The Gulf has entered the age of private power, says MEED

MEED's second annual survey of power and water developers in the Gulf, which is published in the latest issue of MEED magazine, [26 October 2007], reveals that private-sector investors signed agreements to build around 7,200 MW of new power capacity in the Gulf in the 12 months to October 2007 - approximately 43 per cent of all new project agreements signed in the year.

The figure is an 89% increase on the amount of deals signed by developers in the previous 12 months, to October 2006. And it brings the total capacity of electricity contracted from the private sector in the Gulf to 25,500 MW and 1,500 million g/d of water.

MEED forecasts that in 2008, private developers will for the first time account for the majority of deals to provide new electricity and water in the Gulf, leaving the public sector as a minority provider.

In fact, had it not been for Kuwait's emergency programme to install 2,900 MW of additional electricity generation capacity in order to avoid blackouts this summer, the volume of private-sector deals to provide new electricity and water supplies would have overtaken conventionally procured deals this year.

Richard Thompson, editor of MEED, said:

"The ongoing economic boom in the Gulf means increased demand for utilities - particularly electricity and water. We are now seeing GCC governments increasingly putting their faith in private sector developers to meet this double-digit demand growth. Over the coming 12 months Bahrain, Oman, Qatar and Abu Dhabi are all planning to award at least one Independent Water and Power Project (IWPP)."

"Using the private sector to provide public services, particularly water and electricity supply, is now seen by many governments as a cost-effective way to get new infrastructure built. Not only does this form of procurement model satisfy many of the immediate economic and social needs of the Gulf governments, it is also creating significant opportunities for investors in the region."

MEED's research shows that the UK's International Power (IP) remains the region's biggest private developer of new electricity generation capacity - but only just. IP signed deals to provide 2,614 MW of new electricity generation capacity in 2007, just ahead of Belgium's Suez Energy International, which signed deals to supply 2,599 MW of new power capacity.

The biggest climber of the year was Kuwait-based Gulf Investment Corporation, which signed deals to supply 1,481 MW of electricity, taking it from sixth to fourth largest power developer in the Gulf.

Four deals signed by Riyadh-based Acwa Power in 2007 pushed IP off the top spot on the water developer list, with the company signing deals to provide 130 million gallons a day of desalinated water capacity in the Gulf in 2007. Suez came third on the list of desalination developers.

Dubai and Kuwait remain the last bastions of state generation of power and water and potentially face massive capacity building programmes and could finally turn to the public sector for assistance. Dubai publicly indicated in 2007 that developers may have a future role to play in the emirate.

MEED will publish its full Gulf Developer Rankings 2007 in its issue on news stands from Friday 26th October.

In line with the increased demand for industry data and analysis, MEED Insight will publish an extensive report on the GCC Power & Desalination market in December 2007.