Massive Power, Privatization, and Industrialization Push to Change 2020 Mid-East Profile

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The announcement in the first week of January, giving the Bahrain cabinet's approval for the privatization of the country's electricity production is one of a number of indicators that Middle Eastern countries are set for a sustained power generation construction boom as they set targets for industrialization and infrastructure development.

The cabinet, chaired by prime minister Sheikh Khalifa bin Salman Al Khalifa, also issued the first private sector tender for the construction of a 400 MW power station. In the new power industry dispensation in Bahrain distribution and supply will remain in government hands to ensure affordable prices for citizens.

Bids will be invited this month for the $500 to $600 million power plant that could have a fully developed capacity of 1,000 MW and should be operational in 2006. The plant is to be built on Al Hidd on Muharraq Island east of the capital Manama (PEC:92200004/5), reports Trade Arabia.

"Instead of putting up half a billion dollars outright to build the plant, the government would pay that amount over 20 years by buying units from the company that will operate the facility and supply consumers," said Mahmud Al Kawhaji, director of government shareholdings at the country's finance and economy ministry.

Consultants for the project include Britain's Mott MacDonald (PEC:92200019) and the French bank Paribas. Alstom Power is currently expanding an electrical power and desalination plant in the Al Hidd region, which originally came on stream two years ago.

With the country's electricity consumption growing at an annual rate of 5%, the government announced in the middle of 2003 that it had appointed Ernst & Young to carry out a study outlining Bahrain's electricity privatization strategy to improve services to customers. Sums of $270 million and $185 million were allocated to cover Bahrain's electricity demand and the construction of various projects.

From Muscat the Khaleej Times reports Tender Board officials as saying that Oman has shortlisted ten international companies for the $200 million Sohar private power project. The international bidders shortlisted include International Power (UK, AES, USA) Tractebel (Belgium), Mitsui (Japan), Total (France) and SNC Lavalin Thermal Power (Canada).

Electricity ministry officials said that the project contract, expected to be awarded in the third quarter of 2004, would be the biggest to be owned and operated by a private company in Oman. They added that it would also be the most important as it is planned top supply electricity in the biggest industrial area in the country.

The successful private company bidder winning the 15 year contract will build the plant to generate 500 MW of electricity and a water desalination plant to pump 30 million gallons per day to the Sohar industrial area.

Saudi Arabia is looking to invest $115 billion in the construction of new power generation projects in the next 23 years, according to a study conducted by a local bank. The Kingdom's existing capacity exceeds 23,400 MW and there are predictions that additional power requirements of 20,000 MW will be needed by 2010. The study said that these figures are based on a 5.5% annual demand growth in power consumption. These predictions surpass those made two years ago which forecast a possible total capacity of 50,000 MW by 2020, if the 2020 figure is based on anticipated growth. The new target figure for 2020 capacity is 70,000 MW. This implies some serious industrialization along the way.

Currently, power projects worth $4.53 billion are being implemented by Saudi Arabia to meet demands. The Saudi Electricity Company (SEC) has implemented electricity projects costing $5.6 billion said Sulaiman bin Abdullah Al-Qadi, the SEC executive president. The SEC was established three years ago. He said that around 48% of produced power is consumed by the residential sector in Saudi Arabia.

He said that projects completed recently include units 6 and 7 of the Ghazlan steam plant (PEC:97000086) and two units of the Shuayba steam power plant (PEC:97000102). Other projects include the recent expansion of power plants in Asir, Jizan (PEC:97000094), Tihama and Arar. The ninth power station in the capital Riyadh (7000087/116) was recently opened which added 1,380 MW to the national capacity from 16-generation sets.

The impact of the massive drive to boost power generation and industrialization in the region can be expected to change the face of domestic and international politics in the region by 2020.

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