WATER, POWER AND SECURITY: BAHRAIN'S MINISTER OF

UNCLAS SECTION 01 OF 02 MANAMA 001206

SIPDIS

DEPT FOR NEA/ARP: PHEFFERNAN

E.O. 12958: N/A
TAGS: ENRG ECON BA
SUBJECT: WATER, POWER AND SECURITY: BAHRAIN'S MINISTER OF
ELECTRICITY AND WATER WELCOMES CHARGE

REF: MANAMA 496


1. SUMMARY: Minister of Electricity and Water Shaikh
Abdullah bin Salman Khalid al Khalifa, featured lately in
local news reports because of a series of rolling
brownouts, welcomed the opportunity to explain on July 27
to newly arrived Chargie how his ministry is meeting its
mandate to produce, transmit and distribute power and water
in Bahrain. He explained that the power distribution
network, designed to accommodate a 20 percent load
increase, has had to service an 80 percent demand increase
over the past three years. Monies for necessary
infrastructure improvements do not come from consumers,
since power is subsidized and consumers pay 20 percent of
operating expenses for water and 75 percent for power.
(NOTE: Overhead costs are not included in these
calculations. END NOTE). Although multiple ministries
share control over power and water resources, the Minister
said he is doing what he can to enhance current service and
to secure sufficient power and water for the next 15
years. A GCC power grid, set for operation in 2008, and a
possible GCC water-sharing scheme are part of the
Minister's toolkit. The Minister, a 36-year veteran of the
Bahrain Defense Forces, also took this opportunity to
stress the importance of security in Bahrain and of the
continuation of our joint security relationship to promote
regional stability. END SUMMARY.

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SHARED RESOURCES
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2. The Minister of Electricity and Water emphasized that
several ministries have a stake in power and water
resources: the Ministry of Municipalities and Agriculture
uses groundwater, the Ministry of Works and Housing uses
treated sewage water, the Ministry of Health is responsible
for water quality testing, and the Public Authority for the
Environment has an interest in the condition of the
underground freshwater aquifer. Further, the Ministry of
Finance and National Economy holds the pursestrings and
makes decisions regarding facilities, maintenance contracts
and inputs purchases, such as securing the supply of
natural gas used to generate power and desalinate water.
[NOTE: Currently Bahrain depends on domestic supplies of
natural gas, which just meet current demand. The Ministry
of Finance and National Economy is exploring a gas deal
with Qatar, as part of a possible Qatar-Kuwait pipeline, to
secure sufficient supplies over the next 10 to 15 years.
END NOTE].

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WATER
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3. Long range ability to supply sufficient water seems to
be on track. Bahrain's water supply is currently one-third
groundwater and two-thirds desalinated water. Water
production capacity at Hidd II, now 30 million cubic
meters, will reach 90 million cubic meters in 2006.
Further, there are early-stage GCC-internal discussions to
develop a GCC water linkage to mitigate water shortage risk
in the region.

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POWER
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4. On power production, the Minister said that the system
is working 100 percent. With the onset of production from
Bahrain's new Hidd II power/water facility in April, the
GoB has an 1850 MW capacity . This leaves a 200 MW
production margin over current maximum usage during the
summer months. [NOTE: The Minister said that 65-70 percent
of power production goes to air conditioning, so summer
usage is three times higher than wintertime demand. END
NOTE]. As of April, the Government of Bahrain no longer
needs to purchase 270 MW of electricity from Bahrain's
aluminum smelter, ALBA, as it had for many years; in fact,
now the GoB sells its excess output to ALBA in the off
season. Further, on July 31 the GoB signed an agreement
for a private power production facility in Al Azel (see
reftel),so sufficient production capability seems assured
over the long term.


5. Power transmission is also proceding according to plan.
Minister Al Khalifa told Chargie that plans for the GCC
power grid are on track for the 2008 target completion
date, reducing the risk of local power outages if a
production facility temporarily goes offline.


6. The power distribution network is where the Minister
admitted there are some difficulties that caused brownouts
earlier this summer. The network is being used to the
maximum and needs to be upgraded to handle the loads
customers demand and the output power plants are able to
produce, he said. Outlying areas, populated by Bahrain's
poorer populations, are most susceptible to power outages,
in large part because many more air conditioners and water
heaters were installed there in the last few years without
accompanying infrastructure improvements. Implementing
2006 plans in 2005 should help ease the burden, the
Minister added.

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SECURITY
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7. Shifting into Arabic--clearly the Minister's preferred
language--and to issues close to his heart, 36-year veteran
of the Bahrain Defense Forces Minister al Khalifa stressed
to Chargie the need for a safe and secure Bahrain. He
emphasized also the need for enhanced regional stability
and encouraged continued U.S. cooperation on regional
security matters.
ZIADEH