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Wednesday, October 20, 2021

Emerging Trends in Power and Alternative Energy Financing in GCC is Promising


The 4th General Conference of Arab Union of Electricity and Exhibition was held under the patronage of H.E Sheikh Hamad Bin Jassim Bin Jabr Al- Thani, Prime Minister and Minister of foreign affairs of Qatar between 7th and 9th January 2013 at Sheraton Doha Resort and Convention Hotel, Qatar. Dr. R. Seetharaman, CEO of Doha Bank participated in the panel discussion “Today’s role and benefits of private capital in the power and alternative energy sector on 8th January 2013.

Dr. R. Seetharaman highlighted the role of private capital and stated “The main advantage of private sector participation is it results in efficiency in delivery and management of projects and in addition to government private players can also participate in the GCC diversification through capital funding. There are globally private equity (PE) players such a as Global Cleantech Capital, Hudson clean energy which focus on clean energy generation and energy efficiency. Depending on the appetite Global PE players can look for opportunities in alternative energy. Islamic finance can also play a role in financing alternative energy”

Dr. R. Seetharaman explained the current trends in power sector in GCC. He said “According to the World Energy Council, the Gulf region alone will require 100 GW of additional power by 2020 to meet increased demand, growing at 7.7 per cent annually. The GCC utilities contract awards are expected to exceed $30 billion in 2013. Saudi Arabia will have $17 billion worth of new contracts. Kuwait and the UAE are forecast to reach deals worth $4 billion over the same period. Qatar is expected to sign $3 billion of new deals, Oman $2.5 billion and Bahrain closes out the figures with $1billion.In 2012 more than $12 bn-worth of construction contracts for power and water projects were awarded in Saudi Arabia. “

Dr. R. Seetharaman explained the current trends in alternative energy sector in GCC. He said “Most GCC member countries have min 5% renewable energy procurement target by 2020. The major projects in GCC include Shams1 Solar CSP project, Paris Sorbonne, Zayed University, Muharraq Waste Water Project, Bahrain and Medina Airport Scheme, Saudi Arabia and ACWA Power, Saudi Arabia. Bahrain was set to build two new 'hybrid' power plants for solar and wind energy at a cost of around $8 million produces five megawatts of energy. Kuwait is planning to establish a solar energy plant to generate electricity at an estimated cost of $ 650 million. The ambitious $19 billion Mazda City, Abu Dhabi is already six years into production and has been set a completion date of between 2020 and 2025. In March 2011 France's Total S.A., Spain's Abingdon S.A., and Abu Dhabi-based Masdar gained US$600m bank loan to build the plant, named Shams 1,Solar power financing project. The Shams 1 plant is being built under the independent water power and power producer (IWPP) model that Abu Dhabi already uses for conventional power and water desalination. “

Dr. R. Seetharaman highlighted the financing trends in projects. He said” Local export credit agencies (ECA) are the major support for EPC (Engineering, Procurement and Construction) contractors or equipment companies. In terms of Project finance structure, ECA funding must be considered first because most projects in the Middle East with high credit ratings have favorable export credit borrowing conditions. Thus, when ECAs provide financial support for a project, they can procure funds under favorable conditions as more international and commercial banks participate in the project. ”

In his closing remarks Dr. R. Seetharaman said “The emerging trends in power and alternative energy financing in GCC is promising”



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