AFESD Activities
Arab Regional Projects
- Introduction
- Electricity
- Communications
- Transportation
- Natural Gas
The Arab Fund launched its activities during a period when Arab cooperation was growing at the level of economic development. One of the main objectives of the Fund was to support joint Arab projects that increase the coherence and integration among Arab countries. In that regard, and within its available financial resources and options, the Fund was able to finance projects including power grid interconnection, modernization of communication systems and road networks between Arab countries. Supporting functions include the preparation of sectoral studies, holding conferences and seminars that seek solutions to problems hindering economic and social development in the Arab countries. This also includes identifying cooperation opportunities and finding the factors supporting Arab development and integration, in the light of global and regional developments.
Up to the end of 2022, the Arab Fund has provided 66 loans, having a total amount of KD 394 Million, to participate in the financing of 32 inter-Arab integration projects. Most notably, 25 of these loans were directed towards participating in financing communication projects, 16 were directed towards participating in financing energy and electricity projects, and 6 were directed towards participating in financing transportation projects.
Figure (1) shows the integration projects’ share of total loans provided by the Arab Fund, broken down by sector, while Figure (2) illustrates the percent sectoral distribution of loans provided by AFESD to finance joint projects. The figure shows that energy and electricity projects received around 70% of the total amount of loans provided for financing joint projects, followed by communications projects at around 13%, and transportation projects at around 10%.
Figure (1)
Integration projects share of the total loans of the various sectors during the period (1974 - 2022) (Million KD)(*)
Figure (2)
Sectoral share of the loans used to finance joint projects during the period (1974 – 2022)
Introduction
There are multiple advantages to be gained from interconnecting the electric power grids of several countries. The main benefit comes from deferring, or avoiding altogether, the construction of new power plants. This can be achieved by sharing power across interconnected grids without impacting their security and reliability. The interconnection also reduces the need for standby capacity to meet fluctuations in demand, which in turn reduces operating cost. It enables new generating plants to be constructed in the most economically attractive sites, typically close to the sources of inexpensive fuel. A further benefit is the lowering of the overall level of environmental pollution in the region.
Recognizing these benefits, the Arab countries established interconnection links between their respective electricity power grids, as far back as 1952. During that year, a tie line was erected between Algeria and Tunisia to alleviate cross border short term power shortages, and, in 1979, another tie line was established to link Morocco and Algeria for similar reasons. Despite suffering problems which limited the success of these projects, the experience and insight gained contributed to the spawning of other projects on a much larger scale that now encompasses the whole region.
Current Status of The Arab Electricity Grids Interconnection Projects:
These projects include the Eight Country Interconnection Project, the Maghreb Countries Interconnection Project and the Gulf Cooperation Council (GCC) Power Grid Interconnection Project. They are briefly described below:
The Eight Country Interconnection Project (named EIJLLPST):
This project involves interconnecting the electrical grids of Egypt, Iraq, Jordan, Libya, Lebanon, Palestine, Syria, and Turkey. It started as a five-country interconnection project that included Egypt, Iraq, Jordan, Syria, and Turkey, became a six-country project when Lebanon joined in, and later became an eight-country project when Libya and Palestine joined in.
The Egypt-Libya, 220kV link, rated at 170MW, became operational in 2008. The same year also witnessed the operation of the Egypt-Jordan link, rated at 300MW, using 500kV on the Egyptian side and 400kV on the Jordanian side. During 2001, the Syrian and Jordanian networks were interconnected on 400kV using a line rated at 300MW. The Syrian grid was then connected to the Lebanese grid, also on 400kV, during 2009, and the Palestinian grid was later connected to both the Egyptian and Jordanian grids through 66 kV transmission lines having limited capacity. The already completed interconnection between the Syrian and Turkish grids has not been energized due to the political situation in the region.
The Iraqi grid is currently linked with the Syrian and Turkish grids on 220 kV. Interconnecting the Iraqi grid with the Syrian and Turkish grids, on 400 kV, will be accomplished at a later date. There are ongoing efforts to connect the Iraqi grid with the Kuwaiti and Jordanian grids, also on 400 kV.
The Maghreb Countries Interconnection Project:
This project involves connecting the Libyan grid to the Tunisian grid, using 220kV transmission lines, interconnecting the Tunisian grid with the Algerian grid, on 400kV, and interconnecting the Algerian grid to the Moroccan grid, using the same voltage.
