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Unified power grid to be ready by 2004

posted on 09/10/2001: 740 views

Feasibility studies for Phase II of the UAE National Electricity Grid, entailing network integration right through the country, are currently ongoing, with the unified grid to be ready by 2004. "French consultant EDF is due to submit the preliminary report shortly, with a panel empowered by the cabinet to study the same, and work on project implementation starts thereafter," Saud Al Humaidan, Assistant Deputy Minister for technical affairs at the UAE Ministry of Electricity & Water, stated yesterday.

Phase I involved the link-up between Fujairah, Ras Al Khaimah, Ajman and the central regions with Dubai. The second phase will entail merging the Abu Dhabi and other networks into a national grid. He, however, ruled out privatisation of the utilities sector: "The socio-economic structure of the UAE is such that subsidies will have stay in place, for at least five years.

"While we have made a move towards taking aboard foreign companies in the form of partnerships, this does not really constitute privatisation - as understood in other parts of the world - and I do not see such privatisation taking place here until technological or other developments cut generation costs down to economically feasible levels". Until such time state subsidies could not be lifted. On integration with the wider GCC power grid, he said this would happen after the completion of the domestic national grid link-up. "The GCC has signed an agreement on this, whereby Kuwait, Saudi Arabia, Bahrain and Qatar first integrate their national networks, after which the UAE will also link up".

Speaking on the sidelines of the three-day Middle East Energy 2001 Conference and Exhibition which he inaugurated on behalf of Humaid bin Nasir Al Owais, UAE Minister of Electricity & Water, he noted that the UAE's installed power generation capacity, inclusive of projects close to completion, is close to 10,000 MW. "But demand is growing 8-10 per cent annually, and will entail major funding," he pointed out.

"This will be met through offset deals, through partnerships with foreign companies, but we are unlikely to go the BOO/BOT route". Al Humaidan observed that while interest in a similar national water grid remains, it is "difficult" to implement due to the complexities involved. Earlier delivering the keynote address, Dr Hisham Khatib, honorary vice-chairman, World Energy Council, said power demand through the Mideast is expected to grow 3-4 per cent annually until 2004, as against 1-2 per cent worldwide.

"The Gulf itself will need annual investment of $26 billion in the utilities sector, and will need reforms to attract part of the $1,240 billion invested elsewhere in the world to fund its projects". He suggested privatisation of the utilities sector in the downstream, distribution sector - rather than in the upstream, generation sector, as is currently the trend - to ensure cash collection and financial viability. "Prices also need to reflect actual costs," he stated, suggesting the presently subsidised rates lead to considerable wastage.

On the issue of security, he felt talk of the need for alternative energy sources is unwarranted: "There has been no shortage of oil and gas supplies for the past 25 years, and the world has enough petroleum resources for least the next 100 years - so I do not see any question of supply security". (The Gulf News)


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