The cost of establishing a region-wide electricity grid will be $6,000 million, according to a study carried out by the Arab Fund for Economic & Social Development (AFESD). However, the Kuwait-based organisation forecasts that savings from the inter-connection project will reach more than $10,000 million, offsetting the enormous capital costs.

'The joint Arab power grid will reduce investment needed to raise electricity production capacity to face demand,' the AFESD study said. 'This will save more than $10,150 million...meaning that there will be savings in both areas of the Arab world of $4,150 million.' The project will be implemented in stages, with the most expensive phase of the power grid - linking the networks in the GCC - estimated to cost $2,000 million, AFESD says.

In early May, ministers from Egypt, Jordan, Syria, Iraq and Turkey signed a protocol to carry out the second phase of the programme, involving the connection of the five countries' grids by 2002. The work is expected to cost $1,500 million and be financed by AFESD (MEED 20:5:94).