JEDDAH: Substantial increases in wholesale and retail electricity and water demand are anticipated for every country in the Middle East region, Deloitte Middle East whitepaper titled "Switched on to Current Trends and Implications", the first in a series of "Managing Scarcity For The Future" monthly white papers, said Monday. This challenge is all the more difficult as many of the countries in the region are among the world's most water deficit nations. "For Middle East governments, ensuring that their populations have sufficient electricity and water supplies in the coming years will require significant additional generating and desalination capacity. Meeting demands for electricity will necessitate substantial investment throughout the value chain," said Kenneth McKellar, Partner and Middle East Energy & Resources Leader at Deloitte in the Middle East. Currently in most countries in the region, electricity and water generation, transmission and production activities are still in the hands of one single company. Unlike the oil and gas sector, these utilities have not benefited to the same extent from international partnerships and still share operational characteristics of government departments. "Significant inefficiencies still exist, especially on the distribution side at the interface with customers whose numbers are growing significantly. On the consumer side, there is increased upward pressure on tariffs due to rising fuel prices and gradual abolition of subsidies," added McKellar. The whitepaper reiterates that retail electricity prices can be a sensitive issue, especially at times when economic hardship is playing a role in the political developments in many countries in the region. It further states that greater efficiencies and more modern customer credit, collection and billing processes are required, to minimize the effect of higher fuel prices on the end users of electricity and water, and to service increasing numbers of customers. In the longer term, electricity and water operations will need to be unbundled to promote operating and capital efficiency and competition, and to avoid conflicts of interest. "This will necessitate the overhaul of electricity and water regulatory regimes so that they are more reflective of changes in the market. Change for the electricity and water sectors across the Middle East is inevitable. How soon governments can initiate these changes will determine how well they will cope with the looming challenge of supply catching up with demand," McKellar noted.
