By Alan George in Damascus

Syria has decided that its new power generation projects will be established on a build-operate-transfer (BOT) basis, in sharp contrast to the past, when state control of such strategic sectors as electricity was regarded as sacrosanct.

“Our government’s policy is that we shall not privatise existing power plants but that new ones can be built as Independent Power Projects (IPPs) on the BOT basis”, said Zaki Odeh, General Director of the state-owned Public Establishment of Electricity for the Generation and Transmission (PEEGT).

The first clear sign of the shift towards private sector involvement came in October 1997, when a venture of Belgium’s Tractebel and the Surakbi Group, a Lebanese/US concern, won a mandate to develop a 600 mw steam turbine power station at Al Barida, 100 kilometres east of the central city of Homs.

Negotiations on the crucial power purchase and fuel supply agreements for this scheme have been protracted. According to PEEGT, the promoters insisted on an unrealistically high tariff. The company claimed that its proposal reflected the high cost of financing projects in Syria, whose payments record has been mixed.

“This first attempt at a BOT scheme has not deterred Damascus from this mode of development. The initiative at Al Barida came from the developers and future projects are likely to involve an international tendering process”, said Mr Odeh, in an interview with The Middle East.

Syria has invested very heavily in its power sector in recent years in a determined drive to overcome power shortages which in the early 1990s forced power cuts of six hours per day in Damascus and up to 10 days continuously in the countryside. In 1993-96 $1.8 billion was invested and installed generation capacity rose to 6,133 mw last year.

The country’s transmission system has also been expanding fast. In 1991 there were only 167 kilometres of 400 kv cables. By 1999 this had risen to 478 kilometres. In the same period the length of the 230 kv system increased from 3,454 kilometres to 4,333 kilometres.

The sector had suffered, no less than other parts of the Syrian economy, from acute shortages of hard currency during the 1980s — at a time when power demand was spiralling as the result of rapid population growth and industrialisation. The problems would not have been so acute if it had not been for prolonged droughts which seriously hindered the output of Syria’s showpiece Thawra hydro-electric dam on the Euphrates. Commissioned in 1974-78, this was by far the biggest Syrian power generation scheme but it was able to operate at only a fraction of its 800 mw capacity.

The power projects implemented in the 1990s were largely funded by foreign aid, especially from the Gulf states, which were keen to demonstrate their gratitude for Syria’s involvement in the anti-Iraq coalition during the 1990-91 Gulf crisis, and from Japan. The European Union has also assisted, especially in the realms of training and institutional development. It seems certain that direct private investment will play an increasingly significant role in the coming years.

In 1993, when Syria’s power sector was in crisis, President Hafez al Assad personally intervened and stressed the priority that should be given to electricity, as the basis for the economic and social development of the country

The newest power plants are in Aleppo and at Al Zara, near the central city of Hama. The 5 x 200 mw steam power station in Aleppo, which can run on natural gas or residual oil, was built by Japan’s Mitsubishi Heavy Industries (MHI) under a $530 million contract won in 1995. The consultant was Britain’s Kennedy & Donkin. The scheme was financed by the Saudi Fund for Development. The station was commissioned between mid-1998 and early 1999 and is now fully operational.

The 3 x 200 mw gas-fired Al Zara station was also built by MHI. A soft loan of $440 million was provided by Japan’s Overseas Economic Co-operation Fund (OECF). Construction is now complete and commissioning of the final two units is scheduled for September or November this year.

Commissioning of another MHI-built, OECF-funded station, the 600 mw combined-cycle plant at Jandar, near the central town of Homs, was completed in 1995. Syria also installed a series of 100 mw gas turbine units in 1995 and 1996 at Nasiriya, north east of the capital, at Zaizoun, south west of the northern town of Idlib, and at the existing 2 x 200 mw Tishreen power station, east of Damascus, which was commissioned in 1993-94.

Syria’s latest hydroelectric station, the 6 x 105 mw Tishreen plant at Manbij north west of Aleppo, is also nearing completion. The main contract for the project, for which the client is the Ministry of Irrigation, is China’s Sichuan Machinery while Germany’s Lahmeyer International has supervised construction. The first unit was commissioned last year and the second was scheduled to start operating before the end of July 2000. The third will be commissioned before the end of the year and the final two units will go on stream next year.

Rapid progress is set to continue. Syria has prepared an electricity sector master plan for 2004 — 2010 which calls for the installation of a further 3,000 mw of generation capacity — an average of 600 mw per year. It is these schemes which are likely to employ the BOT model.

In the interim, work will go ahead on a series of upgrading and rehabilitation projects. The existing single-cycle Nasiriya, Zaizoun and Tishreen stations are being converted to combined cycle plants. Each of the first two stations has three 100 mw gas turbines and, at each, two 100 mw steam turbines and one 100 mw gas turbine will be added. At Tishreen, which has two 100 mw gas turbines, a new 100 mw steam turbine will be added.

