Power crisis opens door for companies

The demand for power plants in the GCC over the next seven years could lead to contractors gaining a stake in power projects.

SUPPLY AND DEMAND: Contractors may become stakeholders in power plant construction.
SUPPLY AND DEMAND: Contractors may become stakeholders in power plant construction.

The demand for power plants in the GCC over the next seven years could lead to contractors gaining a stake in power projects.

According to estimates from MEED, projects worth a combined US $50 billion (AED 183 billion) will be needed to meet the demand for 60,000MW of power by 2015.

But as demand escalates, contractors grappling with capacity issues have said that plants may only get built if project ownership is shared with developers.

"If the current demand continues, we believe we may have to become stakeholders," said Ilias Abdo, chief executive officer, Powerflow Engineering.

One of the biggest impediments to power plant construction is finding skilled engineers, added Abdo.

Powerflow has doubled its workforce in the last year to 3,000 and is targetting 6,000 in the next 18 months.

Another problem is managing project timeframes.

"Timeframes are not being kept because of the vested interest of the different contractors on a project all working on different phases, which has a knock-on effect on the next phase," he said. "One of our challenges is getting all those involved to have a vested interest in the entire project.

But according to Dr David Barlow, head of business development, Middle East & Africa, International Power, making contractors stakeholders to overcome such issues could lead to other problems.

"We have seen contractors take stakes in independent power projects, particularly elsewhere in the world, but unless the investment is managed well there could be a conflict of interest," he said.

Other contractors fear that the relationship could be fraught with difficulties.

"Obviously, the contractor will be looking to maximise its profit," said Sujit Tharakan, director, engineering & projects division of Kuwait-based K4 General Trading & Contracting Company. "It will want to make a profit as a contractor and also out of the development, which could lead to a conflict of interest."

Dubai Electricity and Water Authority (Dewa) last week signed six contracts for the development of desalination and power projects in the emirate.

One contractor, who wished not to be named, called for governments to take action before capacity impediments to constructing power and desalination projects spiral out of control.

"We cannot overemphasise the need that something has to be done at a higher level. There are too many projects, but not enough capacity.

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