But the top GCC power and water developers are preparing for a surge in business over the next two years
An annual survey from MEED Insight reveals 2009 had the lowest level of activity in the private developer market since 2004. Yet, as the project finance market recovers, the Gulf is growing in importance for international developers.
Even for France’s GDF Suez, the largest international power and desalination developer in the GCC, 2009 was a difficult period with the firm’s equity in power capacity falling 486MW from 2008 levels. Other developers experienced similar hardship, yet the Gulf market has remained a hotbed of opportunity.
The UK’s International Power’s preliminary annual results showed that operating profit in the Middle East climbed by almost a quarter to £85m ($132m) in 2009, despite losing out on other projects that year. This shift towards the private procurement of new power and desalination capacity for private developers came in 1999, with the Taweelah A2 project in Abu Dhabi. International developers raced to submit competitive tariffs, confirming the viability of the private model in the Gulf.
Today, Abu Dhabi remains the most enthusiastic supporter for independent water and power projects in the GCC, attracting $16bn of investment in 2010.
The main difference now is that where US companies were once the frontrunners in the sector, Asian developers have been establishing their position in the market. The fact that Abu Dhabi, the richest place in the region, continues to follow the private route for its power and water projects, shows promise for international developers in the GCC.