The links for the electricity grid that will promote competition between producers in the Gulf will cost US$1.64 billion.
New Gulf links for electricity to cost more
KUWAIT CITY // The links for the electricity grid that will promote competition between producers in the Gulf will cost US$1.64 billion (Dh6.02bn), says Yousef Janahi, the chairman of the GCC Interconnection Authority (GCCIA). The authority, based in Saudi Arabia and set up by the six Gulf states in 2001 to link their power grids, had projected an initial cost for the power project at $1.4bn.
"The cost has increased after the UAE joined the project. We expect UAE's initial link-up to start in 2011 and the whole project to be concluded in 2012," said Mr Janahi. The project was "more than 80 per cent" complete, he said. The GCC's rulers were scheduled to officially launch the grid at a ceremony after the summit's first session last night. Power demand in the GCC's six member states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - will reach about 105,000 megawatts next year if they are unconnected, Mr Janahi said, adding that this will be reduced by 5,000mw with the grid.
The idea of a GCC power grid has been around since the early 1980s and it will be launched at a time when the region's mushrooming populations have strained electricity supplies. Mr Janahi said the annual growth in the Gulf's power demand "was in the range of 5 or 6 per cent in the 1990s, but nowadays it is in the region of 12 or 13 per cent," adding that this growth had probably slowed since the onset of the global financial crisis.
The project has three phases. The first linking Bahrain, Kuwait, Qatar and Saudi Arabia was completed this year. The second to unify the networks of the UAE and Oman has also been completed and the third phase to link all six countries together is now under way. Each state took capital shares of the interconnection authority in proportion to its installed capacity in the 1990s. Saudi Arabia owns the biggest share, with 31 per cent, and Kuwait is second with 26 per cent. The UAE holds about 15 per cent.
While the grid will allow states to share power, their generation capacities will have to increase to allow a lively trade of electricity in the Gulf. "We have a problem with power reserve: whatever we generate, we consume," said Suhaila al Qattan, an engineer at Kuwait's ministry of electricity and water. She said each state had agreed to keep a reserve of power that could be used by other states in an emergency and they would be fined if it was unavailable.
* with Zawya Dow Jones