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MENA power demand to grow at 7%

Transmission and distribution losses are main areas of concern

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$283bn will be invested in power sector between 2014 and 2018
$283bn will be invested in power sector between 2014 and 2018

Power demand in the MENA countries is expected to grow at a rate of around 7 per cent over the next 10 years and an estimated US $283bn will be invested in MENA power sector between 2014 and 2018, said a report published by Kuwait Financial Centre (Markaz).

The report notes that MENA countries, though rich in natural resources that aid in power generation, are bereft of the necessary technology, infrastructure and in some cases, political and economic stability, to fully utilize and benefit from them. In addition, MENA power sector is plagued with problems of transmission and distribution losses. MENA countries, therefore, intend to increase investments in the sector and to look at other alternative sources of power.

In Egypt, domestic oil consumption has grown by over 30 percent over the last decade and the government planned to invest more than US $100bn over the next decade. The economy has, however, been reeling under the negative consequences of political instability and security concerns since 2011.

Meanwhile, surging power demand and shortage of domestic energy resources has compelled the Moroccan government to reduce dependency on non-renewable sources of power generation and strengthen efforts to tap the hydro and solar resources for power generation. Consumption has grown at an average rate of 7 per cent per year over the past ten years, while the production has increased at the rate of 4 percent for the same period.

In 2011, the daily supply rate of natural gas to Jordan was approximately 95mn cubic feet as compared to the demand, which was estimated at 255mn cubic feet. Jordan imports more than 96 per cent of its oil needs and is dependent on Egypt for its gas supplies. The country has not yet explored its energy reserves and there is a huge potential for investment opportunities.

Oil and gas production remains the key source of foreign exchange income and fiscal revenues for Iran. Iran is estimated to have the second largest reserves of the natural gas and the fourth largest reserves of oil in the world. Iran also has abundant sunlight that is underutilized and can be developed as a major source of power. Over the past decade, the Iranian power sector has come under increased pressure to meet the growing consumption needs of the population.

Power consumption in Iraq grew at an average rate of 3.6 per cent over the last decade. But the power distribution networks of Iraq suffer from poor design, lack of maintenance and theft. Iraqi government has announced $28 billion of investments in power sector.

Markaz report points out that depleting natural resources and global environmental awareness have prompted many MENA governments to increase the share of renewable resources in power generation. MENA region possesses 57 percent of the world's proven oil reserves and 41 percent of proven natural gas reserves, but population and economic growth are putting greater pressure on the power sector in the MENA region.

Many countries in the MENA region have planned for the systematic reduction in subsidies, which should help in attracting investments. There is a long way to go for the MENA countries in terms of developing the power sector.

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