All works and final tests to interconnect the electric grids of Libya and Tunisia were concluded in 2005. However, as a result of electrical issues related to oscillations in the combined network, the interconnection lines were re-opened in order to enable both countries to conduct further investigations. The two countries, together with the UCTE, are working on resolving this problem. One of the proposed solutions is to convert the Libya-Tunisia interconnection to direct current (d.c.) instead of alternating current (a.c.).
The Tunisia-Algeria interconnection, on 400kV, was energized in 2012, but still operates on 220 kV due to technical reasons. In addition to the existing 220kV interconnection between Algeria and Morocco, the two countries also completed a project to interconnect their grids using a 400kV network, rated at 900MW. This project was put in service in 2009.
Furthermore, Morocco is currently connected to Spain through two submarine cables, each rated at 700 MW. Up to the year 2016, these cables were mostly used to export energy from Spain to Morocco to satisfy part of the demand on the Moroccan grid and stabilize its network. However, in recent years, and as a result of Morocco’s heavy investment in renewable energy power plants (wind and solar), that have a low generation cost, the two cables are now mostly used to export energy from the Moroccan grid to the Spanish grid. Due to the heavy loading of the two cables, efforts are also underway to construct a third cable, thus raising the capacity of the interconnection to 2100 MW.
The GCC Power Grid Interconnection Project:
This project was implemented over three phases, as follows: Phase 1, which formed the northern section, linked the grids of Kuwait, Saudi Arabia, Bahrain and Qatar, and was completed in early 2009. Phase 2, which formed the southern section, linked the grids of the UAE and Oman. It was completed in 2012. Finally, in Phase 3, the northern and southern sections of the project were linked together. Phase 3 was completed in mid-2014 and the project has been operational since then.
The Arab Fund's Participation in Financing Inter-Arab Interconnection Projects:
Over the past twenty years, the total investment by the Arab countries in Inter- Arab Interconnection Projects has reached two billion US dollars; including US$ 556 million for the Eight Country Interconnection Project, US$ 1100 million for the GCC Power Grid Interconnection Project, US$ 169 million for the Maghreb Countries’ Interconnection Project and US$ 86 million for the interconnection of the two electricity grids in Yemen.
Cognizant of the role it should play in achieving Arab integration, the Arab Fund provided 12 grants, totaling around $ 6 million, to finance various feasibility studies for electrical interconnection projects among the Arab countries. These studies led to the identification and construction of 5 interconnection projects, whose total cost was about $ 616 million. Around 72% of that cost was covered through 9 loans provided by the Arab Fund. The Arab Fund also provided several loans amounting to $ 556 million to cover part of the cost of projects to connect the Egyptian and Saudi grids, the Syrian and Turkish grids, the Moroccan and Spanish grids, and the connection of the Mauritanian grid to the electrical grids in Mali and Senegal. Additionally, the Arab Fund provided 6 grants, totaling around 6 million, to finance studies aimed at improving the performance and utilization of the interconnected networks.
Figure (4) shows the construction of the Arab Fund towards the various Arab electrical interconnection projects that have entered into service, while Figure (5) shows its contribution towards the financing of the Egypt – Saudi interconnection grid. The Arab Fund also contributed US$ 86 million to finance projects aimed at strengthening the national grids in Syria, Morocco and Yemen, prior to interconnecting them to their neighboring country grids.
Additionally, the loans provided by the Arab Fund, for interconnection projects, were not limited to projects between two, or more, Arab countries, as the Arab Fund also contributed to the financing of three electrical interconnection projects that included non-Arab countries (Turkey, Spain, Mali and Senegal) by covering most of the cost of the portion of the project in the concerned Arab country . Below table shows these projects and the contribution of the Arab Fund to each.
Other Interconnection Projects
Project | AFESD Loan ($Million) | Cost ($ Million) |
|---|---|---|
Electrical Interconnection (Syria - Turkey) | 86 | 96 |
Electrical Interconnection (Morocco - Spain) | 80 | 206 |
Electrical Interconnection (Mauritania – Senegal – Mali) | 240 | 900 |
Total | 406 | 1202 |
The communications sector plays an active role in accelerating economic and social development in developing countries. It reduces production costs by making information rapidly available. This also helps improve marketing operations and reduces the need for physical transmission, thus easing transportation and communication congestion. It also produces other positive social effects. The Arab Fund gave the joint communications projects great importance in the eighties, with the aim to create good international communications networks.
