By Lubna Hamdan
Company which acquired Emaar's district cooling business is a wholesaler to developers and does not charge the end user, but many developers pass the charge onto consumers
Abu Dhabi-based cooling giant Tabreed is not considering dropping fees amid Covid-19, according to chairman Khaled Al Qubaisi.
The DFM-listed provider acquired 80% of Emaar Properties' district cooling business in a $675 million deal last month, meaning it will provide its service to developments including the Burj Khalifa and Dubai Mall, the world’s tallest tower and shopping mall, respectively.
"We haven’t discussed it yet internally or externally with our customers. I don’t think they’ll be asking us for relief to that end. We just closed the deal in this current situation. As a socially responsible entity, we look forward to seeing how we can help our customers and we will consider whatever needs to be done in the future,” Al Qubaisi told Arabian Business.
"Because the consumption is there, it’s being used. We’ve been in discussion with them about what’s going around. In the future, everything is open [to discussion]. If we think it’s something we need to do, we will consider it, but for the time being, we haven't discussed any such measures,” he said.
Tabreed is a wholesaler to developers and does not charge the end user. However, while developers can absorb the charges, many pass them onto their tenants, with monthly cooling bills amounting to up to AED800 or higher in summer months depending on the property.
Al Qubaisi said Tabreed has seen a surge in residential usage of its cooling services since the start of Covid-19 as residents stay home amid lockdown measures.
"This small dip in the economy has very minimal, if any, effect on consumption in these assets that Emaar owns, either public or residential. Residential have actually increased usage. And malls, even though they’re closed for the public, still need to be cooled,” Al Qubaisi said.
The majority of Tabreed’s business relies on capacity charges, whereas a set fee is charged whether customers use the service or not, meaning its business is not disputed by the pandemic.
"Even with this virus going around, what’s beautiful about the district cooling business and Tabreed is that our business does not get affected by technicality or such a global situation worldwide. Our contracts are long term contracts, they’re based on capacity charges which are paid whether the usage is there or not, more than 85% of our revenues come from capacity charges,” Al Qubaisi said.
Tabreed counts government entities with strong balance sheets as the majority of its customers, meaning they may not need a relief on fees.
"We always want to play our role to help society in any way we can by alleviating some of the pressures on them, delaying some of the bills maybe but I don’t see it affecting our overall business,” Al Qubaisi said.
The company boasts 72 plants across five GCC countries, including projects in the UAE, Bahrain, Oman, Qatar and Saudi Arabia.