs are transferred from capital work in progress to the appropriate asset category upon completion and commissioning and depreciated over their useful lives from the date of such completion and commissioning.

DepreciationDepreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in the statement of financial performance on a straight-line basis over the estimated useful lives of each component of an item of property and equipment. Depreciation methods, useful lives and residual values are reviewed at each reporting date. The estimated useful lives for the current and comparative periods are as follows:


years

Computer equipment 3

Office equipment and furniture 5

Motor vehicles 3

(e) Intangible assets

Intangible assets that are acquired by the Bureau, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure are recognised in the statement of financial position as incurred.

Intangible assets comprise of software acquired by the Bureau. The cost of the intangible assets is amortised on a straight-line over a period of 3 years.

(f) financial instruments

(i) Non-derivative financial assetsThe Bureau initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date at which the Bureau becomes a party to the contractual provisions of the instrument.

The Bureau derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or if it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such derecognised financial assets that is created or retained by the Bureau is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Bureau has a legal right to offset the amounts and intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.

The Bureau classifies non-derivative financial assets into the loans and receivables category. Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, where the time value of money is material, loans and receivables are measured at amortised cost using the effective interest method, less impairment losses, if any.

Loans and receivables include security deposits, advances to employees, prepayments and receivables, and cash and cash equivalents.

Cash and cash equivalents consist of cash in hand and bank balances.

(ii) Non-derivative financial liabilities Non-derivative financial liabilities are recognised initially on the trade date, which is the date that the Bureau becomes a party to the contractual provisions of the instrument. The Bureau derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Bureau has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Bureau classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities include balances with licensees and payables and accruals.

(g) Impairment

Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Bureau on terms that the Bureau would not consider otherwise or indications that a debtor will enter bankruptcy.

Losses are recognised in the statement of financial performance and reflected in an allowance account. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the statement of financial performance.

Non-financial assets The carrying amounts of the Bureau’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such an indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of financial performance.

Impairment loss recognised in prior periods, if any, is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(h) Operating leases

Lease of assets under which the lessor effectively retains all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are recognised in the statement of financial performance on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

(i) Provisions

A provision is recognised if, as a result of a past event, the Bureau has a present obligation (legal or constructive), that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(j) Current versus non-current classification

The Bureau presents assets and liabilities in statement of financial position based on current / non-current classification.

An asset is classified as current when it is:

• Expected to be realised or intended to sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Bureau classifies all other liabilities as non-current.

4. New standards and interpretations not yet adopted

The Bureau has not applied the following new or revised IPSAS issued but not effective for the year ended 31 December 2016:

• IPSAS 34 - Separate Financial Statements – effective for annual periods beginning on or after January 1, 2017.

• IPSAS 38 - Disclosure of Interests in Other Entities– effective for annual periods beginning on or after January 1, 2017. The adoption of the above new or revised IPSAS and improvements will have no impact on the financial position or performance of the Bureau. However, they will give rise to amendments to the presentation of the financial statements and additional or amended disclosures.

5. Property and equipment

Details of property and equipment are set out in Schedule I on page 71.


6. Intangible assets

Details of intangible assets are set out in Schedule II on page 70.

7. Prepayments and receivables

Prepaid staff allowance and benefits comprise payments to staff associated with their remuneration entitlements. These payments will be recognised in the statement of financial performance in the period to which these payments relate.

8. Cash and cash equivalents

Staff allowances and benefit prepaid Less: non-current portion

Staff allowances and benefit prepaid – currentPrepaymentsLicense fees receivable (note 9)Other receivables

9,937,486(485,300)

9,452,186186,160

102,406,048-

112,044,394

2016AED

11,705,021(1,019,710)

10,685,3112,611,313

-160,190

13,456,814

2015 AeD

The Bureau carries out its banking transactions through a commercial bank with which it has a related party relationship.

