Sheikh Abdullah:Primarily to achieve the following objectives: to benefit from the private sector's experience and efficiency to achieve better performance criteria; to concentrate the government's financial resources into basic infrastructure such as health and education; and to enhance our capital market and give the private sector the chance to play a role in financing important infrastructure investment opportunities in Bahrain.

At what stage is the privatisation process?

The process is under way with the appointment of the Privatisation Committee with representatives from this ministry (MEW); the Finance & National Economy Ministry; the Economic Development Board, and advisers from the Crown Prince's court.

An inquiry was issued in March for international consultants with expertise in the restructuring of power and water sectors. Eight offers were received from various bidding consortiums including financial, management, technical and legal expertise. The committee is assessing these offers and clarifications were held in the latter part of May with the best contenders for the award (see page 20).

Is demand for power and water big enough in Bahrain to draw in developers?

The interest of private developers in countries such as Bahrain does not only stem from growth in demand but also the economic and political stability of the country and the region. The kingdom provides a strong platform for such investments and reputable investors, both international and regional, have always shown keen interest in investment opportunities here. We are confident that this trend will continue to be reflected through the forthcoming opportunities in the next phase development of Hidd adding another 1,000 MW to generating capacity. The first development phase is scheduled for completion by 2006. The signals we are receiving from the market are so far very positive.

How will the privatisation be structured?

The structure will be determined by the comprehensive study which will be carried out by the consultant who is to be appointed very shortly. The government has given the consultant a free rein to accurately study the past financial and technical data of the electricity and water sector and accordingly tailor and propose suitable and optimum structures that can bring about benefits of privatisation both to the government and to the customers and establish true competition in the long term.

What are your plans for additional power and water capacity?

At present, work is under way to commission the third gas turbine on Hidd Phase 2. The steam turbine, which is part of the same phase, will be commissioned before the summer of 2004. This will bring the total capacity of the Hidd power and water complex to about 1,000 MW and 30 million g/d of desalinated water. This capacity will be sufficient to serve the load growth until summer 2005.

New generation capacity needs to be commissioned before the summer 2006 and this we expect to come from 420 MW of additional power at Hidd out of a total of 1,000 MW in generating capacity that will come from private development. Our long-term plans indicate that 1,000 MW will be sufficient to sustain us until summer 2011. Rehabilitation work is also under way to extend the life of the existing power plants such as Riffa by some 15 years.

The water capacity expansion plan has already started for Hidd phase 3 with a capacity of 60 million g/d based on multi-stage flash technology planned. The steam requirement for this water has already been incorporated into the plan as part of Hidd phase 2. The ministry is also evaluating the restoration of the Addur reverse osmosis (RO) plant to its original capacity and the rehabilitation and enhancement of the Ras Abu Jarjur RO plant.

Are you planning to continue to buy power from Aluminium Bahrain (Alba)?

he power purchase agreement signed with Alba some 10 years ago is scheduled to expire before summer 2004. The ministry has substantially benefited from the agreed annual energy imports from Alba and the agreement has worked with the utmost spirit of co-operation. With this attitude in mind, the ministry is actively engaging with the executive management on ways to continue energy imports from Alba for the next few years. We hope to reach a concrete mutual agreement with Alba before the end of the year.