APICORP, the multilateral development bank focused on the energy sector, on Tuesday published its latest research report on the regional power sector. The report forecasts that the Middle East and North Africa (MENA) region will require US$260bn of investment to meet rising and suppressed electricity demand.
APICORP said that the GCC governments have coped well with the rising electricity demand. The GCC countries currently represent 47 per cent or 151GW of current MENA power generating capacity.
APICORP forecasts that the GCC countries will need to invest US$55bn to create 43GW of additional generating capacity and another US$34bn in transmission and distribution over the next five years.
According to APICORP estimates, Oman will need to invest US$5.4bn in additional generating capacity and another US$3.4bn in transmission and distribution by 2022.
In Oman, APICORP said the current medium-term plans are for the development of plants with a combined capacity of 4.6GW. ‘Two major projects are the 1.7GW Sohar 3 IPP and 1.5GW Ibri IPP, both due on line in 2019. Oman also plans to integrate renewables in the power mix with the Oman Power and Water Procurement Co in the process of tendering a 500MW solar PV project expected to be commissioned in 2021’, it said.
The report said the required additional generating capacity in the GCC will be found in traditional and renewable forms of power generation. Saudi Arabia will lead the way in both, with the country needing to invest around US$21bn, which will increase capacity to 92GW.
The UAE needs to invest at least US$33bn to meet its expected additional 16GW capacity requirement over the medium term.
Ghassan al Akwaa, energy sector specialist at APICORP, said, “Fiscal challenges have meant that governments are no longer able to support the provision of cheap power. Many countries are accelerating their price reform plans with the aim of liberalising prices in the short term. At the same time, there is a growing role of independent power producers (IPPs) in the region’s power sector.
Governments have limited options in the medium-term and IPPs will continue to be at the forefront of governments’ strategies to add generating capacities.”
Mustafa Ansari, senior economist at APICORP said, “The GCC governments will continue to cope well with rising demand, using price reforms as an effective tool. Renewable energy projects will also continue to be at the forefront of long-term government plans to diversify generation capacity.”