UAE must end subsidy to avoid 'slipping into hole'

Abu Dhabi - The Supreme Petroleum Council has announced that the UAE will be self-sufficient when it comes to gas.

UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei said the country is fast shifting to renewables and should end subsidy to avoid slipping into a hole. He noted that GCC interconnected grid can be expanded to include more countries as power trading is emerging as a profitable market.
"Our energy strategy for 2050 is to rely 50 per cent on fossil fuels and 50 per cent on non-fossil fuel - the green forms of energy. Solar will be 44 per cent of our energy installed capacity of electricity by 2050. The total installed capacity will be around 44GW," AI Mazrouei said during a panel discussion held as part of at the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) on Tuesday.
"The pace of growth for us in the renewable energy in the UAE is going to be very fast."
The minister said that pricing will be an important factor.
"At the end of the day, different forms of energy are competing on price to consumers. Price of generation should be competitive for the utility company to make money."
The minister said the crucial step forward is a shift from subsidised system to a non-subsidised one in energy sector.
"Without that we are in a hole and that hole is going to get deeper and deeper as the population grows. So we are really solving a big issue for the governments in the Middle East. This is the essence of everything that we are doing. And we are sharpening the pencils and pushing the developers to reduce costs as we move."
The minister noted that the UAE will be self-sufficient in gas but for that subsidy has to end.
"The Supreme Petroleum Council in Abu Dhabi has announced that the UAE will be self-sufficient when it comes to gas. And that cannot be done if you are subsidised. We will do that without subsidy. We are depending on technology and larger products that we will launch to break the record year on year and achieve that target."
Expansion of GCC power grid
AI Mazrouei also revealed plans to expand the GCC interconnected grid to include other countries.
"Connectivity with rest of neighbours is important. We are blessed today with GCC interconnected grid. We can move electricity from Oman to Kuwait in range of 2,000MW. But for security and supply reason, we are using a limited 1,000MW. More trade has been done since past three years. That gives us a hope of creating market for power trading in the GCC. We are thinking to interconnect with Jordan, Iraq and Egypt."
However, he mooted need for reforms in the sector. "Price is important. We need to be competitive if we want to develop this sector. Some reforms need to happen to tariff down the road. We have consumers who are using 20 to 30 times the average. We need to encourage slab system and efficiency improvement. Every time we tap into a challenge, we discover an opportunity," he added.
 ashwani@khaleejtimes.com