JEDDAH, 2 October 2005 — Six companies have won 13 GCC power grid contracts worth $1.079 billion to implement the first phase of the multibillion dollar project that would link the six GCC member states with an electricity network.
The decision to award the contracts was taken by the board of directors of the GCC Interconnection Authority (GCCIA), which met in Dammam yesterday, the Saudi Press Agency said. It did not name the companies which won the contracts.
The first phase will link Saudi Arabia, Bahrain, Qatar and Kuwait, the authority said. It includes establishment of an 800-km 400KV overhead line linking Kuwait’s Al-Zour station with Doha and a 400KV submarine line connecting Saudi Arabia with Bahrain.
Dr. Saleh Alawaji, chairman of GCCIA, and Saudi deputy minister for electricity affairs, said the project, which is to reduce the cost of power generation, would be carried out in three phases.
The contracts for the first phase include sub stations, back-to-back HVDC converter station, overhead transmission lines, submarine cables, and a control center. The first phase will be completed by 2008.
Saudi Arabia has offered to meet 40 percent of the cost of the first phase while Kuwait will provide 36.5 percent, Qatar 13.5 percent and Bahrain 10 percent.
A joint meeting of GCC electricity ministry undersecretaries and GCCIA board was held to set out a timetable for monetary flow from the member states to implement the first phase.
The second phase of the project will link the United Arab Emirates with Oman. The resulting two mega grids will be joined in the final phase.
Speaking about the economic viability of the ambitious project, Alawaji said the benefit to cost ratio for Phase-1 is 1:5 and that the pay back period for the investment is less than four years. Upon 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. The total cost saving rate of return after three years from operations is projected at $3.35 billion.
The GCC countries gave the green signal for the power grid late last year after the project was declared technically feasible. “The intent is to enable a wide participation by international contractors in the implementation of the project in an efficient and economic manner,” he said.
The power grid is expected to boost electricity network in GCC member states. It will help them exchange electricity to meet growing needs, utilize their surplus output, save money on new power projects and ensure uninterrupted electricity supply.
