VZCZCXRO9490
RR RUEHDE RUEHDH RUEHDIR
DE RUEHKU #0687/01 1901147
ZNR UUUUU ZZH
R 091147Z JUL 09
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC 3647
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 KUWAIT 000687 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ARP, EEB 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EINV KU
SUBJECT: KUWAIT AIMS FOR ENERGY SELF-SUFFICIENCY BY 2012 
 
REF: A. 08 KUWAIT 1030 
     ¶B. KUWAIT 659 
 
¶1. (SBU) Summary: The GOK seeks to end perennial electricity 
shortfalls by summer 2012 through the construction of two 
(long-planned) power plants, the 2,000 MW Subiya power plant 
and the 4,800 MW As-Zour North power plant.  U.S. firm 
General Electric is involved in two of three consortia being 
considered for the $2.4 billion Subiya project; the contract 
award will likely be decided by the end of July.  Separately, 
the GOK expects to import electricity from Qatar during the 
summer of 2010 and beyond.  End Summary. 
 
¶2. (SBU) Ministry of Electricity and Water (MEW) Assistant 
Undersecretary Ahmad Al-Jassar told Econoff July 8 that 
Kuwait -- which has one of the highest per capita power 
consumption rates in the world -- expects an average power 
shortfall of 1,436 MW for 2009, 1,441 MW for 2010, 1,163 MW 
for 2011 and a surplus of 492 MW for 2012.  These targets 
assume that the Subiya power plant provides interim output of 
at least 1,300 MW by June 2011 and that the first two phases 
of the As-Zour North project are completed by summer 2012. 
(Note: This information from the MEW's second most senior 
civil servant contradicts data provided to Econoff by the 
MEW's Director of the Studies and Research in October 2008; 
ref A.  End Note). 
 
2,000 MW Subiya Plant 
--------------------- 
 
¶3. (SBU) Jassar said the MEW expects to finalize contract 
negotiations for the Subiya power plant project by September. 
 Despite the cancellation of two tenders relating to this 
project in the past three years, Jassar asserted that the MEW 
was committed to initiating work on the project this year and 
that his political masters were on the same page.  The 
project calls for an interim output of 1,320 MW by June 1, 
2011 and final output (2,000 MW) by June 2012.  The bidding 
consortia are: (i) GE and Hyundai Heavy Industries (local 
partner: Al-Rashed); (ii) Ibedrola, using GE turbines and 
generators (local partner: Kharafi); and (iii) Siemens and 
Doosan Heavy Industries (local partner: Alghanim 
International). 
 
¶4. (SBU) He said that the GE/HHI consortium is currently the 
lowest bidder but that deviations from the MEW's 
specifications will undermine the viability of the GE-led 
group's bid.  He suggested that GE/HHI needs to hew closely 
to the GOK's specifications if the consortium hopes to win 
the contract.  Jassar noted that achieving interim output of 
approx. 1,100 MW by June 2011 is critical, otherwise Kuwait 
faces a massive electricity shortfall of approximately 2,500 
MW in 2011. 
 
¶5. (SBU) Embassy conveyed the essence of Jassar's comments to 
GE officials in Dubai. 
 
4,800 MW As-Zour North Plant 
---------------------------- 
 
¶6. (SBU) The GOK plans to construct a 4,800 MW power plant 
and 280 million gallons per day (g/d) desalination plant in a 
combined facility in As-Zour in southern Kuwait.  The project 
comprises four primary phases and one smaller fifth phase, as 
follows: phase 1 - 1,500 MW and 102 million g/d; phase 2 - 
1,500 MW and 102 million g/d; phase 3 - 800 MW and 51 million 
g/d; phase 4 - 1,000 MW; and phase 5: 25 million g/d.  The 
first two phases need to be completed by 2012 if the GOK is 
to achieve the national output targets stated in paragraph 
two above. 
 
¶7. (SBU) Jassar said that the six consortia pre-qualified for 
the Subiya power plant project would be invited to bid on the 
As-Zour project, as would other firms.  He said the tender 
process for the project would last from seven to ten months. 
Jassar said the tender process needs to commence 
expeditiously if the GOK is to meet short-term electricity 
targets; he did not know why his political masters had not 
approved the initiation of the tender process.  He added that 
the contractor who wins the bid for the project's first phase 
will be well placed to be awarded contracts for the 
subsequent phases. 
 
¶8. (SBU) Responding to a query about local media reports 
regarding a GCC grid, Jassar said that Kuwait was already 
hooked up to Saudi Arabia and Qatar via two 600 MW circuits. 
He said that Qatar had surplus power which Kuwait expected to 
buy for summer 2011 and beyond, if need be.  He said that 
 
KUWAIT 00000687  002 OF 002 
 
 
Qatar didn't sell power to Kuwait this summer because the GOQ 
may have been committed to other buyers.  Jassar said that a 
GCC-wide grid made sound technical sense inasmuch as a larger 
grid reduces the need for a high spinning reserve; he said 
that a regional grid would need a spinning reserve of five 
percent while Kuwait's national grid currently requires 15 
percent. 
 
Comment 
------- 
 
¶9. (SBU) Petroleum-rich Kuwait's drive to be energy 
self-sufficient within three years is contingent on the 
completion of two long-delayed projects, namely the Subiya 
and As-Zour power plants.  A newly assertive executive branch 
-- which commanded clear majorities in critical votes in the 
new National Assembly (ref B) -- may be gearing up to 
implement a series of long-planned infrastructure programs 
stymied by the political paralysis of the past three years. 
Embassy is cautiously optimistic that the GOK is, at long 
last, in a position to make good on plans to develop the 
country's faltering infrastructure, including power 
generation.  End Comment. 
 
********************************************* ********* 
For more reporting from Embassy Kuwait, visit: 
visit Kuwait's Classified Website at: 
 
http://www.intelink.sgov.gov/wiki/Portal:Kuwa it 
********************************************* ********* 
JONES