First: The Arab Fund's Contributions
Up to the seventies, communications among Arab countries were only possible via low-grade high frequency networks, or through the International Space Network of the International Organization (INTELSAT), which was mostly routed indirectly through Europe or the United States, due to the lack of or limited number of communications links among the neighboring Arab States. Therefore, the Arab Fund, since its inception, has worked with the International Telecommunication Union, both financially and technically, to establish an integrated plan for the Arab Communications in 1976, and has designed a practical program to implement this plan. The Arab Fund participated in financing most of the projects included in this plan, as well as, some other projects which were not included, however subsequently, emerged as a result to the increasing usage of telephones and other communications, accompanied by the increase in the economic and social convergence among Arab states. The Arab Fund also participated in the three types of media that are used in international communications, namely: ground networks (microwave lines or ground cables), satellite networks (Arab sat) and marine cable networks, which are connected by copper links or fiber-optics. Figure (1) shows the Arab Fund’s contributions in the joint communications projects, compared to its total contributions in the development of the communications sector. This figure shows how the contributions reached their highest value towards the end of the seventies and early eighties, in addition to the Arab Fund’s financing to the communications sector, since 1989 onwards, which was limited to financing regional communication projects.
The Arab Fund’s contributions was targeted the following main areas:
- Providing technical assistance to finance the studies carried out by the International Telecommunication Union, to develop strategies for enhancing the communications sector in most Arab countries.
- Providing technical assistance for planning and organizing frequency bands in the Gulf States, which reduces any possible interference of radio signals in different countries.
- Contributing towards financing ground stations in ten Arab countries, and linking them with the Arab satellite “Arab sat.”
- Contributing towards financing several projects regarding microwave networks, as well as, marine and ground cables, to connect the communications networks covering Arab countries.
- Using ground wires containing fiber-optic cables, to link the electrical networks, in order to take advantage of these cables to transfer international telephone traffic among the associated Arab states.
The projects financed by the Arab Fund, have led to the increase in telephone traffic and improved communications services among Arab countries. Most of these projects are still in service and represent the backbone of international communications in the Arab World.
Figure (1)
The Arab Fund’s Participations in the Joint Communications Projects Covering the Arab Countries During the Period (1974-2008)
(Million KD)(*)
(*) 1 KD is equivalant to about 3.3 US Dollars
Second : Examples of Communication Projects
The Arab Fund contributed to the financing of communications network covering Arab countries. The network consists of seven projects. The first project aims to link communications network covering Morocco and Algeria, and a central cable extending from Rabat – Morocco to Tlemcen – Algeria. The project was completed in 1978.
The second project aims to link communications network covering Iraq, Syria, Jordan, Saudi Arabia and Egypt, by a central cable between Al-Qaem – Iraq and Tadmur – Syria. It also includes a microwave link-network, extending from Amman – Jordan to the Jordanian- Egyptian borders and the Jordanian – Saudi borders. The project was completed in 1984.
The third project aims to link communications network covering Somalia, Djibouti, Yemen and Saudi Arabia, by a microwave network, extending from Hargeisa – Somalia to Djibouti, across Taiz and Aden in Yemen, reaching the Yemeni-Saudi borders, with the capacity of 1920 telephone channels. The project, which was completed in 1986, has strengthened the international communications network covering these countries.
The fourth project aims to link communications network covering Algeria, Tunisia and Libya, by a network of grand cable with the capacity of 8100 telephone circuits, and a microwave network with the capacity of 2880 telephone circuits, extending from Tlemcen – Algeria to the capital of Tunisia, across Gabes to the Tunisian-Libyan border. The project was completed in 1986, linking the Arab Maghreb countries with a modern communications network, and improving the standard of communication services among these countries.
The fifth project aims to link communications network covering the Arab countries via the Arab satellite (Arab sat), by establishing ground stations in Mauritania, Tunisia, Morocco, Algeria, Djibouti, Somalia, Yemen, Jordan, Syria and Iraq. The project was completed in 1987, linking the 10 mentioned Arab countries to a satellite communications network, complementary to the ground communications network, to be used when the former is out of order.
The sixth project aims to link communications network covering Bahrain, Qatar and the UAE, by a submarine cable extending from Manama to Doha throughout Dubai. The project was completed n 1989.
