UAE among world's best five electricity suppliers, says study

The UAE is one among the world's best five electricity suppliers to its people and investors in terms of costs, time and procedures, according to an official Arab study, which cited a new index by the World Bank.

Although it is surpassed by Qatar in power supply costs and procedures, the UAE was ahead of all Arab countries in the overall 2010 power supply index just introduced by the Washington-based World Bank on a trial basis, according to the study by the Inter-Arab Investment Guarantee Corporation (IAIGC).

The Kuwaiti-based IAIGC, a key Arab League financial establishment, said the new index is vital as easy access to power complements other procedures and facilities in attracting foreign investment and supporting the domestic economy.

The study said the "Getting Electricity Index" did not rank the 140 countries covered in the overall survey but did give ranks in sub-categories, including the costs and number of days and procedures needed to get power.

"The World Bank did not give general ranks in its overall index perhaps because some advanced economies such as the United States and Britain got low ranks compared with some developing nations," IAIGC said.

"At this stage, the World Bank ranked countries only in sub categories… but a team from the IAIGC's Research Section has worked out a general ranking formula in accordance with the categories issued in the World Bank Index."

The report said the UAE ranked fifth to become the only Arab country to be classified within the world's top 10 nations in the Index.

It based the UAE's rank on the fact that there are four procedures and 55 days needed for power connection in the country, while the cost of getting electricity is 15.9 per cent of its GDP per capita income, among the world's cheapest.

Qatar, which has the highest per capita income in the Arab region and one of the highest in the world, was ranked 13, while Saudi Arabia was ranked 17.

The top 10 world nations in the general index are Germany, Iceland, Switzerland, Sweden, the UAE, Denmark, Norway, Belgium, Grenada and Panama.

"Getting Electricity presents findings on the kinds of constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes," the World Bank said about its new index.

"The study tracks all the procedures, the time, and the cost required for a business to obtain an electricity connection for a newly-constructed building. It highlights economies where this process is efficient and others where it could be made simpler and more efficient."

It said the "Getting Electricity" pilot study sheds light on the interactions of businesses with distribution utilities. "In doing so it covers only a small part of electricity service for the 140 economies surveyed. Yet it provides information on a number of issues for which data previously did not exist for such a large number of countries. These include the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection."

A large part of the UAE's power generation facilities is run by gas but costs to consumers have remained among the lowest in the world despite the surge in gas prices over the past few years. Analysts attributed the low costs in the UAE and other Gulf oil producers to heavy subsidies electricity services. Speaking at a recent energy conference in Abu Dhabi, a Western analyst said the UAE and other regional countries could be prompted by a steady increase in gas prices to hike prices of power services to customers.

Douglas Caskie, regional manager of the Scottish IPA Energy company, said higher gas prices mean an increase in the costs of electricity generation in the UAE and could also boost the costs of water output.

"Many power stations in UAE and other GCC countries are gas fuelled... gas represents 75-85 per cent of operating costs… If gas prices increase, this will have direct and immediate impact on power production," he said.

"Realism on pricing is necessary for both buyers and sellers… as for the UAE, it will up to the decision-makers whether the increased costs of gas will be absorbed by government or passed through to consumers."

But according to other analysts, higher operational costs could be partly offset by massive savings in the operation and maintenance of a common power grid being installed by the six-nation Gulf Co-operation Council.

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