Middle East Power Sector Grows at Strong Pace, Offers Attractive Business Opportunities

---

Researched by Industrial Info Resources (Sugar Land, Texas)--The power sector has been growing at a significant pace in the Middle East during the past few years, and several international players have been investing in the region's electricity generation, transmission and distribution (T&D) projects. Growing industrialization, increasing residential subscribers, and attractive government subsidies are the primary factors driving demand for electricity and resulting in the flourishing power sector.

Saudi Electricity Company (SAU:5110) (SEC) (Riyadh, Saudi Arabia), Saudi Arabia's national power T&D company, has awarded power and automation technology company ABB Limited (NYSE:ABB) (Zurich, Switzerland) with an $89 million contract for setting up a 380/132/13.8-kilovolt (kV) substation that will ensure power security to the King Abdullah Financial District in Riyadh. The substation will feed four smaller substations in the district. The scope of the contract involves design, supply, installation and commissioning of the substation, including all associated civil work. The contract is expected to be implemented within 22 months from the signing of the contract.

In early May, SEC awarded ABB with a $108 million contract for setting up six substations. Four substations (115/13.8 kV each) would be in the eastern towns of Damman and Al-Hassa, and the remaining two (110/13.8 kV each) in the western towns of Jeddah and Mecca. The scope of the contract was similar to the new one, and it is to be completed by 2012.

ABB recently secured a similar substation contract from the Ezdan Real Estate Company QSC (DOH:ERES) (Doha, Qatar) in Qatar. The order includes two new substations that are to be set up within 14 months. While the 132/11-kV substation will power the Al Gharaffa and Gulf malls in Doha, the 66/11-kV EZDAN-5 will power a new residential area. Other than designing, engineering, supplying, constructing and commissioning the substations, ABB will supply low-voltage auxiliary systems, gas-insulated and medium-voltage switchgear, transformers and power cables.

In September 2009, the government of Oman awarded the technical and financial advisory contracts for the $2 billion Al Duqm IWPP (Integrated Water and Power Project) to professional services company WorleyParsons Limited (ASX:WOR) (Sydney, Australia) and financial advisory giant KPMG LLP (Montvale, New Jersey), respectively. The 1,000-MW IWPP, which includes a desalination plant, will be the first coal-fired power plant in the Gulf Cooperation Council (GCC) nations. A request for proposal is expected to be announced in September, and the contracts are expected to be awarded in August 2011. The project is scheduled to be completed in January 2016.

Meanwhile, Bahrain's $5.3 billion Al Dur IWPP is being developed on a build-own-operate basis by a consortium comprising natural gas and electricity company GDF Suez S.A. (EPA:GSZ) (Paris, France) and the Gulf Investment Corporation (GIC) (Safat, Kuwait). The first phase of the project will be completed this year and will generate 400 MW of power, while the whole plant will generate a total of 1,245 MW when completed in mid-2011. The power plant is expected to meet 30% of Bahrain's power demand. The reverse osmosis-based desalination plant will produce 218,200 cubic meters of water per day. The various projects contracts were awarded to Hyundai Heavy Industries Company Limited (Ulsan, South Korea), for engineering, procurement and construction; Degrémont (Rueil-Malmaison, France), for reverse osmosis technology; Bahrain Petroleum Company B.S.C. (Awali, Bahrain), for fuel supplies; and GE Energy (Atlanta, Georgia), a division of General Electric (NYSE:GE) (Fairfield, Connecticut), for four Frame-9FA gas turbines and two steam turbines. GE Energy also will provide maintenance services for a 20-year period.

According to a new business report titled "Middle East Power Sector Analysis," Jordan, Oman, Saudi Arabia, Turkey and the United Arab Emirates (UAE) have recorded impressive growth in both demand and capacity installation, and are expected to continue to do so. Oman, however, has been demonstrating the fastest growth in the power sector, and both generation and consumption in the country recorded double-digit growth in 2009 from the previous year, even after the global economic crisis. In fact, Oman's power generation and consumption figures are expected to grow at a compound annual growth rate of 14% and 13.7%, respectively, during 2010-13.

Jordan hopes to enhance its domestic power generation capacity from 4% to 39% by 2020. Saudi Arabia's SEC has set very ambitious targets as well. With a 7% to 8% growth in demand, the company hopes to achieve a power generation capacity of 70,000 MW by 2020. The UAE expects to see domestic demand for power grow threefold by 2020. The governments of Jordan, Oman, Qatar, Saudi Arabia, Turkey and the UAE have liberalized their electricity sector and are framing privatization regulations. Such a step will attract greater investment; enhance the power sector infrastructure; and lead to more efficient management of the T&D network.

All the nations are planning to focus on renewable energy sources as well. Turkey plans to invest about $1.57 billion on the sector and generate more than 1,100 MW of power from such sources. In fact, Turkey has set a target of sourcing 25% of its power from renewable sources by 2020. Jordan and UAE also are focusing on the sector.

View Project Report - 92200042 94600073

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.