The final project aims to link communications network covering various countries (14 countries), among which are seven Arab countries, including Algeria, Tunisia, Egypt, Saudi Arabia, Djibouti, Yemen and Syria. The project consists of two cables, one made of copper that works on an analogue system, while the other is made of fiber-optics that works on a digital system and runs throughout the mentioned countries. The project was completed in 1995, and achieved a major development in the volume and quality of international telephone communications among the countries connected by the submarine cables.
The Arab region’s strategic geographic location with its abundant resources, give it great international importance. Arab countries share the same great social, cultural, and political values. Over the past decades, the Arab countries have invested significant resources into various sectors, including the transportation sector, due to its vital role in advancing the development processes. New modern roads networks have been established and ports and airports have been constructed and upgraded. Road transport in Arab countries currently accounts for more than 80% of the total transportation of people and goods. In recent years there has been a marked improvement in the length of road networks. The total length of roads in 2006 was 670,000 km. compared with 581,000 km. in 1996. The general aim of road projects is to develop road transport services and to reduce the cost of transporting people and goods, and at the same time improving road safety. Projects involving main roads and highways also link remote and rural areas to cities and service centers. Such projects contribute to economic and social development and improve living standards as well as create new job opportunities.
The Arab Fund's Contributions
The Arab Fund’s contribution to inter-Arab projects in transportation is focused on financing the preparation of sectoral studies among Arab countries, leading to the identification of joint Arab projects and the support of priority investments. It gives priority to projects that help link Arab countries and supports this by allocating additional financing towards the implementation of such projects.
In 1979, the Arab Fund contributed to financing the economic and technical feasibility studies for a number of joint Arab transportation projects. The studies included roads in the Iraqi border area between Tadmur and Albukamal stretching to a length of 260 km. In 1982, the Arab Fund conducted a complete survey aimed at establishing a general framework to determine joint Arab road and railway networks. This survey helped identify key links in the networks connecting the Arab countries, and a methodology for prioritizing projects for study and implementation according to a timetable, based on short and long-term transport requirements and traffic flows and the estimated value of the investment required. The Arab Fund, along with other Arab and international financial institutions, financed a number of the projects that emerged from this survey.
In response to the request of the General Secretariat of the GCC countries, the Arab Fund contributed to financing a study on transport patterns in the GCC countries, in order to improve transportation services. It also proposed a strategy for investing in this sector and developing methods of operation and management. This study was completed in 1991.
In 1994, the Arab Fund responded to a request from the Arab Maghreb Union to finance a study on the Maghrebi highway, including a plan and a program to develop specific parts of the highway by 2025. It also responded to a proposal on consolidating the technical specifications of the road. The work included conducting a preliminary study on the road networks connecting the Union Member countries, by a highway extending from Libya to Mauritania, through Tunisia, Morocco, and Algeria, having a total length of about 7,000 kilometers.
The Arab Fund has played an active role in the development of the maritime transport sector in the Arab countries, providing loans for the development of several ports in the Sultanate of Oman, the Republic of Yemen, the Kingdom of Bahrain, and the Republic of Djibouti, while providing two loans to the Arab Republic of Egypt to develop the Suez Canal and the navigational course of the Nile river.
The Arab Fund also contributed to the financing of several projects aimed at the development of the air transport sector. The Fund provided loans for the development of the Sana’a International Airport in the Republic of Yemen, and Mohammed the Fifth’s Airport in the Kingdom of Morocco, as well as the Hurghada International Airport in the Arab Republic of Egypt.
In recognition of achieving vital links among the Arab countries and facilitating Arab economic integration, within the vision context of an integrated strategy for the development of Arab transportation sector, the Arab Fund is currently completing technical and economic studies in preparation for an extensive scheme linking the Arab countries by a railway system.
Formation
Natural Gas is a mixture of hydrocarbon compounds, produced from decaying of living matter subjected to high levels of heat and pressure over many centuries. Natural Gas is similar to other fossil fuels, such as charcoal and petroleum, however, it is considered less harmful to environment, due to its high efficiency and low polluting emissions.
Production
Natural Gas is produced from wells similar to oil wells, and is transported by pipelines to gathering and processing centers to be dewatered, desalted, treated, cooled down and then separated into different components for different applications. The remaining gas is transported to loading centers through pipeline networks in liquid form, after it is pressurized and condensed.
