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Fri 9 Jul 2010 04:00 AM

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The heat is on

Subsidies must go to if a summer of discontent is to be avoided.

Reported power outages in Saudi Arabia, Sharjah, and talk of reducing working hours to conserve energy in Kuwait: the summer is well and truly on its way. Peak loads are bearing down once again on a power infrastructure overburdened by the rapid increase in demand.

Ministries and utility providers are not blind to the fact that scorching temperatures are skewing the supply-demand balance, and governments have been busy investing their petrodollars in upgrading their countries' power generation capacity. A quick perusal of the news pages (or a click through the
utilities-me.com

news section) reveal a picture of consistent and unrelenting investment in plants, substations and grids all over the GCC. This month's features section concerns itself with Masdar's record solar power plant, the GCC interconnection grid and switchgear, amongst other things.

All well and good, yet still the summer heat looms large over the region. And while the efforts of the likes of Adwea and the SEC are commendable, it surely will not have escaped their attention that they are catering for a population that pays little heed to saving energy or conserving water. And why should they, as both water and electricity are highly subsidised, and few efforts are made to educate them on the merits of restraint?

Subsidies are based on delicate socio-economic considerations. In a big country such as Saudi Arabia, they serve to support great swathes of the population that have otherwise not seen the benefits of the kingdoms vast oil wealth. In smaller entities such as Kuwait, the government can afford to be generous and bestow on its citizens a cradle to grave benefits system.

Considering the difficulties utilities have in delivering the goods, power and water make for poor political instruments. It is time governments realised this, and pushed through meaningful reform. Saudi Arabia has taken a step in the right direction, with higher electricity tariffs in effect since July 1. But these increases exclude households, which account for 53 percent of power consumption in the desert kingdom.

It is debatable whether governments really have a choice anyway. Power plants take years to build. Power outages are here, now. Quick fix solutions are not usually known for their lasting impact. In this case, slapping a price tag on unreasonable consumption might just keep the air conditioning units working over the summer, and make real headway in leading the GCC down the road of sustainability.

Florian Neuhof, is the editor of Utilities Middle East.

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