Bahrain Power Market Outlook to 2030 - Business Propensity Indicator (BPI), Market Trends, Regulations and Competitive Landscape
- Published: April 2012
- Region: Bahrain
BMI View: The sense of panic that prevailed in Bahrain through much of 2011 has dissipated. This is clearly a positive development for the country’s water sector, which is heavily dependent on international developers with regard to desalination and wastewater. Renewed momentum on the country’s publicprivate partnerships (PPPs) is another source of comfort for investors. Much will hinge on the level of interest in the sale of a 40% stake in the Hidd IWPP by UK developer International Power, which is due this year. A quick sale of the stake would suggest continued confidence in the overall investment climate for power and water in Bahrain.
Key themes to highlight for Bahrain’s water sector:
- Bahrain has reason to feel more confident about its economy than it did at the equivalent same in 2011. Despite continued worries about renewed political unrest, which could afflict the investment climate, the government has made some serious efforts to improve conditions for foreign investors, with the first public-private partnership (PPP) project getting underway in the low-cost housing sector. Such moves suggest a greater determination to push ahead with key infrastructure development in the kingdom, and water and wastewater projects are likely to benefit.
- The UK’s International Power is preparing to sell a 40% stake in Hidd IWPP in the summer of 2012, as a result of regulatory requirements (although the company will retain a 30% stake in Hidd). The IWPP’s co-owner, Japan’s Sumitomo, is tipped as the most likely buyer of the stake.
The reason for the divestment is that the Bahraini authorities are wary of allowing one company to have such large exposure to the Bahraini power and water sector. This in itself is a potential concern for developers that are considering making an investment in Bahrain’s water sector – should they find themselves in a dominant position. International Power’s merging of its operations with GDF Suez left the combined entity with a majority holding, hence the forced sale. On the other hand, the Bahraini government argues that it wants to avoid dependence on one entity.
According to BMI latest forecasts, Bahrain will produce slightly less water over the coming five year period than under our previous forecast scenario – with daily average water production set to reach 193.5mn gallons in 2016, compared to 195.2mn gallons under our previous forecast. This is due to a contraction in both groundwater and desalinated water output. With weaker economic growth registered in the past year, demand for water will be weaker than before, though we expect consumption to resume its recent historical trend in 2013 and beyond – though with the political situation in the kingdom still a concern, there are downside risks to this forecast.
Business Monitor International's Bahrain Water Report provides industry professionals and strategists, corporate analysts, utilities associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's water industry. SHOW LESS READ MORE >
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