Sharjah and the Northern Emirates have experienced some of the worst power cuts in the Gulf in recent years. Sharjah residents have been particularly hard-hit having to endure in 2010 a second summer of widespread electricity outages. 

As both Sewa and Fewa know only too well, additional gas supplies are virtually non-existent

Sharjah’s problems are not due to a lack of capacity. Data for 2008, the latest provided by monopoly generator Sharjah Electricity & Water Authority (Sewa), show the emirate should have had ample capacity to cover peak loads in both 2009 and 2010. Installed capacity of 2,381MW was well above demand of 1,817MW in 2008, leaving a ‘theoretical’ reserve margin of 24 per cent. The Sewa data also suggested the utility did not have a major issue with existing capacity being unavailable. Of the total installed, 2,303MW was classified as being available.

Feedstock woes

Sewa has been tightlipped about the causes of recent power cuts. Faulty equipment at power stations and a transmission and distribution network unable to handle increasing loads have been blamed. However, it is becoming increasingly clear that the emirate’s growing difficulties stem from its precarious feedstock situation rather than anything else.

Although never a major producer, Sharjah had more than enough gas in the 1990s to meet its own requirements as well as some of Dubai’s. In recent years, exports to Dubai have halted and there have been insufficient supplies to meet its own power generating needs. The growing gas issue was highlighted in 2008, when Sewa’s gas consumption fell by 9 per cent, despite the amount of electricity it generated increasing by 8 per cent. To make up for the gas shortfall, the utility was forced to significantly increase its usage of liquid fuels, which led to its fuel bill more than doubling in cost.

Sharjah had long known it would need to start importing gas to offset the decline in gas supplies. In 2001, the local Crescent Petroleum signed a 25-year supply deal with Iran’s National Iranian Oil Company to import gas into Sharjah starting in 2006 in a move that would have secured sufficient feedstock supplies for the emirate’s industrial and power sectors. Despite the infrastructure having been completed on the Sharjah side, gas supplies have still not begun following a gas price dispute.

With little sign of a resolution to its feedstock problems, Sharjah has turned to Abu Dhabi for increased power supplies, which more than doubled to 400MW in 2009. Originally, 2010 was to be the last year Sharjah would import power. Since the 2009 outages, however, a new deal has been agreed between the two emirates, hiking contracted deliveries to 680MW.

Sewa is not alone in becoming more reliant on Abu Dhabi for power. With the generation costs of the Federal Electricity & Water Authority (Fewa) among the highest in the UAE, Abu Dhabi exports to the Northern Emirates are also set to rise, increasing from 1,000MW in 2010 to 2,500MW in 2015. This will not only meet the growth in power demand, averaging 5-10 per cent a year, it will also allow many old Fewa stations dependent on expensive liquid fuels to be decommissioned. In 2009, total Fewa capacity stood at 1,014MW, just ahead of Abu Dhabi imports of 830MW.

Private power has had only limited success in the Northern Emirates. From the mid-1990s through to 2006, numerous independent power projects (IPPs) and independent water and power projects (IWPPs) were proposed in the Northern Emirates, including several in Ras al-Khaimah and Ajman along with a planned IPP at Sharjah’s Hamriyah free zone. With the exception of the Fujairah 1 IWPP, sponsored by Abu Dhabi, not one managed to get beyond the planning stage. In 2007, a UAE cabinet decision was issued on the Northern Emirates power sector, which not only confirmed Abu Dhabi’s increasing role, but also included an amendment to existing legislation allowing local government departments to sanction private power and water projects. The hope was that the new legislation in place would lead to an IPP surge. In the end, only a handful of small IPPs in Ras al-Khaimah came to fruition.

The problem for private developers in the Northern Emirates is a familiar one – feedstock. As both Sewa and Fewa know only too well, additional gas supplies are virtually non-existent. The situation led several developers in 2008/09 to look at alternative feedstocks, including coal. The projects now appear to be on the backburner because of the downturn in the real estate market and environmental concerns.