Tractebel's moves were not only disappointments for the authorities in Abu Dhabi and Amman, but the latest in a hail of blows dealt to regional programmes for private power. The reality is emerging that as the number of potential private power projects in the Middle East grows, the number of potential developers is in sharp decline.

While none have sold out - no existing contracts have been broken, nor stakes in power projects divested - the list of bidders interested in new projects has become ever shorter over recent months. Tractebel is not alone in signalling that it has no further appetite for regional initiatives. The US' big three - AES Corporation, CMS Energy Corporation, and PSEG Global - have all been regular bidders on regional projects, but have all now indicated that they will not be seeking new opportunities.

Some exits have been forced: Enron Corporation may have left the region in an orderly fashion - its only power asset was a 33 per cent stake in the Gaza IPP - but it is unlikely to return with US courts still hearing accounts of its demise and creditors still picking at its carcass. The other US developers have also been hit by problems in their core markets that have led to debt service problems and tanking share prices.

While the trend is clear, the reasons for retreat differ. Things are not so bad on the other side of the Atlantic - most of the continental European developers remain in better shape than their US counterparts - but all is not well. Tractebel has left the market not because of its own financial difficulties - it is one of the few developers to maintain an investment grade credit rating - but because of radical restructuring by its parent company, the Suez Group of France. Other European heavyweights such as the US' InterGen and Enelpower of Italy have also shown reluctance to bid for Gulf projects.

The timing could scarcely be worse. Just as the appetite for regional projects seems to be in decline, so the demand for increased investment is approaching its peak. The philosophical argument over the benefits of private power has only recently been won in the Middle East - the major remaining recalcitrants can be found in Dubai. In the Gulf, Oman and Abu Dhabi have led the way with IWPP and IPP programmes, while Qatar has followed. But, with Saudi Arabia and Iran in the process of bringing extensive programmes to market, and further developments planned elsewhere, critical mass is only now approaching. In Saudi Arabia alone, a raft of initiatives are calling for the installation of almost 10,000 MW of private power. In Iran the build-own-operate (BOO) and build-operate-transfer (BOT) programme will require about $5,000 million of investment in the near term. The passing of a new sector law in Oman will clear the way for the sale of three existing power plants, and the Sohar IWPP is seeking advisers. The IPP route is also being examined for proposed power projects in Kuwait and Bahrain (see MEED's Power Projects Table, pages 28-29).

The danger is growing that after fierce competition between developers on the early regional projects, there will be rather too little on some to come. Recent bid lists illustrate the point. When Egypt's Sidi Krier project was presented to the market five years ago, there were nine bids tabled. That only two bids were made for Umm al-Nar - arguably a far more secure project in a more stable environment - is significant.

One ray of hope is that developers might appear from new sources. The Japanese could be coming to the rescue. Certainly, the presence of Mitsui & Company and Tokyo Electric Power Company alongside International Power in the front-running group bidding for the Umm al-Nar project could be an important marker. Japanese companies have tracked Saudi initiatives from an early stage and Mitsubishi Heavy Industries, Mitsui and JGC Corporation are prominent among the shortlisted bidders for Saudi Aramco's proposed IPPs at Juaimah, Shedgum, Ras Tanoura and Uthmaniya. Just how prominent will be seen after the 28 February bid deadline.

There is a possibility that other Japanese companies will seek to take the developer's role, supported and encouraged by the Japanese government. The extent of Japan's reliance on the Gulf region as its primary supplier of energy is considerable - 51 per cent of Japan's energy needs are met by imported crude oil and 88 per cent of this comes from the Gulf, despite attempts at diversification. One of the results is a willingness to build a sense of reciprocal dependence through strong Japanese investment in the region's infrastructure.

However, Japanese developers alone will not be enough. The Middle East will have to seduce continental Europeans such as RWE, Steag and Electricite de France, among others, if the demand and supply equation is to remain in healthy balance.

If it cannot and the pendulum swings too far, making the power sector a sellers' market, some regional authorities might be a forced into a strategic rethink. The shift could herald a return to the engineering, procurement and construction (EPC) path that predated the developers.

The debate over private power has been won, but the theory might be hard to put into practice. And the implications are immense. One of the most telling points in the argument for private power generation in the region was that without it, governments would be facing a massive wall of investment if installed capacity is to grow in line with projected demand growth.

And it is not just generation that requires private sector investment. Privatisation, as envisaged in the proposed sale of Electricite du Liban and the plans under development in Qatar and Oman for the transfer of ownership of power grids could also be affected if international appetite dries up. For the region as a whole, the need to sell itself is rising fast up the agenda.