Cash in handCash at bank

Current account

11,269

155,047,098

155,058,367

12,493

97,192,756

97,205,249

2016AED

2015 AeD

9. Licensees transaction and balances

Transactions with licensees included in the statement of financial performance are as follows:

License fees received during the yearLicense fees received in prior yearLicense fees received in advance Less: excess recovery of license fee for the year

License fees recognised in the statement of financial performance

Net funding at 1 JanuaryFunding received during the yearExpenditure during the yearRefund

Net funding at 31 December

Excess recovery of license fees:Prior yearCurrent year

Net funding received for projects undertakenon behalf of licensees (refer below)

License fees received in advanceLicense fees receivables

Total amount due to licenseesLess: non-current portion

Due to licensees - current portion

188,794,4926,037,521

(18,169,101)(66,152,823)

110,510,089

27,685,8684,495,125

(8,370,029)(6,355,192)

17,455,772

39,889,54966,152,823

106,042,372

17,455,77213,673,978

102,406,048

239,578,170(66,152,823)

173,425,347

Balances with licensees included in the statement of financial position are as follows:

Movement for net funding for projects undertaken on behalf of licensees is as follows:

The licensees under the Bureau predominantly include entities related to the Government of Abu Dhabi.

148,722,626--

(39,889,549)

108,833,077

16,574,26028,554,938(17,443,330)

-

27,685,868

11,829,20739,889,549

51,718,756

27,685,8686,037,521

-

85,442,145(39,889,549)

45,552,596

2016AED

2015 AeD

2016AED

2015 AeD

2016AED

2015 AeD


At 1 January Charge for the yearPayments during the year

At 31 December

Accounts payableAccrued expensesOther payables

SalariesAccommodation allowanceEmployees’ end of service benefits (note 10)Employers’ contribution to Abu Dhabi Retirement Pensions and Benefits FundBonusOther benefits

16,601,6672,784,465

(3,860,825)

15,525,307

202,30114,898,300

22,713

15,123,314

42,790,72620,270,4132,784,4654,246,0032,661,660

19,122,373

91,875,640

10. Employees’ end of service benefits

11. Payables and other

12. Personnel expenses

13. related parties

Related parties represent Government of Abu Dhabi and related departments and institutions, associated companies and key management personnel of the Bureau. Pricing policies and terms of transactions with related parties are approved by the Bureau’s senior management.

(a) Compensation of key management personnel Key management personnel include Board of Directors (“the Board”) and senior management of the Bureau. Senior management consists of the Bureau’s Director General, Deputy Director General and the heads of division. The new Director General appointed by the Executive Council, who is remunerated by the Bureau from 20 July 2016.

2016AED

2015 AeD

2016AED

2015 AeD

2016AED

2015 AeD

17,801,7603,063,810

(4,263,903)

16,601,667

1,549,21311,496,4143,808,740

16,854,367

39,188,75219,684,6673,063,8103,024,3042,586,673

19,125,564

86,673,770

The aggregate remuneration of the Board and the number of members receiving remuneration are as follows:

Rent expenses

Office service charges

Abu Dhabi Retirement Pensions and Benefits Fund

Abu Dhabi National Oil Company

Abu Dhabi Distribution Company PJSC

Government of Abu Dhabi entities

Salaries and short-term benefitsPension and end of service benefits

Number of persons

7,632,923

1,583,130

22,712

16,904

2,553

217,991,335

13,496,2761,110,503

14,606,779

7

(b) Other significant related party transactions

These expenses represent rent and related charges paid to Al Sowwah Square Properties LLC, a company owned by the Government of Abu Dhabi.

(c) Related party balancesBalances with Government of Abu Dhabi entities included in payables and accruals are as follows:

Balances with Government of Abu Dhabi entities included in due to licenses:

Also refer notes 8 and 9 for other related party balances and transactions.

2016AED

2015 AeD

2016AED

2015 AeD

2016AED

2015 AeD

7,632,923

1,446,101

394,874

28,767

1,306

80,447,541

16,648,5521,262,596

17,911,148

12

Accrued expenses include a provision for employees bonus amounting to AED 2,661,660 in 2016 (2015: nil) which is subject to Executive Council approval.


Within one yearBetween one and five years

10,098,9616,185,613

16,284,574

9,618,05816,284,574

25,902,632

14. Commitments

Operating lease commitments

The Bureau has entered into commercial leases for office premises. The lease is for a term of 10 years (started in 2012), with a renewal option included in the contract. There are no restrictions placed on the Bureau in respect of the lease arrangement.

The base rental shall be reviewed in 2018 as agreed with the lessor or determined by a surveyor.

Future minimum lease payments under the operating lease as at 31 December are as follows:

15. Accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying the Bureau’s accounting policies, which are described in note 3, management has made the following judgements which have a significant effect on the amounts recognised in the financial statements.

