An update on the GCC and Pan-Arab Interconnection Grids

Part I - The GCC RegionPart II - Arab Countries

Saleh H. Alawaji, Ph.D.Chairman of the Board of GCCIA

GCC Interconnection Authority

2005 JEDDAH WATER and POWER FORUM, 12 14 November 2005Jeddah, Saudi Arabia

Contents

Part I - GCC REGION: -- About the Authority- Power Systems in GCC Countries Year 2004 - GCC Interconnection Phases and Scheme- Single-Line Block Diagram- Interconnection Share Capital- Contract Value- Project Timeframe - Future Developments

Part II ARAB COUNTRIES:

About the Authority

Established in July 2001 by Royal Decree No. M/21.

Owned by the six GCC Countries the authorized share capital is($US 1,100,000,000) divided into (1,100,000) shares of ($US 1,000) each share.

The Authority is managed by a (twelve member) Board of Directors; each member country is represented by two members. The Chairmanship is rotated among the member states every three years.

The official domicile of the Authority is Dammam, with the Control Center to be located in Ghunan, Saudi Arabia.

The primary objective of the Authority is to: link up the power grids of the six GCC countries operate and maintain the interconnection become a leading player in the regional electricity market

Power Systems in the GCC Year 2004

28267853,89958,617TOTAL

3.910,5822,4062,485Sultanate of Oman

6.959,72110,56411,184United Arab Emirates

9.513,5802,7103,025State of Qatar

6.08,9181,7382,097Kingdom of Bahrain

8.269,75611,23511,873East Region of Kingdom of Saudi Arabia

6.2 *146,569 *27,847 *30,500 *Kingdom of Saudi Arabia

6.043,3088,6359,326State of Kuwait

Growth Rate(%)

Energy(GWh)

Peak Load(MW)

Total Generation Capacity

(MW)GCC State

* Not included in the total, (East Region of Saudi Arabia is considered)

Benefits of the Interconnection

Reduce generation reserves;Reduce generation reserves;

Provide power exchange and strengthens supply reliability;Provide power exchange and strengthens supply reliability;

Improve the economic efficiency of the electricity power systemsImprove the economic efficiency of the electricity power systems;;

Strengthens operational efficiency;Strengthens operational efficiency;

Promoting utilities to construct larger generation units to sharPromoting utilities to construct larger generation units to share extra e extra generated power;generated power;

Provide opportunities for industrial customers and utilities to Provide opportunities for industrial customers and utilities to shop shop around for more attractive supply of power;around for more attractive supply of power;

Adopt technological development and use the best modern Adopt technological development and use the best modern technologies;technologies;

Providing longProviding long--term environmental advantages by reducing waste term environmental advantages by reducing waste emissions from increasing generation plants.emissions from increasing generation plants.

Interconnection Phases & Scheme

PhaseI

PhaseIII

Phase

II

Phase I: AlPhase I: Al--Zour Substation (Kuwait), AlZour Substation (Kuwait), Al--Fadhili, Ghunan & Salwa Substations (Saudi Arabia); AlFadhili, Ghunan & Salwa Substations (Saudi Arabia); Al--JasraJasraSubstation (Bahrain); and Doha South (Qatar), and a double circSubstation (Bahrain); and Doha South (Qatar), and a double circuit 400 kV line interconnecting all uit 400 kV line interconnecting all substations and HVDC backsubstations and HVDC back--toto--back converter station and Control Center.back converter station and Control Center.

Phase II: double circuit 400 kV line interconnecting Shuwaihat tPhase II: double circuit 400 kV line interconnecting Shuwaihat to Alo Al--OuhahOuhah and associated substations.and associated substations. Phase III: Interconnecting Salwa and Shuwaihat with a double cirPhase III: Interconnecting Salwa and Shuwaihat with a double circuit 400 kV, and a double circuit 220 kV cuit 400 kV, and a double circuit 220 kV

line between Alline between Al--OuhahOuhah (UAE) and Al(UAE) and Al--WaseetWaseet (Oman).(Oman).

Single-Line Block Diagram

BAHRAIN

U.A.E.

EMIRATES NATIONALGRID

AL OUHAH220kV220kV

AL FADHILI 400kV

JASRA 400kVGHUNAN

400 kV600MW

SALWA400kV

SALWA400kV

QATAR

750MW

90km90km

DOHA SOUTH SUPER 400kVDOHA SOUTH SUPER 400kV

290km290km

150km150km

SHUWAIHAT400kV400kV

900MW OMAN

OMAN NORTHERNGRID

AL WASEET220 kV

400MW

52km

112km

100km100km

KUWAITAL ZOUR

400kVAL ZOUR

400kV

310km

1200MWSAUDI ARABIA

SEC - ERBHVDC

BACK -TO -BACK

1200MW

Capacity of Interconnection to GCC

Kuwait

Country

Saudi Arabia

Bahrain

Qatar

UAE

Oman

Capacity (MW)

1200

1200

600

750

900

400

The interconnection allows the reduction of the capacity The interconnection allows the reduction of the capacity reserve up to 50% that of the isolated grid.reserve up to 50% that of the isolated grid.

