Second phase of Gulf interconnection project reaches completion

21 April 2011

Project expected to save $5bn

The GCC Grid Interconnection Project completed its second phase, adding the independent power transmission systems of the UAE and Oman to the network.

Phase two was inaugurated on 20 April and follows a previous phase that saw Kuwait, Saudi Arabia, Bahrain and Qatar join the interconnection project.

The second phase cost AED5bn ($1.4bn) in total, of which the UAE contributed around AED800m.

Phase three, the final stage of the project, will join the GCC South Grid to the GCC North Grid. Once this is complete, all six Gulf states will be joined.

The aim of the project is to provide a platform for energy trade and exchange, while improving the reliability of existing energy systems and lowering electricity reserve requirements on GCC countries.

At the inauguration ceremony, UAE Vice President, Prime Minister and Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum justified the price of the project by the potential savings. The project expects to save up to AED18.4bn ($5bn).

The completion of phase two of the projects coincides with the approval of bilateral power trading agreements. In line with international electricity trading, the GCC Interconnection Authority (GCCIA) will act as the regulator and manage the flows of electricity through the network between states.

Pricing is part of the trading agreements and the GCCIA is working on a tariff study along with developing its business plan. In the long term, the authority is working on opening of the network to the private sector.

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