The Tishreen scheme, for which bids will be called this summer, will cost an estimated $60 million. It will be funded 50 per cent by the Abu Dhabi Fund and 50 per cent by the Jeddah-based Islamic Development Bank. The Nasiriya and Zaizoun schemes, which will each cost an estimated $160 million, should be launched in 2001 and 2002 respectively.

Projects are also in hand to rehabilitate three of Syria’s older stations: the 4 x 170 mw plant at Banias, on the coast; the 630 mw Muhardeh station, near the central town of Hama; and the 150 mw Qattineh station, near Homs. In 1998 Lahmeyer International was appointed as consultant for the Muhardeh scheme and Italy’s Enel was appointed as consultant for Banias last year.

Italy has agreed funding of $23 million for the first two units at Banias and bid invitations are expected shortly, said Mr Odeh. Japan’s MHI has won the contract to rehabilitate the other two units at Banias where work started 1 August this year. The Japanese government is providing $8.5 million for the project.

Tenders for the rehabilitation of two of Muhardeh’s units will be issued “by the end of the year”, said Mr Odeh, noting that the station’s other two units “have been overhauled and don’t require rehabilitation”.

He noted that eight firms had initially been shortlisted for the consultancy contract for Qattineh. They were invited to re-bid early last year and re-bids were called for a second time in spring this year.

Syria’s supply situation is also being improved dramatically by means of 400 kv grid interconnections with neighbouring states, forming key elements in a wider project which originally involved interconnections between Egypt, Jordan, Syria, Turkey and Iraq but which this year was expanded to include Lebanon.

The financial benefits to Syria of being able to trade power with its neighbours will be considerable, and deepened the deadlock in the negotiations with Tractebel/Surakbi over the proposed Al Barida scheme. “They were unable to submit a competitive tariff, especially taking into account the impact of interconnections with our neighbours”, said Mr Odeh.

A consortium of Turkey’s Galkom and Germany’s SAG this year won a $38 million plus a 65 million Syrian Pounds contract to install 350 kilometres of overhead line from Aleppo across the Turkish border. Work started in May and 52 kilometres should be completed by the end of the year. The consultant is Britain’s Merz & McLellan and the scheme is being funded by the Kuwait-based Arab Fund for Economic and Social Development (AFESD).

A 400 kv interconnection with Jordan, also funded by AFESD, was completed late last year and energised early this year. The works on the Syrian side of the border, comprising 350 kilometres of overhead line, were undertaken by KEC International of India under a $46 million plus 120 million Syrian Pounds contract awarded in 1997.

As part of the southern interconnector, Germany’s Siemens in 1998 won a 37.8 million Deutsch Marks plus 145 million Syrian Pounds contract to build two 400/220 kv substations in Damascus and Dera’a, on the border.

Presently, Syria is linked to its western neighbour, Lebanon, only by a 220 kv line along the coast between the Syrian port of Tartous and the northern Lebanese city of Tripoli. Electricité de France last September submitted to the Syrian-Lebanese joint commission a feasibility study on an estimated $35 million, 400 kv link and in May AFESD agreed a $26 million loan to fund the Lebanese section of the scheme. Mr Odeh said “that the Syrian section would be funded from an unspent part of the AFESD loan for the link with Jordan.”

“We might start work on this overhead line next year, with completion in 2001”, said Mr Odeh, adding that the connection might initially operate at 230 kv.

The Jordanian-Egyptian interconnection, commissioned early last year, was the first in the regional interconnection scheme to be completed. Work has yet to start on the Syrian-Iraqi link.

A new dispatching centre will meanwhile be established in Damascus in order to manage electricity flows more efficiently. Electricité de France has been evaluating supply and installation bids submitted by Italy’s Nuovo Pignone, Germany’s Siemens, France’s Cegelec and by Beijing-based China Wanbao Engineering Corporation. AFESD has approved a $34 million loan for the project.

“The technical evaluation has been completed and we hope to award the contract by the end of August”, said Mr Odeh.

The PEEGT General Director stressed, meanwhile, that his company’s own development was not being overlooked in the drive to upgrade the country’s power facilities. Training centres have been established at Jandar, with financial help from Japan, and at Adra and Aleppo, with assistance from the European Union. The first phase of an institutional strengthening programme has been under way with EU support and Brussels has just agreed funding for a second phase. Technical assistance has been provided by Electricité de France; Merz & McLellan and Kennedy & Donkin, both of the UK; and Ireland’s ESB International with Finland’s Ekono Energy.

In 1993, when Syria’s power sector was in crisis, President Hafez al Assad personally intervened, underlining his concern in a series of meetings with senior power sector officials. At a time when most of the country was suffering protracted blackouts, he declared electricity to be nothing less than a right for every Syrian.

“In meetings in 1993 our President stressed the priority that should be given to electricity, as the basis for the economic and social development of our country”, recalled Mr Odeh.

President Assad passed away in June, but not before witnessing a transformation in the electricity sector of which he must have been gratified.

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