Business | Analysis

Oman and Bahrain have lot to gain from GCC plan

The plan can help rejig entire energy needs

  • By Mohammad Al Asoomi, Special to Gulf News
  • Published: 12:42 June 19, 2013
  • Gulf News

The $20 billion GCC “Marshall-type Plan”, laid down by the Gulf nations to finance development projects in Bahrain and Oman, is expected to bring about a qualitative leap in infrastructure in both countries. In turn, it will lead to the implementation of several development projects and creation of job opportunities due to their sheer size.

The aid package of $20 billion, with $10 billion going to each country, was announced in March 2011. Some of these infrastructure projects are defined as service, such as housing and health projects, while others are more long-term development ones, such as the creation of energy and water sources, particular renewable energy, which need huge investments.

The Gulf plan can focus on this important developmental aspect since it is well known that sources of hydrocarbon are relatively modest in the two Gulf states. It means their capacity in this area is limited, even though they still depend on oil and gas as the main source of financing the government budget and development programmes.

Therefore, it would be of great benefit if a certain percentage of the Marshal Plan’s aid package is allocated to developing renewable energy sources, such as solar and wind power, which could serve as an alternative and renewable source. Demand is considerably high in the GCC, and in fact registering one of the highest rates in the world.

In this regard, the UAE — through Masdar — can play a prominent role in the development of clean energy sources not only in Bahrain and Oman, but also in the rest of GCC and Arab countries. It is imperative here to refer to the London Array Offshore Wind Farm for wind energy production. The London wind farm is expected to help supply Britain with renewable energy sources.

Similarly, the Gulf Plan can finance the installation of two offshore wind farms - Muscat Array and Manama Array - for offshore wind energy production, which can boost the economies of both significantly and contribute to finding solutions to the energy problems that countries everywhere face now.

Such an approach has a strategic dimension, as it will help meet the growing demand for energy in the two countries and reduce reliance on costly natural gas, which is now used for electric power generation and production. Both Oman and Bahrain can reduce their reliance on gas and utilise the locally available gas in the development of other industrial projects, by using it as a raw material for petrochemical plants.

It is known that natural gas production is barely enough to meet the needs of both countries at present. Oman and Bahrain are likely to turn into importers of natural gas in the near future.

This is evident through the ongoing talks between Bahrain and the Russian Federation, and it should be noted that Oman is supplied by Qatari gas through the Dolphin project in partnership with the UAE.

In case of implementation of the proposed arrays, in addition to the solar energy projects in Bahrain and Oman, this will help reduce future gas imports and be less of a burden on government budgets and balance of trade. This is simply because such an approach would add a long-term developmental character for the GCC’s Marshall Plan, which will meet growing demand for housing, education ad healthcare services, as well as for road networks and infrastructure in general. It will contribute to economic stability in Oman and Bahrain through creating sources of renewable energy.

If so, the next 10 years as set in the GCC programme will see a qualitative change not only in energy sources in both countries but also in their infrastructure and economies. This will be positively reflected on job opportunities, increased development and improved living standards as well as economic and social stability in harmony with that elsewhere in the GCC.

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