Almost eight years later, that enthusiasm has given way to a tempered realism about what can be achieved and how quickly. In this time, electricity industry failures from California to Pakistan have taken the gloss off the dream. Private power has often meant major problems.
There has been an echo in the Middle East. Oman, the first country in the region to build an independent power station, is considering further changes in its electricity structure. Bahrain is yet to adopt the private model and Dubai has so far shown no interest in it at all.
In countries that have gone further than the rest, special factors apply. Qatar’s power sector is now, essentially, in the hands of the Qatar Electricity & Water Company, a firm listed on the Doha Securities Market. But it is still majority-owned by the state and enjoys a gilt-edged offtake agreement with Kahramaa, the government power and water supply monopoly. Similar risk-reducing arrangements apply in Abu Dhabi’s four existing independent water and power projects (IWPPs).
Saudi Arabia, where the big idea of privatising power was embraced first in the Middle East, is the concept’s new frontier and will provide its greatest test. The kingdom has a per capita national income of about $8,000 million and is not rich in the way that Abu Dhabi and Qatar definitely are. In Abu Dhabi, cost savings are in part due to job cuts, a formula that is less attractive in Saudi Arabia where reducing unemployment is a priority. Many, if not most, of its people depend on subsidised electricity and water. Because of Saudi Arabia’s size and the dispersion of its population, system failure could be a disaster.
That is why it has taken so long to apply the Yamani vision. The kingdom insists that developers of its first IWPP in Shouaiba, south of Jeddah, demonstrate that investment and operating costs will be kept as low as possible. A long-term offtake agreement is on offer, but influential figures close to Industry & Electricity Minister Ghazi Algosaibi want competition introduced quickly in generation and distribution. Riyadh continues to be reluctant to provide an unambiguous sovereign guarantee to reassure the bankers. Investors and developers, of course, want excellent returns and are pressing for the adoption of the Abu Dhabi system of long-term guarantees to minimise risk.
Much depends on the Shouaiba project. I am sure the conflicting requirements of the client, the developers and the financiers will be elegantly reconciled. Compromise on both sides is inevitable. But the lesson of the past eight years is familiar. In the quest for faster economic growth, there are no easy answers.
Laureate of Iran
Shirin Ebadi has won the Nobel Peace Prize and, predictably, her deserved triumph has been used to heap fresh abuse on the government of the Islamic republic. The laureate’s words, however, suggest it would be wrong to classify her simply as an anti-regime liberal. Ebadi implies in recent interviews that she accepts the application of Islamic law in Iran, but charges that it is being wrongly interpreted.
Her views echo others who challenge the status quo, from both the left and right, in every country where Muslims form the majority of the population. The real dividing line is between those who believe the final judgement about how the sharia should be applied rests with experts, and those arguing that ultimate authority resides in Muslim people’s will expressed through the ballot box.
The Islamic world is a long way from settling this issue and the debate will continue. But we know where that authority isn’t. It is definitely not in the White House or on Capitol Hill. There were very few committed Muslims in either place the last time I checked.