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New plant to meet energy needs

Manama, June 22, 2007

Bahrain's newly-operational first private power plant will allow the country to meet its high energy requirements.

Al Ezzel Power Company (AEPC) chief executive Stafford Reimers said the $500 million Al Ezzel power plant in Hidd Industrial Area started full commercial operation of 950mw on June 3 and added the new plant would allow Bahrain to meet its energy needs in the coming months with something to spare.

"We are going to make this summer a problem-free one.

"As far as generating capacity is concerned we now provide 950mw and this is up 480mw on last year. I think there is probably a 200mw increase in demand on last year - the ministry have the figures for that. I believe they are reckoning on an increase of around 10 per cent a year, maybe a little more than that.

"But there is no doubt that, as I think the Prime Minister and others have already stated, there is sufficient generating capacity to get us through the summer. I have read about recent problems, but I think they have been in transmission and distribution," he said.

The high-profile Al Ezzel plant was officially inaugurated by the Crown Prince last month, and following the completion of tests is now responsible for around a third of Bahrain's power generation capacity - along with Hidd power plant (962mw) and further facilities at Sitra, Riffa and Muharraq (855mw).

The state-of-the-art facility took 30 months to construct with Siemens Power Group as the turnkey contractor and will be operated by AEPC under a 20-year Power Purchase Agreement (PPA) with Bahrain's Ministry of Electricity and Water.

"The Al Ezzel Power Company started as a joint venture owned with 50pc owned by Suez International Energy and 50pc by Gulf Investment Corporation (GIC).

"Everyone knows GIC are based in Kuwait and owned by the GCC countries and they are looking for investments mainly in the GCC area. So GIC and Suez submitted a proposal with four other bidders on May 1, 2004. We then brought in Bahrain's Pension Fund Commission at a later date.

"They thought this would be a good investment with a good return for them and we were very happy to bring them on board for 10pc," Mr Reimers said.

Asked whether the production of electricity by an independent power plant (IPP) would means higher costs for consumers, he explained that private firms place a high emphasis on efficiency.

"The more efficient it is the better we are off because we have committed to a certain efficiency with the Ministry of Electricity and Water and the PPA. We are paid for operating at a certain efficiency - and if we are not as efficient as the contract says we lose money - or on the other side of the equation we maybe make a little more if we are more efficient.

"We bear the business risk of not being as efficient as we should be, we bear the business risk of not maintaining the plant properly and maybe having breakdowns and being penalised. The one risk we don't take is on fuel price which is basically a pass through - no company would do that, since the cost of fuel is beyond the plant owner's control," he said.

"Traditionally your private operator has more incentive to run the plant efficiently than your typical state-owned utility.

"We are operating this plant with 45 people.

"A typical state-owned utility might have two or three times that.

"As far as efficiency and maintenance ability I think you will find that if you compare an IPP with a state-owned utility it will score on availability and efficiency because of the financial incentives to the owners.

"It's the typical example of a private company doing better on the performance and efficiency aspect than a state-owned project could. They have realised this in the Middle East - in Oman and Abu Dhabi, now in Bahrain and more recently in Saudi Arabia.

"We are very happy to be the first IPP in Bahrain,"<




Tags: Bahrain | Al Ezzel Power Company | Hidd Industrial Area |

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