Bahrain's water and power needs will double by 2020, an expert said yesterday on the first day of a major event on project finance.

International Power Mena region chief executive Dr Ranald Spiers was speaking at the Meed 10th Middle East Project Finance event at the Ritz-Carlton Bahrain, Hotel and Spa.

He told the international delegates at the summit that the kingdom was seeking to 'double its capacity'.

Dr Spiers said Bahrain was currently able to produce 2,400mw of power that figure is 'expected to grow to 5,000mw by 2020.'

Similarly the kingdom's current water needs would almost double from 120 million imperial gallons a day (MIGD) to 220 MIGD in the same period.

The substantial increase in Bahrain's power requirements is in keeping with other Gulf countries, and Dr Spiers revealed the region's current capacity of 47,000mw would have to be increased by 50,000mw over the next 12 years.

However, a shortage of the gas needed to drive new power plants could act as a 'constraint' for countries as they try to meet increasing demand, Dr Spiers said.

'Saudi Arabia has an existing capacity of 26,000mw, and an additional 30,000mw is required by 2020. The biggest issue for developers is the choice of fuel.

'There is not enough gas in Saudi Arabia to meet power needs because of their choice to divert it to petrochemicals. Where is the gas going to come from?'

Dr Spiers said that despite the fact debt markets remain 'cautious' in the wake of the recent credit crunch, and that firms building major power and water projects face rising costs, the trend towards major projects is likely to continue due to 'unprecedented demand'.

'This is probably the most active market in the world. If you look at these markets compared to the merchant markets of US, Europe, and Australia over time then you see you get a better deal in the Middle East,' he said.

International firms felt comforted by the fact they could diversify sovereign risks across a number of countries in the region and by a fast-growing population which underlined future demand.

As well as power projects, the region has become an important territory for the water desalination industry, Dr Spiers added.

'Desalination is the only credible source of water here, driven by the scarcity of fresh water reserves. Saudi Arabia has 17.5 per cent of the world market.'

The latest Independent Water and Power Production projects were becoming larger and more expensive than ever before he said, citing the $3.5 billion Ras Laffan C project in Qatar. In future Islamic debt could play a larger role in financing such projects, and there was little sign of funding problems on the horizon, with Dr Spiers saying that 'equity is still out there chasing projects'.-TradeArabia News Service