GCC power investments put at over $63 bn

Gulf hydrocarbon producers are expected to pump more than $63 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 in the Middle East and North Africa (Mena), showed the figures by the Arab Petroleum Investment Corporation (Apicorp). The six Gulf Cooperation Council (GCC) countries, which control nearly 40 per cent of the world’s recoverable oil resources, will add nearly half the expected additional power generation capacity in the region. In a paper to an energy conference held in Ras Al Khaimah this week, Apicorp’s senior consultant Ali Aissaoui estimated the total capital in power generation in Mena at $147.5 billion during 2013-2017 to add about 123.9 GW of electricity. “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.” The study put investments in power projects at around $63.1 billion in the GCC, $36.8bn in Mashreq (east) Arab nations, $21.4 billion in Iran, $14.6bnn in Maghreb Arab countries and nearly $2.3bn in other Arab nations. “In the current socio-political context, power/water has emerged as a critical sector featuring prominently on top of Mena policy agendas,” the study said. It said that as a result of high population growth, record levels of urbanization, sustained economic growth and pressing needs for air conditioning and sea water desalination, many countries in the region have been struggling to meet demand. “They now face an even steeper uphill struggle as phasing out price subsidies to rein in excess demand growth has become extremely tricky…. accordingly, power generation capacity is projected to continue growing at an unrelenting rate of 7.7 per cent per year during the next five years.” In a previous study, the Saudi-based Apicorp, an affiliate of the 10-nation Oapec, 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). Aissaoui estimated total energy investment in Mena, including power, oil and gas at around $740bn during 2013-2017. “Compared to past assessments, investment appears on the rise again, driven mainly by costs and a catch-up effect…each of the oil, gas and power value chain now accounts for a third of the region’s total investment,” he said. “The most salient link is the power sector, which has been on a steady rise and is expected to accelerate during the review period.”