Powering Up

A series of power outages in early May, which officials from the Sharjah Electricity and Water Authority (SEWA) said was a result of disruption to the distribution network, has prompted concerns that the emirate may experience summer blackouts as was the case last year, when high demand and technical difficulties combined to frustrate both the economy and residents alike.

Part of the problem is that while SEWA is able to meet normal demand, it has little in the way of reserve capacity. Though the authority is working hard to increase output, with plans in to install new generators, it faces the prospect of being caught short if there is any failure of its infrastructure, as appears to have been the case in early May.

In response to the blackouts, officials called on the public and businesses to be patient and to economise wherever possible to limit the strain on the grid.

Demand for electricity has risen sharply in the past 12 months, from 1557 MW in 2009 to just under 1700 MW, a 12% increase according to SEWA figures issued in mid-May, further adding to the strain being placed on the utility's resources.

In some ways, Sharjah has become a victim of its own success in being able to attract investment, in particular in the industrial sector, a high-level consumer of electricity. The emirate is home to more than 1600 industrial enterprises, accounting for up to 48% of the UAE's industrial GDP, according to a recent report issued by the Sharjah Economic Development Department (SEDD).

However, the emirate's continuing focus on industrialisation may have to be balanced with the need to ensure infrastructure and energy resources are equal to the growing demands being made of them.

Though some may argue more should have done more to boost production capacity sooner, at least some of Sharjah's energy problems are not of its own making. With only limited hydrocarbon reserves, Sharjah needs to import gas if it is to ramp up its electricity generation capacity. Though both the government and private enterprise have been seeking additional supplies, these efforts have not always been successful.

Sharjah was to have been one of the main beneficiaries of the Dolphin gas project, by which Qatari natural gas is piped to the UAE. However, while Qatar is pumping a considerable 56.6m cu metres a day, this makes up around 60% of the pipeline's capacity.

Dolphin was not the only step taken to solve Sharjah's energy shortage. Under a deal struck in 2001, Iran was contracted by Sharjah-based oil company Crescent Petroleum (CP) to supply natural gas to the domestic market, with imports scheduled to begin at the end of 2005 through a 140-km lone pipeline built by the company. However, the agreement between the National Iranian Oil Company (NIOC) and the Sharjah firm soon floundered, with officials in Tehran unhappy with the tariff set in the contract after prices soared not long after the ink dried.

Though Iran has said it is willing to export gas to Sharjah, Tehran's oil minister recently said that CP could not be a part of the equation.

"We are ready to provide natural gas to Sharjah but we will not hold talks with Crescent," Massoud Mirkazemi told a news conference in the Iranian capital on April 24.

CP's chairman Hamad Jafar is more optimistic, telling local media in mid-May that he hoped talks with Iran on launching the project would resume in June.

"We'll have some news next month," Jafar said. "We are hopeful the pipeline will start this year, the technical delays are on the Iranian side."

If CP can establish a working relationship with NIOC, or if Tehran is willing to discuss beginning exports to Sharjah, the news that the emirate could have guaranteed supplies of gas for both power generation and industrial applications would be welcome.

Despite last year's global economic slowdown, and the power shortages that hindered production, Sharjah's non-oil exports increased slightly in 2009, growing by just under 1% to total $844m. While export growth may have been small, any expansion of overseas trade in such a difficult environment must be considered as an achievement.

However, if Sharjah is to continue to expand its industrial base and build on its economic achievements, the emirate is going to need to match demand for energy with supply.