Qatar plans to spend $5.75bn up to 2010 to meet its growing demand for electricity, which is increasing at an annual rate of 12 per cent. This investment will not be limited to the introduction of new power generation capacity. As the emirates’ population has expanded and new industrial, commercial and residential projects have developed, Qatar has had to make sure that its electricity transmission network is able to keep up.
As a result, the country is conducting the largest transmission system expansion project in the region. By 2010, Qatar General Water & Electricity Corporation (Kahramaa) will have spent $9.6bn on developing its transmission infrastructure since 2002.
In January, Kahramaa awarded more than $1bn worth of contracts on the eighth phase of the transmission expansion programme, the largest stage of the scheme to date (see table). The pace of work on the transmission system is staggering. Work on phase 7 is almost complete and construction on phase 8 has already begun. Kahramaa is now pushing ahead with phase 9 of the programme.
Tenders for the project will be issued in the third quarter of 2008. Under phase 9, contractors will be called upon to build 22 new sub-stations at the 400kV, 220kV, 132kV and 66kV level, as well upgrading eight existing ones. They will also install 297.7km of underground cables and 61.6km of overhead lines.
Focusing on the development of the western, southern and northern regions of the country, it is expected that phase 9 will cost a similar amount to its predecessor. The ninth phase of the expansion programme will meet projected load growth up to 2012.
Beyond that, the scope of further expansions is unclear. “We have a five-year plan from now until 2012,” says Saad al-Mohannadi, manager of network planning at Kahramaa. “Up to then, phase 9 is sufficient. If we receive any new load growth, there will be a plan for phase 10.”
Kahramaa has yet to decide how it will tender the work that phase 9 comprises. “Up to now, we have not finalised an awarding policy,” says Al-Mohannadi. “We don’t know whether it will be an open tender, or if we will keep it for particular contractors.”
If Kahramaa opts for the latter, it will mark a return to its policy prior to phase 8, which was the first time it had issued an open tender for work on the transmission system expansion programme. On previous phases of the project, only companies invited to bid by Kahramaa were allowed to do so, and the utility gave preference to technology manufacturers over engineering, procurement and construction contractors. “The strategy was to ensure the quality of supply, and for that reason we kept the tender closed for some particular contractors,” says Al-Mohannadi.
Limiting participation to manufacturers meant projects were more likely to be delivered on time. “Because this is a huge project, which needs to be completed in a short time, Kahramaa only wanted big com-panies and EPC contractors that are manufacturers themselves so it has control over procurement,” says Momcilo Mrvic, project manager of Serbia’s Energoprojekt, the consultant on phases 6, 7 and 8 of the expansion programme.
Significantly, opening the projects to more contractors and increasing competition resulted in lower cost rises between phases 7 and 8 than between phases 6 and 7.
“Compared to the rest of the region, costs in Qatar are the highest,” says Mrvic. “Mainly the cost for civil works is going very high.”
According to Mrvic, the cost of work on the expansion project grew almost three times between phases 6 and 7, which was awarded in 2006. The cost of inflation between phases 7 and 8, however, was about 25-30 per cent.
The speed at which the expansion programme is being implemented poses several problems for Kahramaa. Scarce contracting resources are a key concern.
“It will be in the hands of the client to look at which contractors are free to do the job [on phase 9] because resources are scarce now and it is not easy to find quality human resources,” says Sandeep Sharma, project manager on Isolux Corsan’s portion of phase 9.
“I do think Kahramaa has very aggressive schedules and stringent procedures. It always wants all projects implemented on a fast-track basis, but third parties work on a normal-track basis, so getting approvals becomes quite difficult for contractors.”
To ensure that schedules are met, Kahramaa has introduced significant changes in recent years. It has, for example, brought in consultants to assist with the expansion programme. “Resources within Kahramaa are limited,” says Sharma. “It has 20-25 contractors working for it now, but the number of people dealing with the projects at Kahramaa has not changed.
“It has used consultants to help to overcome at least part of the backlog of approvals, so it is becoming more effective.”
Others agree that the availability of human resources at Kahramaa is a major constraint. “It is a huge load on Kahramaa,” says Mrvic. “It did not increase its staff and has increased the workload, and they have to cope with all these requirements in a short time.”
Kahramaa also recognises it will have to be very selective when it comes to awarding the next round of contracts.
“Because we have a lot of projects and contractors are busy with already awarded contracts, we don’t want to give new awards to the same contractor to delay both his projects,” says Al-Mohannadi.
An open tender on phase 9 could go some way towards resolving this problem by allowing new contractors into the market. Alternatively, contractors currently completing work on phase 7 could bid for the new spate of projects. Having already gained experience in the Qatari market, they will have a distinct advantage over newcomers.