Natural Gas Reserves
World reserve of Natural Gas is estimated at about 180 trillion cubic meters, 28% of which are in reservoirs within the Arab countries, the largest of such reserves are in Qatar, followed by Saudi Arabia, United Arab Emirates, Algeria, Iraq and other Arab countries. It is widely believed that Arab reserves, not yet discovered, are equal to the discovered reserves.
Importance and usages of Natural Gas
Natural Gas is an important energy source due to its efficiency and environmental advantages, compared to other fossil fuels.
Natural Gas is utilized as fuel in industries, homes, power generation, water desalination, petrochemical production, petroleum industry, and as a source of hydrogen. It can be used as an alternative fuel for transportation, with fewer environmental pollutants. The world is witnessing a actual steady increase in Natural Gas demand, as consumption in the Arab countries reached 232 billion cubic meters in 2007 and is expected to reach 275 cubic meters in 2010.
Natural Gas Networks:
The major difficulty in the use of natural gas on a large scale is the physical separation between the sources of production and the consumption centers, which requires transporting the natural gas over long distances through pipelines, since these pipelines are considered to be the best form of transportation to end users, hence, industrial countries have developed their gas networks and linked them to production centers that used to be considered far away.
The Arab Fund believes in the importance of developing the Arab Gas Network and has always been willing to finance Natural Gas projects due to their impact on Arab economic development.
Arab Gas Pipeline
The Arab Gas Pipeline consists of several sections, of several stages: two of the stages have been completed and one is under construction.
Phase 1 is a pipeline that runs from Arish to Taba in Egypt, ending in Aqaba in Jordan at a length of 265 kilometers and a width of 36 inches. The total cost of this phase was about US 280 million (about KD 82 million). In addition to the Arab Fund loan, valued at KD 17 million, the Kuwait Fund and the Egyptian Government covered the balance of the costs of the project. The pipeline was completed in 2004 and since then, Egyptian natural gas has been provided to the Aqaba thermal station.
Phase 2 of the pipeline involved establishing a gas network in Jordan that runs from the Aqaba power station to the Syrian border in order to provide the Samara, Rehab, and Manakhir power stations with gas. A group of investors, and Egyptian and Jordanian banks financed this phase, which was completed by mid 2007.
Phase 3 constitutes the gas network in Syria, which runs from the Jordanian-Syrian borders to the Syrian-Turkish borders, ending in Lebanon. This phase is of four parts, as follows: part one which is a pipe running from the Jordanian-Syrian borders to the city of Homs in Syria, while the second part is a pipe connecting the Syrian city of Aleppo to the Syrian-Turkish borders, the third part is the pipe connecting the cities of Homs and Aleppo, while the fourth and final part is the pipe connecting the city of Homs in Syria with Tripoli in Lebanon. The first and fourth parts have been completed. The Arab Fund has contributed to the financing of the second part by providing a loan valued at KD 10 Million. As for the third part (connecting the cities of Homs and Aleppo), it will be completed at a later date, as gas will be transported between the two cities, in the interim period, using the current local gas network in Syria.
The Arab Gas Pipeline is considered the backbone of the future Arab Gas Network. The benefits of what has already been established can be seen in the fact that 80% of the power, generated in Jordan, is fueled by this pipeline. An agreement was signed between Iraq and Syria to connect the western Iraqi gas fields to the gas processing centers in Syria, in order for Iraq to become a part of the Arab Gas Pipeline, in addition to Egypt and Jordan, which will facilitate marketing Arab gas (Egypt and Iraq) in Turkey and Europe.
Other Gas Pipelines
The Dolphin project links Qatar with the United Arab Emirates via pipelines having a total length of about 440 km. Omani gas is being transported to the United Arab Emirates using a pipeline that was established to provide gas to the water desalination plant and to the power stations in Fujairah.
Algeria is connected to Europe through two pipelines, the first passing through Tunisia to Italy and the second linking Algeria directly with Spain. Currently, Algeria exports 35 billion cubic meters of gas, annually, through this network.
Several projects are being considered to link the Arab gas producing countries to gas consuming countries. These network projects include linking Qatar to Bahrain, Qatar to Kuwait, Iraq to Kuwait, Libya to Egypt and Libya to Tunisia. The Arab Fund participated in the preparatory studies for the latter project, and has expressed willingness to participate in financing it.