Impairment losses

At each reporting date, management assesses whether there is any indication that its assets may be impaired. The determination of allowance for impairment loss requires considerable judgment and involves evaluating factors including the performance, industry and market conditions.

Useful lives and residual values of property, plant and equipment

Management assigns useful lives and residual values to items of property and equipment based on the intended use of the assets and the expected economic lives of those assets. Subsequent changes in circumstances such as technological advances or prospective utilisation of the assets concerned could result in the actual useful lives or residual values differing from the initial estimates. Management has reviewed the useful lives and residual values of the major items of property and equipment and has determined that no adjustment is necessary.

16. financial instruments and risk management

The Bureau has exposure to the following risks from its use of financial instruments:

• credit risk• liquidity risk• market risk

This note presents information about the Bureau’s exposure to each of the above risks and the Bureau’s objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout these financial statements.

2016AED

2015 AeD

The Director General, with inputs from the Head of Finance and Accounts, has the overall responsibility for the establishment and oversight of the Bureau’s risk management and he is responsible for developing and monitoring the Bureau’s risk management policies.

Credit risk

Credit risk is the risk of financial loss to the Bureau if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The Bureau collects licence fees from its related parties. Licence fees are collected based on an annual budget. The Bureau is exposed to credit risk from its operating activities (primarily for other receivables and amounts due from licensees) and from its financing activities, including deposits with a bank. The carrying amount of the financial assets represents the maximum credit exposure at the reporting date.

Liquidity risk

Liquidity risk is the risk that the Bureau will not be able to meet its financial obligations as they fall due. The Bureau limits its liquidity risk by monitoring its current financial position in conjunction with its cash flow forecasts and close communication with licensees 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.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Bureau’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency riskThe Bureau’s currency risk is limited as a significant proportion of the transactions, monetary assets and liabilities are in AED or currencies currently pegged to the AED. The Bureau does not have hedging contracts to mitigate the fluctuation in foreign exchange rates. However, management is aware of the risk and closely monitors the exchange rate fluctuations.

fair values

The fair values of the Bureau’s financial instruments are not materially different from their carrying amounts.


Cost:At 1 January 2015AdditionsDisposals

At 31 December 2015

At 1 January 2016AdditionsDisposals

At 31 December 2016

Accumulated depreciationAt 1 January 2015Charge for the yearDisposals

At 31 December 2015

At 1 January 2016Charge for the yearDisposals

At 31 December 2016

Carrying amountsAt 31 December 2015

At 31 December 2016

602,000-

(79,000)

523,000

523,000--

523,000

228,545179,997(30,481)

378,061

378,061144,939

-

523,000

144,939

-

8,391,174--

8,391,174

8,391,174124,821

(523,201)

7,992,794

6,543,0261,011,866

-

7,554,892

7,554,892676,004(501,422)

7,729,474

836,282

263,320

Motorvehicles

AED

Office equipment and

furnitureAED

Computer equipment

AED

27,905,305-

(79,000)

27,826,305

27,826,305124,821

(523,215)

27,427,911

17,335,7354,946,282

(30,481)

22,251,536

22,251,5364,474,798(501,434)

26,224,900

5,574,769

1,203,011

18,912,131--

18,912,131

18,912,131-

(14)

18,912,117

10,564,1643,754,419

-

14,318,583

14,318,5833,653,855

(12)

17,972,426

4,593,548

939,691

Total AED

Schedule IProperty and equipment

Cost:At 1 January 2015AdditionsDisposal

At 31 December 2015

At 1 January 2016AdditionsDisposal

At 31 December 2016

Accumulated amortisationAt 1 January 2015Charge for the yearDisposal

At 31 December 2015

At 1 January 2016Charge for the yearDisposal

At 31 December 2016

Carrying amountsAt 31 December 2015

At 31 December 2016

3,383,04596,040

-

3,479,085

3,479,085-

(64,048)

3,415,037

2,471,661684,587

-

3,156,248

3,156,248205,918(64,048)

3,298,118

322,837

116,919

Software AED

Schedule IIIntangible assets


the Regulation & Supervision Bureau

PO Box 32800, Abu DhabiUnited Arab [email protected]

www.rsb.gov.ae

Documents

AnnuAl RepoRt - rsb.gov.aersb.gov.ae/assets/documents/192448/rsb_ar16_en_4web.pdf · The regulation & Supervision Bureau Annual Report 2016 03 The regulation & Supervision Bureau