Second phase of $1.4bn Gulf power grid starts

Aims to save up to $5bn; studies under way to connect the grid to Europe
The second phase of the AED5bn ($1.4bn) Gulf power grid became operational on Wednesday with the UAE joining the grid (SAID KHATIB/AFP/Getty Images)
By Reuters
Wed 20 Apr 2011 03:55 PM

The second
phase of the AED5bn ($1.4bn) Gulf power grid became operational on Wednesday
with the UAE joining the grid, officials said.

The
electricity grid unifies those of six Gulf states with the first phase having
become operational in early 2009 connecting Saudi Arabia, Kuwait, Bahrain and
Qatar.

"This
would provide a platform for energy trade and exchange, while improving the
reliability of existing energy systems and lowering electricity reserve
requirements on GCC countries," Sheikh Mohammed Bin Rashid Al Maktoum,
vice president and prime minister of the UAE said in a statement.

The project
will save up to $5bn and will lay the foundation for a common energy market
among the GCC countries, he said, adding it will provide the GCC states with
sustainable energy supplies to support the national economies.

Essa
al-Kawari, chairman of the Gulf Cooperation Council Interconnection Authority
(GCCIA) said studies were under way to connect the gulf grid to the wider Arab
region as well as to Europe.

"The
Arab League is conducting a study for the connection to the wider Arab region
and Saudi Arabia along with the World Bank is conducting the study for
connection to Europe," he told reporters without giving a timeline.

The total
capacity of the Gulf grid is up to 1200 MW, the maximum power that can be
transferred to any country at any time, said Kawari.

Discussions
are currently going on for selling power on a commercial basis. Currently each
Gulf country can negotiate bilaterally with one another to agree on tariffs for
purchase and sale of electricity, he said.

"All
countries have benefited from the grid," Kawari said, adding there was a
penalty for countries for not supplying their quota or spinning reserve to the
grid.

Oman had
delayed joining the grid by two years, Kawari said. "Due to rapid growth
in demand in Oman and the GCC they are expected to join in two years."

The Gulf
Cooperation Council (GCC) is a loose political and economic alliance between
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. ($1=AED3.672)

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