Manama sets course for liberalisation

14 March 2003
Plans are being drawn up for the restructuring of the power and water sector in Bahrain. Request for proposal (RFP) documents have been sent to a number of international banks and management consultants. A financial consultant will be selected to form and lead teams which will include technical and legal consultants. Recipients of the RFP have until 2 April to submit their bids.

The RFP outlines a proposed three-stage reform of the power and water sector. Key components are a full review of the sector, the recommendation of options for its liberalisation, the formulation of a national plan, a review of existing sector law, advice on how an independent regulatory body might be structured and assistance in the establishment of a regulator. The mandate is also expected to encompass the provision of financial advice on future power and water projects.

'The scope of works suggests the process will not be dissimilar to that followed in Oman,' says one of the interested parties.

It is understood that about six banks and four consultants have received the RFP. Among them are thought to be ABN Amro, BNP Paribas, Citibank, HSBC, Booz Allen Hamilton, PricewaterhouseCoopers, McKinsey & Companyand Deloitte & Touche.

Significantly, the RFP has been issued by the Ministry of Finance & National Economy (MoFNE). 'This is important as the existing infrastructure assets are held through the directory of public shareholders, a department in MoFNE,' says another prospective bidder. 'One question that will have to be answered is the extent to which the MEW [Ministry of Electricity & Water] is pleased about this and willing to co-operate. There may be political issues in store.'

Bahrain's power and water sector is not only one of the last to be liberalised in the GCC, it is also one of the smallest. Sector reform should pave the way for the next proposed power plant - which is expected to have capacity of about 1,000 MW - to be tendered on an independent power project (IPP) basis.

The most recent expansion in power infrastructure - the 700-MW extension of the Al-Hidd complex - was originally slated to be conducted on a build-operate-transfer (BOT) basis, but eventually the engineering, procurement and construction (EPC) path was taken (MEED 7:9:01).

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