GCC power investments at $104bn

Gulf hydrocarbon producers are expected to pump more than $104 billion into projects over the next five years to expand their power generation capacity to meet growing domestic demand, according to official Arab data.

The investments account for nearly 43 per cent of the total capital required for electricity development projects during 2013-2017 in the Middle East and North Africa (MENA) and 53 per cent of the Arab power projects, showed the figures by the Saudi-based Arab Petroleum Investment Corporation (Apicorp).

In a study, Apicorp’s senior consultant Ali Aissaoui estimated the total capital in power generation, distribution and transmission in MENA at about $250 billion to add 123.9 GW of electricity. Generation projects alone are valued at nearly $148 billion.

“A regional breakdown shows that about 43 per cent of that expansion is expected in the GCC, which remains the fastest growing area. This should come as no surprise, taking into account its record rates of urbanization and the massive requirements for water desalination and air conditioning,” he said. He said that many countries within MENA have been struggling to meet fast‐growing demand for electricity, a consequence of high population growth, fast expanding urban and industrial sectors, increasing needs for air conditioning, and heavily subsidized electricity tariffs. “With ongoing turmoil in parts of the region, catching up with unmet demand may be perceived as socially and politically more desirable,” he said.

“In the absence of active demand side management, this will entail a capacity growth of 7.8 per cent per year, which translates into a five‐year increment of 124GW above the

2012 level. Therefore, with current reference costs – reflecting prevailing prices of engineering, procurement and construction (EPC) and country investment climates – the capital required for power generation will be in the order of $148bn for 2013‐2017.”

A breakdown showed total investments in power generation, distribution and transmission projects are estimated at $104.7 billion in the GCC, $61.1 billion in Mashreq (east) Arab nations, $32.1 billion in Maghreb(west) Arab countries and the rest are in the remaining Arab nations and Iran.

In a previous study, Apicorp, an affiliate of the 10-nation Organization of Arab Petroleum Exporting Countries, said the GCC is projected to record the highest power demand growth of around 8.5 per cent in the region in the medium term.

It put growth at 7.6 per cent in Mashreq (Egypt, Iraq, Jordan, Lebanon and Syria), 7.2 per cent in other Arab states, seven per cent in Iran and 6.5 per cent in Maghreb (Algeria, Libya, Mauritania, Morocco and Tunisia).
 

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