Power consumption in Bahrain is expected to increase by 4-7% annually in the next decade.

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Sharing the burden

Bahrain's reliance on the public private partnership model has so far served its utilities sector well. But will financing difficulties put a stop to its expansion?

Unlike most of the other nations in the GCC, the Kingdom of Bahrain is not blessed with significant oil reserves. As a result, the state has been effective in winning foreign direct investment (FDI), particularly due to a recent free trade agreement with the US. However, the Economist Intelligence Unit (EIU) predicts that FDI will be more subdued in the next five years; a fact that has so far not offered any restraints for the country's utilities sector.
The turning point for Bahrain's power sector came five years ago, when the country's installed base was not enough to cope with demand over the peak summer period. Since then, Bahrain, along with its fellow GCC member states, has moved strongly to address the deficit, with public private partnerships helping to make up the shortfall.

In particular, the growing number of independent water and power projects (IWPPs) in the GCC has offered many opportunities for international companies to invest in the utilities sector. In many respects, Bahrain has proved to be something of a leader in this field, a fact that was underlined by the successful financing of the US $2 billion Al Dur IWPP, which will have a capacity of 1234 MW and 218,200m³ of desalinated water per day when it comes online in 2011.

But Al Dur was not the first IWPP in Bahrain's power sector. In January 2007, three companies - International Power, Belgium's Suez Energy and Japan's Sumitomo - bought the Al Hidd power and water plant for $738 million. Their investment in the project will increase the total amount of funds ploughed into Al Hidd to around $1.25 billion.

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