Structure

Qatar Electricity & Water Company (QEWC) is a publicly listed joint stock company that is 43 per cent owned by the government, with the remaining shares belonging to public and private firms or individuals. The company, which has its headquarters in Doha, was established in 1990 with paid-up capital of QR1bn ($275m) and a remit to pioneer private investment in Qatar’s power and water sector. The company recorded net profits of QR614m in 2007, against sales of QR1.9bn.

QEWC is the largest power and water generator in Qatar. Its assets are divided between equity interests in independent water and power projects (IWPPs) and full ownership of plants acquired either from the Electricity & Water Ministry, or its successor Qatar General Electricity & Water Corporation (Kahramaa).

QEWC gained its first asset in 1999 when ownership of the Ras Abu Fontas (RAF) B power station and desalination facility was transferred to it from the ministry. An extension to the power plant, known as RAF B1, was commissioned in 2002 by QEWC, and a second expansion, RAF B2, was completed in 2008.

In 2003, QEWC added to its portfolio with the acquisition of RAF A and its three satellite power stations – Al-Wajbah, Al-Saliyah and Doha South Super – from Kahramaa. The same year, it took over the 2 million gallon a day (g/d) Dukhan desalination plant from Qatar Petroleum (QP). An extension, RAF A1, is scheduled to start in July 2009.

In addition to owning these assets outright, QEWC has stakes in three private power and water projects at Ras Laffan and one 2,000MW independent power project under construction at Mesaieed. These projects have been developed in conjunction with international partners, such as the UK’s International Power, Marubeni of Japan and France’s GDF Suez.

Company snapshot

Date established 1990
Main business sectors Power and water
Main business regions Qatar
General manager Fahad Hamad al-Mohannadi

Operations

QEWC owns and operates 2,700MW of power-generating assets and 204 million g/d of desalination capacity. The company is a shareholder in IWPPs with a total of 6,505MW of power capacity and 163 million g/d of water, although much of this is still under construction.

QEWC has signed power and water purchase agreements lasting 20-25 years with Kahramaa for the output from its plants, with the exception of the Dukhan facility, for which QP is the sole offtaker. In 2007, QEWC recorded revenue from the sale of electricity to Kahramaa totalling QR1.04bn, and income from water of QR677.7m. Water sales to QP generated QR11.9m.

The company works in close co-operation with Kahramaa, the body that was set up in 2000 to plan and implement projects in the power and water sector in place of the Electricity & Water Ministry, which was dissolved. Kahramaa is also in charge of maintaining and expanding Qatar’s transmission and distribution networks.

Aside from its generation activities, QEWC is involved in developing new water desalination technologies, working in collaboration with research company Water Re-Use Promotion Center of Japan. A research facility has been set up in Dukhan to study reverse osmosis seawater desalination techniques.

Ambitions

Since its inception, QEWC’s ambition has been to become the leading power generation and water desalination company in the Middle East, by establishing a strong local footing before moving into other markets in the GCC.

Although it has yet to announce plans to expand overseas, the company’s IWPP interests in Qatar are increasing, both in terms of capacity and equity stake. In its first private generation project, the 750MW and 40-million-g/d Ras Laffan A plant, which was commissioned in 2003, QEWC’s shareholding was 30 per cent, but its stakes in subsequent projects have been higher, at 40-55 per cent.

The Ras Laffan C project, due for completion in 2011, is more than three times the size of the original Ras Laffan project in terms of power generation, with a planned capacity of 2,600MW of power and 55 million g/d of desalinated water.

QEWC is participating in the Qatarisation programme promoted by the government to encourage firms to employ nationals. In 2009, QEWC aims to raise the number of nationals on its payroll from 26 per cent of its workforce to 50 per cent.

MEED assessment

QEWC, together with Kahramaa, has managed to keep power generation one step ahead of demand growth. Over the past decade, Qatar has had one of the fastest growth rates in power and water usage in the GCC. In 2007, water consumption in the state grew by 16 per cent, while power demand rose by 17 per cent.

