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Saudi, Egypt Power Grid Project Severely Delayed - Sources

Sunday, May 27, 2012

(This story was originally published Thursday)

--Delay due to political upheaval in Egypt

--Talks may resume after the election

--Project aims to exchange 3,000 megawatts of electricity

By Summer Said

Of ZAWYA DOW JONES

RIYADH (Zawya Dow Jones)--A $1.5 billion project linking the power grids of Saudi Arabia with Egypt has been severely delayed due to the political upheaval in the North African country, according to people aware of the situation.

"The Egyptians are really keen on the project and we are too, but talks have been kind of frozen due to the unrest in Egypt," one person in the kingdom, who declined to be identified, told Zawya Dow Jones.

"Maybe after the elections and the appointment of a new government talks will continue," he said.

The project, which aims to exchange 3,000 megawatts of electricity between the two power-hungry countries through direct current electrical lines, was initially expected to start trial operations in 2015.

Saudi Electricity Co. (5110.SA), the largest listed utility among the Gulf Arab states, and Egyptian Electricity Holding Co. will each finance, own and operate parts of the grid in their respective countries.

Last year Egypt said it would issue in September 2011 a tender for the construction of the project, but the tender has not been announced since then as the country transitions from military-backed dictatorship to democratic civilian rule.

Both Saudi Arabia and Egypt had expected the construction of the mega project to start in 2012.

Egypt plans to send Saudi Arabia electricity through the connection in the afternoons and the kingdom will send electricity to Egypt in the evenings, taking advantage of the difference in the countries' peak usage hours.

Saudi Arabia, the Middle East's biggest economy, has seen its power requirements rise rapidly in recent years as its population grew and the government spent oil revenues on new industries and infrastructure to diversify the local economy away from hydrocarbons.

The kingdom needs to invest more than $100 billion in electricity generation and distribution over the next 10 years to meet the growing demand. It is also studying a plan to export electricity to European markets during the winter when the kingdom's power demands are low, and import it during the summers when the country has peak load.

-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com; Twitter: @ZDJnews

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

27-05-12 0351GMT

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