Syria Today | First private firm enters Syria’s electricity sector

First private firm enters Syria’s electricity sector

Syria’s first private power plant will be established following the signing of an agreement between energy company Kharafi Cham, an affiliate of Cham Holding, and the Syrian Ministry of Electricity on July 23.

According to the agreement, Kharafi Cham will build and operate a SYP 41.5bn (USD 900m), 750MW capacity power plant at Jandar near Homs, next to the existing state-owned 450MW plant built by Mitsubishi. The ministry, in turn, will provide the gas needed to operate the plant and buy all its electricity output at an agreed price. A statement from Cham Holding said the plant will rely on French- made equipment. It is expected to start operating by June 2010 at an initial capacity of 500MW. The plant’s maximum capacity is expected to be achieved by June 2011.

The agreement was signed by the Syrian Electricity Minister Khalid al-Ali and Cham Holding Chairman Nabil Kuzbari. Ali said the agreement is part of the government’s efforts to meet the increased demand for energy in Syria.

“It is our policy to open the door for the national private sector to invest in energy,” Ali said. “Syria is witnessing a new era of alliances between the government and the private sector. Such alliances, which will support social and economic progress, indicate that our private sector has become fully mature.”

According to energy specialists, Syria’s demand for electricity will reach 1,700MW by 2010. To meet this demand, the government will need investment in power infrastructure totaling more than SYP 70bn (USD 1.4bn). The Ministry of Electricity plans to add 4,500MW in generating capacity in the coming three years.

The Kharafi deal is the first time the private sector has been allowed to enter Syria’s electricity sector in more than four decades. It follows government moves to liberalise previously state-monopolised sectors such as banking, insurance and air transport over the past seven years.

Cham Holding is the largest private joint -stock company in Syria. It was established in early 2007 with a total start-up capital of SYP 18bn (USD 390m). It has previously declared plans to focus on strategic investments in tourism, energy, education, transport and healthcare.

Kharafi Cham was established last March as an arm of Cham Holding to carry out projects offered by the government according to the Build-Operate-Own (BOO), Build-Operate-Transfer (BOT) and Build-Own-Operate-Transfer (BOOT) systems. The affiliate focuses on the power generation, transport, water treatment and environment protection sectors. The company was formed through a partnership between Cham Holding and three leading Kuwaiti companies: the Al-Kharafi Group, the Kuwaiti Syrian Holding Company and the Kuwait Privatization Project Holding Co.

The Al-Kharafi Group is a Kuwaiti corporation specialising in the construction, telecommunications, energy, water, banking and financial services sectors. It operates in more than 50 countries around the world, has 100,000 employees and an annual turnover of USD 12bn.