But the government’s decision to separate out generation from transmission and distribution, along with its encouragement of private investment in the power and water sectors, has enabled Qatar to avoid shortages and build new capacity in a timely manner. QEWC has been instrumental in making this possible, proving itself capable of reliably managing and extending the country’s generation facilities.

Demand for power in Qatar is forecast to almost double by 2013, reaching 7,791MW from 3,990MW today. But projects have been set in place by Kahramaa and QEWC to ensure that these needs will be catered for. By 2011, total installed power capacity is expected to be more than 9,000MW once the Ras Laffan C and Mesaieed power plants come on line.

Qatar’s desalination capacity, meanwhile, will total 324 million g/d in 2010, but water consumption is expected to reach 380 million g/d by 2013. Plans are being drawn up for a new 30-50 million-g/d desalination plant to plug an anticipated water shortfall by 2011-13. Preliminary studies are also being made to determine the best location for further power plants.

QEWC and Kahramaa are laying sound foundations for continued economic growth and urbanisation in Qatar. Their recent efforts to boost capacity will have done much to dispel the predictions of impending shortfalls in power and water supply prompted by the mid-2000s real estate boom across the GCC.

QEWC’s gas costs

  • QR489m: Cost of gas purchased from Qatar Petroleum by QEWC in 2007

  • QR458m: Cost of gas purchased from Qatar Petroleum by QEWC in 2006

Source: QEWC

QEWC expanding capacity

Despite being home to the world’s largest non-associated natural gas reservoir, with an estimated 900 trillion cubic feet of reserves in its North field, Qatar’s power sector has had restricted access to gas feedstock.

For much of this decade, Qatar’s gas sector has been focused on increasing exports to lucrative overseas markets, with long-term liquefied natural gas [LNG] deals signed with a host of countries promising gas supplies for up to 25 years.

In 2005, a moratorium on further development of the North field was put in place to enable studies to be conducted into the health of the reservoir. The following year, demand for power and water in Qatar surged by more than 15 per cent.

Between 2001 and 2005, demand growth had averaged 8.5 per cent a year for power and less than 5 per cent for water.

Qatar’s gas consumption is predicted to rise to 4.5 billion cubic feet a day (cf/d) by 2020, from about 1.5 billion cf/d today, driven by increasing demand from the industrial sector and investment in new power and desalination plants.

It is not known exactly when the freeze on allocations from the North field will be lifted, but it is unlikely to be before 2012-13. This uncertainty has forced Qatar General Electricity & Water Corporation (Kahramaa) and Qatar Electricity & Water Company (QEWC) to consider alternative sources of energy production.

In early 2008, Kahramaa began releasing details of its power and water capacity expansion plans. Taking in the period after 2011, the draft plan includes the construction of up to 3,500MW of solar power capacity at Al-Khararah, or 1,080MW of nuclear power at Umm Bab, by 2018. Less than 600MW of gas-fired capacity is included in the programme.

Kahramaa has since said it has identified a good opportunity for an integrated solar combined-cycle plant, and consultant studies on such a scheme are expected to be completed by the end of 2009.

A study has also been conducted to see whether an atomic plant could feasibly be integrated with the electricity grid, its possible location, and the safety measures needed to implement a nuclear programme. However, the nuclear option is currently low on the government’s agenda.

Two major gas projects dedicated to supplying the domestic market are planned. The Al-Khaleej Gas Phase-2 project being developed by the US’ ExxonMobil Corporation will be commissioned this year and will supply 1.58 billion cf/d of gas.

The energy giant is also working on the Barzan upstream development, which will produce 1.7 billion cf/d of gas when the first of six trains starts up in 2012.

State-owned energy major Qatar Petroleum (QP) supplies the fuel for QEWC’s power and desalination facilities, which are all gas-fired.

In 2007, the total cost of the gas purchased from QP was QR489m ($134m), up from QR458m a year earlier.