Kuwait faces a major energy crisis this summer, with widespread power cuts likely as demand for electricity overwhelms capacity. But the crisis has been predicted and, with better planning, can be averted
Ed James reports
The average daily temperature in Kuwait in the summer months is 44°C. During the day, thermometers regularly record temperatures of more than 50°C. According to international classifications, the discomfort from the combination of heat and humidity from June to September is extreme - the highest possible level.
More than half the local population flee the state every summer for this very reason, seeking cooler climes abroad. The rest, including most of the expatriate community, have no choice but to live through the heat, relying on notoriously power-hungry air conditioning to conduct their normal day to-day activities.
But this summer, even that might not be possible. The state has total installed capacity of 9,800 MW. This summer peak demand is forecast to approach 9,700 MW - if not more - far exceeding the accepted 20 per cent reserve required to cope with sudden spikes. There is a very real threat of widespread and prolonged brown and blackouts from May onwards. Put plainly, Kuwait is heading for an energy crisis.
"It all depends on the temperature," says Jassem al-Jamal, assistant undersecretary for power transmission at the Energy Ministry (Electricity & Water). "If it exceeds 48°C during the peak period [13.30-15.30pm] and if people do not reduce their consumption, then we will have some problems."
Failure The story behind the sorry state of affairs is one of poor management, indecision and wasted opportunities. As far back as 1997, it was clear that new capacity had to be brought on line toward off a future shortage. However, low oil prices and underestimated population projections from the Planning ministry meant that it was not until 2002 that the Energy Ministry had the budget and the data to start gearing up for new capacity additions.
Since then, only 1,000 MW has been added to the grid - at Al-Zour south -while demand has surged by an average of more than 5 per cent a year for the past four years. The 2,500-MW AI-Zour north, the 500-MW AIZour south combined cycle conversion and the 1,500-MW Subiya power plant projects have all stalled through a combination of contractor disinterest and the state's rigid and outdated tender regulations.
"We are talking to people and industry to try and reduce their consumption during peak times" Jassem al-Jamal, assistant undersecretary for power transmission. Energy Ministry
Efforts are now being made to rectify the situation and avoid disaster this summer. The Energy Ministry recently signed three contracts, totalling almost $1,000 million, for the fast-track installation of almost 1,000 MW of emergency power generating capacity at three existing power plants in the state. Under the terms of the agreements, the new turbines must be installed by the end of July, with first capacity coming on stream within just 100 days, demonstrating just how urgent the ministry views the situation.
Yet even with the emergency additions, there may still not be enough electricity. The ministry had placed a fourth contract -with the US' BTECH Turbines - but the deal fell through because agreement on contract conditions could not be reached. "This has put us in a difficult situation," says AI-Jamal. "We will have to hope that all our equipment does not develop any faults."
Contractors are less sanguine. "It's going to be really tight," says one. "Frankly most of us in the industry believe that Kuwait won't make it this summer. It's difficult to see how they will have enough capacity in place in time." Even if it is, there are doubts that the network will be able to cope. According to a report drawn up for the ministry late last year by an independent Chinese power consultant, deficiencies in the transmission and distribution network reduce the amount of power that can by transmitted by 600 MW - during the blackouts last August, cables overheated after the power surged.
Aware of the alarming situation, both the local press and National Assembly(parliament) are growing increasingly critical of the ministry and Shaikh Ali al-Jarrah al-Sabah who heads it, accusing both of doing too little too late. One of the biggest gripes is the length of time it is taking for the problem to be addressed. "Last summer's blackouts should have provided the impetus for quick action," says one local agent.
«So, why they only awarded these emergency contracts just now is beyond me." Criticism of the ministry is certainly warranted, but it has not been helped by Kuwait's inflexible tender regulations which have often prevented it from building new capacity even when the ministry has given the go-ahead, as with the case of AI-Zour north. And Shaikh Ali, who only took the job early last summer, can point the finger at his predecessors, arguing that the problem was largely inherited.
