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Saudi Arabia to invest $133 billion in electricity projects

Saudi Arabia will need to invest 500 billion riyals ($133.3 billion) to cope with rising demand for electricity over the next decade, its electricity and water minister has said, according to Reuters. 08 Feb 2016

Electricity and water minister Abdullah al-Hussayen told a recent conference that the country will reach a peak in demand for electricity in 2022 when it will need 90,000 megawatts (MW), Reuters reported. The current installed capacity is around 70,000MW, the news agency said.

"The expansion plan in the sector...requires the execution of electricity projects for the next 10 years whose costs will exceed 500 billion riyals and in which the private sector is expected to take part," al-Hussayen said, according to Reuters.

Al-Hussayen said he expects contracts to build an electricity grid to connect Saudi Arabia and Egypt to be signed by the middle of this year, and the project is due to operate at full capacity before mid-2019. This will involve energy trading between the two countries, which use power at different times: peak power consumption in Saudi Arabia is in the middle of the day, while Egypt uses more electricity in the evening, Reuters said.

Saudi Arabia's deputy oil minister Prince Abdulaziz Bin Salman told the same conference that the country's energy consumption is expected to grow by 4-5% annually in the next few years, reaching double its current level by 2030 if no efficiency measures are taken, the news agency said.

Domestic energy consumption uses around 38% of the total oil and gas resources produced in the kingdom. However, an efficiency programme being put in place could save 1.5 million barrels per day (bpd) of oil equivalent by 2030, Bin Salman said, according to Reuters.

Dubai-based Mark Raymont of Pinsent Masons, the law firm behind Out-Law.com said: "The comments from the Saudi government minister serve to highlight the fact that, whilst many are exercising understandable caution when assessing possible short to medium term opportunities in the Saudi power market, nevertheless the political and economic imperatives that have driven recent growth remain influential in this sector and are likely to encourage a continued pipeline of significant power projects to facilitate further expansion."