22 March 2005
ABU DHABI -- The construction work on the first phase of the GCC grid costing $1.189 billion would start in September this year that will interconnect countries of the northern Gulf-Kuwait, Saudi Arabia, Bahrain and Qatar.
"In the first phase, the four countries of the Gulf would be interconnected by year 2008, in the next phase costing $300 million, the internal interconnection of what is called as the Southern system comprising the UAE and Oman, would be formed while in the last phase costing $137 million, the northern and southern grid systems would be finally interconnected by year 2010", said Dr Saleh Alawaji, Saudi Arabian Deputy Minister for Electricity, who is also the Chairman of GCC Interconnection Authority.
He was speaking at the three-day second Middle East Power and Water conference being organised by MEED here in the capital in which government officials, water and power sector executives, bankers and technocrats from the GCC, and Middle East are taking part.
About the economic viability of the ambitious project, Dr Saleh said the benefit to cost ratio for phase- 1 of the project is of the ratio of 1.5 and that the pay back period for the investment is less than four years. Given the small incremental cost of phase III, he said this phase would further improve the attractiveness of the project.
Upon the completion of phase -I and the reduction of generation capacity, the total cost savings rate of return after four years from operations would be $2.5 billion. While after the completion of phase-III, he said that the total cost saving rate of return after three years from operations is projected at $3.35 billion.
Late last year, a green signal was finally given to the phase-1 of the project, as the project was declared technically feasible following consultants report. The phase has been divided into several work packages: substations, back-to-back HVDC converter station, submarine cable, overhead transmission line and a control center.
"The intent is to enable a wide participation by international contractors in the implementation of the GCC project in an efficient and economic manner", he said.
About the time schedule for the project, Dr Selah said bidders have already been pre-qualified for the different packages in the first quarter of 2004, while the tender documents were issued last month and bids are April next month.
He said that soon the bids will be evaluated and it is expected that contract awards will be made in August/September 2005.
BY HASEEB HAIDER
© Khaleej Times 2005