The interconnection size was dimensioned in such a manner The interconnection size was dimensioned in such a manner that each system can import up to 50% the capacity of its that each system can import up to 50% the capacity of its largest plant. largest plant.

The interconnection size is summarized as follows: The interconnection size is summarized as follows:

Interconnection Share Capital

Founders No. of Shares Nominal Value Percent

United Arab Emirates 169 ,400 $169 ,400 ,000 15 .40 %

Kingdom of Bahrain 99 ,000 99 ,000 ,000 9.00 %

Kingdom of Saudi Arabia 347 ,600 347 ,600 ,000 31 .60 %

Sultanate of Oman 61 ,600 61 ,600 ,000 5.60 %

State of Qatar 128 ,700 128 ,700 ,000 11 .70 %

State of Kuwait 293 ,700 293 ,700 ,000 26 .70 %

1,100 ,000 $1,100 ,000 ,000 100 .00 %Total

Based on the 1990 Project Study it was determined that the share of the cost of the interconnection will be the present worth of the capacity savings.

Contract Value

Substations

HVDC

OHL

Cable

Control

Total

Lots

$221,983,888

$205,896,785

$280,400,717

$343,122,125

$27,637,220

Contract Value

$1,079,040,735

The value of the final evaluated technical and commercial tenderThe value of the final evaluated technical and commercial tenders for the s for the thirteen (13) lots are as follows:thirteen (13) lots are as follows:

Project Timeframe

The Project timeframe for the Phase I Interconnection Project isThe Project timeframe for the Phase I Interconnection Project is as follows:as follows:

Engagement of Consultant

Availability of Bidding Documents

Invitation to Pre-Qualified Bidders

Event

September 2004

February 2005

February 2005

Date

Project Commissioning Year 2008

Pre-Tender Meetings

Tendering Period

Bid Evaluation

Pre-Award Meetings

March 2005

April 2005

May-August 2005

September 2005

Contract Award Ceremonies

Project Construction Commencement

November 2005

December 2005

Other Developments

Consultancy & Supervision ServicesConsultancy & Supervision Services The Authority is currently evaluating tenders to provide ConsultThe Authority is currently evaluating tenders to provide Consultancy & Supervision ancy & Supervision

services for the construction of the Phaseservices for the construction of the Phase--I project.I project.

Review & Approval of Design Documents

Training & Transfer of Technology to

Consulting & Engineering Firm

Contractors

Sub-Contractors & Manufacturers

GCCIA Personnel

Construction Supervision of

Other Developments

Management Consultancy ServicesManagement Consultancy Services Realizing the importance of operating a vital facility such as tRealizing the importance of operating a vital facility such as the interconnection the he interconnection the

Authority has embarked on hiring a reputable management consultiAuthority has embarked on hiring a reputable management consulting firm to ng firm to develop GCCIA into an organization to meet future growth and chadevelop GCCIA into an organization to meet future growth and change.nge.

The vision of the Authority preceding the construction of the PhThe vision of the Authority preceding the construction of the Phasease--I project is to be I project is to be able to fully Operate and Maintain the Interconnection.able to fully Operate and Maintain the Interconnection.

To develop the Authority to become a major player in regional anTo develop the Authority to become a major player in regional and global energy d global energy trading.trading.

ConstructionPhase

Operations &Maintenance

EnergyTrading

Operations &Maintenance

Conclusion of Part I

The technical and economical feasibility for the GCC InterconneThe technical and economical feasibility for the GCC Interconnection ction has been proven, (has been proven, (cost $1.7 Billion, Benefits $3.2 Billioncost $1.7 Billion, Benefits $3.2 Billion))

The GCC Interconnection will enhance the Power Systems of the GCThe GCC Interconnection will enhance the Power Systems of the GCC C Countries.Countries.

The Power Grid is a fundamental step leading to the liberalizatThe Power Grid is a fundamental step leading to the liberalization of ion of regional power market.regional power market.

The GCC grid will be a significant part of the PanThe GCC grid will be a significant part of the Pan--Arab Grid.Arab Grid.

The GCC Interconnection will be the main gateway towards a RegioThe GCC Interconnection will be the main gateway towards a Regional nal and Panand Pan--Arab Power Pools. Arab Power Pools.

