The island Kingdom has turned to public private partnerships to power its economic expansion.
Bahrain is in need of new sources of power as well as upgraded and new power networks as it strives to meet the demands placed on by a growing economy and expanding population. This was made abundantly clear in July, when energy consumption reached a record 2,650MW, according to the Bahrain Tribune, as temperatures soared beyond 40 degrees Celsius.
Bahrain had 2.3 gigawatts (GW) of installed electricity generation capacity in 2007, according to estimates by Business Monitor International (BMI), all of which coming from conventional thermal sources. An estimated 9.2 billion kilowatthours (KWh) of electricity was generated in 2006, an increase from 8.2 billion in 2005. There are currently no exports of electricity and no imports. Bahrain is now connected to the GCC Interconnection Grid, however, which will enable it to tap electricity from other countries, as well as participating in a future regional energy market.
The Ministry of Electricity and Water (MEW) anticipates annual growth in electricity consumption of seven percent each year for the next decade or so.
The authorities are encouraging independent power plants (IPPs) to operate and they have also privatised some state power assets. Bahrain is one of the few countries in the Middle East that has laid the regulatory framework for the privatisation of the power generation industry, say experts.
The private sector has already contributed to the electricity and water sector in Bahrain through the construction of Bahrain's first IPPs, Al Ezzel, and the enlargement of Al Hidd power and water station.
When fully operational in 2011, the Al Dur independent power and water project (IWPP) will be the Kingdom's largest electricity and desalination plant and will be operated on a built, own and operate (BOO) basis by GDF Suez and the Gulf Investment Authority.
According to media reports, Bahrain was seeking a US$1.3 billion infrastructure loan to finance power and water projects in 2009. Of this total, $850 million will be allocated to add energy projects to the national grid between 2009 and 2014. Under the plans, Bahrain is looking to build 10 new power stations and expand four others, as well as adding 380 kilometres in underground cables. The remaining funding will be used to upgrade Bahrain's water network.
Bahrain makes much use of desalinated water and major investments are planned to increase production from the current 143 million gallons per day, to 200 million gallons per day in 2011. New transmission systems and storage facilities will also be built. In the waste water sector, production will reach 164,250 cubic meters annually by 2015, up slightly from the current 163,000 cubic meter annual capacity, according to data supplied by Aquastat, a division of the UN's Food and Agricultural Organisation.
Because of Bahrain's size, the challenges it is facing in its water sector are easier to respond to than in larger neighbouring states, such as Saudi Arabia. According to Aquastat, total water withdrawals per capita increased by 14 percent between 2002 and 2007, equal to the rate of growth of the population over the same period. As the population remains small, with less than a million people, a well planned investment strategy in the water sector can cater for the country's needs relatively easily. According to IMF data, the population will reach 920,000 in 2012, up from 830,000 today. It should be noted that the industrial sector has increased its share of water consumed in the country, chipping away at agriculture's share. As economic growth rises, the industrial sector demand is also anticipated to rise.
In 2008, Bahrain's Electricity and Water Authority signed a Memorandum of Understanding (MoU) with Singapore's National Water Agency (PUB). The two agencies will collaborate on the operation and maintenance of water supply, and the design and construction of waste water treatment systems. This partnership will create opportunities for Singapore's own water companies, such as Hyflux and Darco, to enter Bahrain's water sector.
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