Gulf oil producers and other countries in the Middle East and North Africa (MENA) need to pump nearly $250 billion in the next five years to expand their power sector and face a rapid growth in domestic demand.
According to an official Arab report, nearly $148 billion will have to be invested in raising generation capacity while the rest will cover transmission and distribution (T&D) of electricity supplies.
The study by the Saudi-based Arab Petroleum Investment Corporation (Apicorp), an affiliate of the Organization of Arab Petroleum Exporting Countries (OAPEC), said growth in MENA’s power sector would far overtake GDP growth during 2013-2017, with the first projected at around 7.8 per cent against real GDP growth of 4.5 per cent.
“This would require an investment in MENA power sector of about $250 billion, nearly 59 per cent for new generation capacity and the remaining 41 per cent for T&D,” said the study sent to Emirates 24/7.
It said the growth rate of 7.8 per cent translates into a five-year power capacity increment of about 124 GW above the 2012 level, partly through combined power/water desalination plants.
“Therefore, with current reference costs – reflecting prevailing prices of engineering, procurement and construction (EPC) and country investment climates – the resulting capital requirements will be in the order of $148 billion for power generation during the forecast period.”
The study by Apicorp senior consultant Ali Aissaoui showed the six-nation Gulf Cooperation Council (GCC), which controls over 40 per cent of the world’s proven crude deposits, accounts for 43 per cent of MENA total and 53 per cent of the Arab world total, noting that expenditures for nuclear power generation is implicit in the case of the UAE and Iran.
“As for investment in T&D, it derives from the need to develop adequate transmission networks to supply electricity to industries, businesses and households in the region. These networks are differentiated between transmission and distribution grids.”
A breakdown showed investment requirement in the GCC would total around $104.7 billion, including $63.1 billion in power general and $41.6 billion in T&D. The report estimated the required total capital at around $61.1 billion in Arab Mashreq, $31.2 billion in Arab Maghreb (North Africa), nearly $4.1 billion in the rest of the Arab world, and $49.2 billion in Iran.