For further information you mayFor further information you may

access the website of the Authority at:access the website of the Authority at:

www.gccia.com.sawww.gccia.com.sa

End of Part I

Part IIPart II:: Arab Interconnection GridArab Interconnection Grid

Contents:Contents:

Brief overviewBrief overview

Regional GroupsRegional Groups

Benefits of InterconnectionsBenefits of Interconnections

Mediterranean RingMediterranean Ring

Conclusion & RecommendationsConclusion & Recommendations

Brief overviewBrief overview

CountryCountry Installed Capacity (MW)Installed Capacity (MW) Peak Load (MW)Peak Load (MW) Generated Energy Generated Energy (GWH)(GWH)

JordanJordan 1,7901,790 1,5551,555 8,9678,967

UAEUAE 15,22815,228 10,33410,334 58,48158,481

BahrainBahrain 1,8491,849 1,6321,632 8,4488,448

TunisaTunisa 3,5693,569 20082008 11,50811,508

AlgeriaAlgeria 6,7536,753 5,5415,541 30,88530,885

KSAKSA 30,52630,526 27,84727,847 159,875159,875

Sudan Sudan 1,2011,201 611611 3,7493,749

SyriaSyria 7,0797,079 5,6205,620 32,07732,077

IraqIraq ** ** **

OmanOman 3,1663,166 2,6262,626 11,48511,485

PalestinePalestine 00 240240

QatarQatar 1,8291,829 2,5202,520 13,23213,232

KuwaitKuwait 9,7099,709 7,7507,750 41,25641,256

LebanonLebanon 2,3122,312 1,8501,850 10,27510,275

LibyaLibya 4,7084,708 3,6123,612 20,20220,202

EgyptEgypt 18,32418,324 14,73514,735 95,18395,183

MoroccoMorocco 5,0065,006 3,1913,191 16,38316,383

MauritaniaMauritania 9999 58**58** 174174

YemenYemen 1,1051,105 642642 4,3384,338

TotalTotal 114,253114,253 92,37292,372 526,518526,518

Installed Capacity, Peak Load and Generated Energy in 2004

* No available data. ** Data of year 2003. Source: AUPTDE; Statistical Bulletin 2004

Brief overviewBrief overview

High Annual Growth Rate 4-6%

Investment needs $130 billion (2000-2020)

Cost of Interconnections $8.5 billion

Total Net Benefits $10 billion

Weak private financing

Good opportunities for investors

Extrapolation for electricity in Arab countries

2000-2015

Source: Oxford Institute for Energy Studies; R. Alami

Extrapolation for electricity in Arab countries

2000-2015

Source: Oxford Institute for Energy Studies; R. Alami

Electrical Connections Between Arab countriesElectrical Connections Between Arab countries

Groups currently connected or will be connected: Groups currently connected or will be connected:

Heptagonal connection group : Egypt, Libya, Heptagonal connection group : Egypt, Libya, Jordan, Syria, Lebanon, Jordan, Syria, Lebanon, Turkey* and Iraq*.Turkey* and Iraq*.

Arab western connection group: Libya, Arab western connection group: Libya, Tunisia, Algeria and Morocco.Tunisia, Algeria and Morocco.

GCC connection group* : GCC connection group* : KSA, UAE, KSA, UAE, Bahrain, Qatar, Oman and KuwaitBahrain, Qatar, Oman and Kuwait

* * will be connectedwill be connected in future.in future.

Regional Groups

Estimated Net Benefits of Pan-Arab Interconnections(Projects Funded by AFESD)

Costs 930 Million $

Net Benefits:

2.8 Billion $

Source: Report of AFESD on Arab Interconnection Projects; Achievements and Challenges.

Transmission line capacities in the gridTransmission line capacities in the gridof the Mediterranean Ring in 2010 in MWof the Mediterranean Ring in 2010 in MW

Italy

Turkey

Syria

Jordan

EgyptLibyaTunisiaAlgeriaMorocco

Overhead lines Marin cables

Marin cables under study

Swaziland

Spain

France

600

600

600

600700130140

600

200200200700

350350

290

380

Conclusions & RecommendationsConclusions & Recommendations The Pan-Arab, and the GCC Grids are fundamental step leading to the

liberalization of the power markets, and promoting regional social, economic development and assuring environmental protection.

The great expansion of Arab electrical interconnection requires every state to focus on completing and enhancing its internal grid, so as to enhance the capability of the Pan-Arab interconnection.

The private sector must be encouraged to participate in Electrical Projects in Arab Countries, such as power production and transmission projects, where there are good opportunities for investors.

Power projects in Arab countries suffer from lack and shortage of financing, therefore, it is the role of the governments to take the necessary measures so that the financial institutions could provide the required fund.

THANK YOUTHANK YOU

Part II: Arab Interconnection Grid Brief overview Brief overview Electrical Connections Between Arab countriesTransmission line capacities in the gridof the Mediterranean Ring in 2010 in MWConclusions & Recommendations