"The last two years have been the first time that we have been unable to attract contractors," says AI-Jamal. "We have to show them that we are fair. But it is difficult when you have to deal with the requirements of the CTC [Central Tenders Committee] and State Audit Bureau in such a bureaucratic system. This is why we have a plan to become an independent authority to get rid of some of the red tape." It is ironic that the emergency contracts were awarded with only cursory CTC approval, when many previous attempts to award conventional power plant work over the past few years have been thwarted because the ministry could not get the CTC to approve the bids.
"It seems odd that these things can be rapidly awarded without scrutiny, while previous attempts have met with failure," says another local contractor. "For the same amount of money AI-Zour south could have been converted to combined cycle without requiring any additional fuel. The decision making seems illogical at times." The ramifications of any loss in power are serious. Local industry will be forced to halt operations at considerable expense. Oil production, refining and exports will be similarly affected. As an ominous warning of events to come, the state's three refineries were forced to temporarily shut down on 18 February after a fault developed at a power plant. Events like that also badly damage the state's reputation as a place to live, invest and do business in.
The social and political consequences are equally worrying. With money and indeed fuel oil not a problem, most Kuwaitis find it inexcusable that the authorities could put the state in such a situation. Although only power was lost for less than an hour at a time last summer, the outcry from the press, MPs and population as a whole was immense, and resulted in the unprecedented suspension and eventual retirement of the ministry undersecretary and four assistant undersecretaries. Should the situation be repeated this time round, the government can expect some major public discontent.
Conservation In expectation of the worst, the government has started a media campaign to instill the idea of energy conservation in the local population. One of the biggest problems is that many Kuwaitis leave the air-conditioning on in their houses while they travel. Inspections last summer revealed that more than 200 schools did the same over the holidays.
But as long as Kuwaitis have to pay close to nothing for their utility bills - if they pay at all - then it is difficult to see how they can become more conservation-conscious.
"We've been arguing unsuccessfully that tariffs should be raised for more than 20 years, but it is difficult politically," says AI-Jamal. "We are talking to people and industry to try and reduce their consumption during peak times."
With rising economic and population growth, the problem is not going to go away unless substantial new capacity is brought on stream and quickly. Contracting regulations must be modernised to attract contractors and decision-making must be more rapid and authoritative.
Tariffs will also inevitably have to rise to reduce what is one of the highest electricity per capita consumption rates in the world.
The economy and finance committee of the National Assembly recently approved a draft bill that will necessitate an increase in prices and improve payment collection. But as seen so often in Kuwait, it is highly unlikely that the populist parliament will pass such a reforming measure.
In the end, the situation this summer will probably come down to luck. Cooler temperatures, few equipment breakdowns and reduced consumption could see the State through the hottest months. But few things rarely go to plan, and the summer months may well be make or break time for Kuwait.
Kuwait's malaise
Kuwait's power woes are symptomatic of a wider malaise in the country's political and economic system. Despite being one of the richest nations on earth, the state simply cannot find a way of moving forward.
A Saudi engineer on a recent visit to the state summed up the situation. "I hadn't been there for I5 years and, to be honest, I could see little difference between then and now." It is difficult to pinpoint any particular issue as the main barrier to progress.
Certainly, the state's imperfect democracy plays a role, with the constant bickering between the executive and legislative branches stalling reforms. High oil prices disguise structural problems. And an overbearing bureaucracy stifles innovation.
Many locals recognise the problems, but with full employment, a cradle-to-grave support system and few money issues, most find little reason to disturb the balance.
For its part, the leadership has shown itself uncomfortable to deal with issues that may rock the boat or cause friction with the National Assembly.
Getting it right
This is why those involved with Kuwait's landmark infrastructure schemes are happy for every possible avenue to be explored before making decisions. This in turn leads to a master plan culture, where projects go through one consultancy contract to another. "There is no responsibility in decision making." says one local businessman. "Nobody wants to be the one to make the decision because they are fearful of the consequences." The multi-billion-dollar Bubiyan and Failaka island developments, the Subiya causeway and the Project Kuwait upstream initiative have all been victims of this inaction, waiting years for the go-ahead.
As a result, Kuwait is rapidly falling behind the other Gulf states. That is why there are some who are hoping that the summer energy crisis will jolt the state from its collective daydream. 'With oil prices set to remain high for the foreseeable future, only through a severe shock to the system, they argue, can the impetus for change be found.