The value of contract awards in the GCC’s power sector fell by 24 per cent to $4.7bn in the first half of 2012, down from $6.2bn in the same period in 2011.

The vast majority of the GCC power contracts awarded in the first half of 2012 were in Saudi Arabia, the region’s biggest projects market. During this period, $4.7bn of contracts were awarded in the kingdom’s power sector, 79.6 per cent more than the $693m awarded in Kuwait, the second-biggest power market for the period. The $3.4bn-worth of awards in the Saudi power sector was down 5.6 per cent on the $3.6bn awarded for the first six months in 2011.

The largest contract was also awarded in Saudi Arabia, with the Saudi Electricity Company (SEC) awarding the local Arabian Bemco an estimated $1.2bn award to build the PP12 (power plant 12) near Riyadh. The second-largest contract award was also in Saudi Arabia, with Saudi Aramco awarding an estimated $430m contract for the expansion of three independent power plants.

Saudi Arabia is set to continue its dominance in the region’s power sector for the rest of 2012, with $10.5bn-worth of power schemes currently in the prequalification or bidding stage. One contract that is due for award before the end of the year is the estimated $1.8bn power plant for the third phase of Saudi Arabia’s Saline Water Conversion Corporation’s (SWCC)’s Yanbu power project. The kingdom is planning to boost spending in its power sector to cope with increasing demand, with the SEC forecasting in 2011 that power demand would rise to 77,000MW by 2020, up from 46,000MW in 2010. The SEC is planning to tender a 3,600MW power plant for a site on the eastern coast before the end of 2012.

The largest project awards in Kuwait’s power sector in the first half of 2012 were for a $196m telemetry system for the Kuwait Oil Company (KOC) and $140m-worth of transformer substations for the Ministry of Electricity and Water (MEW) in Al-Zour. Kuwait’s power sector is also providing opportunities in the operations and maintenance sector, with the MEW recently awarding a KD88m ($313m) contract to the local Kharafi National to operate and maintain a co-generation power and water plant at Shuaiba North.

The future of Kuwait’s first independent water and power project (IWPP) at Al-Zour North is uncertain, with no further decisions having been made since the country’s National Assembly voted to scrap the existing plans in June.

Qatar was the GCC’s third-largest market for new power projects in the first six months of the year, with $354m-worth of deals awarded. The Qatari government’s success in doubling capacity between 2007 and 2010 has meant that Qatar does not require any further generating capacity until 2016, although it is expected to invest heavily in expanding transmission and distribution networks as it undertakes its vast World Cup construction programme.

In the UAE, $230m-worth of power deals were awarded in the first half of 2012. This included three projects worth $170m in Dubai and a $60m gas-based power project in the northern emirate of Ras al-Khaimah.

Oman awarded only $50m-worth of power deals in the first six months of the year, but is poised to offer a number of opportunities for work in the coming years as it seeks to increase its power capacity and distribution networks. The Oman Power & Water Procurement Company (OPWP) is preparing to launch a tender for its next independent power project (IPP) at Salalah.

For the GCC power sector to match the contract awards made in 2011, its member states will be required to award at least $12.8bn-worth of power deals in the second half of the year. The trend in the GCC power sector in recent years is for contract awards to rise sharply in the second half of the year, with more than $11bn-worth of awards in the second half of both 2010 and 2011.