As of December 31, 2005, the Israel Electricity Corporation (IEC), Israel's monopoly national utility, reported 10,040 Megawatt (MW) of installed electric generating capacity (at 17 power stations) with 83 percent generated by coal, 7 percent by natural gas, 6 percent by fuel oil (down from 17 percent in 2003), and 6 percent by gas oil. Israel also is a world leader in solar technology research, and relies heavily on solar energy for water heating (around 80 percent of Israeli homes have solar water heaters). The 1,645-mile, IEC transmission grid is a closed loop system connecting power stations to major load centers throughout Israel and to the Palestinian Authority. The system includes EHV-400 KV transmission and 161 KV sub-transmissions systems.

According to the IEC, from 1995 to 2005, Israel's aggregate demand for electricity grew at an average rate of more than 5 percent. The IEC has estimated that growing power demand will require an increase in production capacity to nearly 15 Gigawatt (GW) by 2010. To meet this increased demand, IEC is aiming to raise $1.2-$1.3 billion a year in financing for generation, transmission, and distribution systems.

The IEC is converting its coal and oil-fired generators to natural gas, and plans to generate 50 percent of its electricity from gas by 2010. Natural gas will serve at least three goals: diversity in energy sources; benefits to the environment; and reductions in IEC's electric generation costs. In February 2004, IEC's Eshkol (Ashdod) plant was the first to convert from fuel oil to natural gas. In July 2006, the 450-MW Reading power plant in Tel Aviv switched over to partial production from natural gas (50 percent coal, 50 percent natural gas). Also in February 2004, IEC received a $380 million loan to build gas-fired power plants near Tel Aviv and Haifa, plus natural gas turbines for plants near Ashdod and Afula. IEC is also constructing a $2 billion combined-cycle plant that will be operational in 2007.

In July 2006, construction began on the country’s first solar power facility, a 100-MW plant at Ashalim in the Negev desert. The plant, which is being built by Israel’s Solel Solar Systems Ltd, will have an initial capacity of 100 MW but is expected to supply 500 MW after several stages of expansion. The plant is expected to become operational in 2008.

The IEC currently operates four coal power plants at Hadera and Ashkelon. The four plants have a combined capacity of 4,850 megawatts. In December 2002, the Israeli government granted final approval for construction of the country's fifth coal-fired plant at Ashkelon at a cost of $1.3 billion. The 1,100-MW plant will consume around 3 million tons of coal per year. In March 2005, however, it was announced that the construction is three to four years behind schedule. The plant is not expected to begin supplying electricity until 2012.

At the present time, Israel has no nuclear power plants, although the country operates a reactor at Dimona, in the Negev Desert 25 miles west of the Jordanian border, as well as a smaller research facility at Nahal Sorek south of Tel Aviv. In December 2002, Israel's Infrastructure Ministry announced that it was proceeding with plans to study construction of a 1,200-MW nuclear plant at Shivta, in the Negev Desert near the border with Egypt. The Ministry has set 2020 as a target date for the plant.

Privatization of the power sector has been a government objective since 1996 amidst reports of operational inefficiencies and financial difficulties (IEC’s credit rating was downgraded in 2003). However, reform plans have been delayed for ten years due to disagreements among several government ministries, IEC leadership and union officials. In June 2006, widespread power outages that crippled the country for days brought renewed attention to the issue.

According to revived reform plans put forward by the Ministry of Infrastructure, the IEC is to be split into several subsidiaries based on business function (generation, transmission and distribution) along with the establishment of two private companies to operate the diesel-fired Alon Tover and Gezer power plants (460 MW and 592 MW installed capacity). In the second phase of reform, the subsidiaries would then be broken up into smaller firms and then partially privatized. The government remains committed to beginning restructuring by March 2007. In June, the IEC chairman again proposed postponing privatization until at least 2010. IEC has also proposed an alternative reform plan in which IEC would remain government owned with four partially privatized generation companies, five IEC controlled distribution companies and two subsidiary companies focusing on related activities. The chairman has since resigned.

Previous attempts by the private sector to break the IEC’s monopoly and to increase overall capacity failed owing to the inability of these firms to secure funding. A target has been set to increase the generation of electricity by independent power producers (IPPs) from the current less than one percent of installed capacity to 20 percent, but previous efforts to expand the provision of IPPs faced numerous delays and it may be some time before this target is met. In January 2005, new regulations opening the market to competition were passed. The regulations allow private power producers to build power plants and sell electricity directly to end users rather than IEC. They also allow companies to build private cogeneration plants and to sell the excess electricity to consumers at lower prices. This law is expected to largely temper the IEC's monopoly as new power producers begin competing with the IEC over the next few years.

Plans for the first IPP tender -announced in 1997 -for a 375-MW, dual-fired, combined-cycle plant to be built at Ramat Hovav , fell apart in 2004. In April 2006, it was announced that the Delek Group Ltd was expected to bid on the project, which is expected to cost $60-70 million. However, Delek , a minority shareholder in the Yam Thetis gas consortium may be prohibited from partnership in power generation by the Public Utilities Authority. If allowed to participate in the sector, Delek is also reportedly considering building a 400-MW power station in Ashdod at a cost of $250 million.

In July 2005, Israel's Finance Ministry and the Public Utilities Authority recommended the cancellation of the 400-MW Mishor Rotem private power tender, awarded in 2003 to OPC, a joint venture of the Ofer family and Germany's Siemens (OPC had previously been interested in Ramat Hovav ). Reportedly, an error in the terms of agreement would have proved costly for the government of Israel . The OPC has reportedly taken the matter to court.

One area of potential regional cooperation involves integration of individual national power transmission grids into a regional power network. Such a network would, among other benefits, allow power companies to take advantage of differences in peak demand periods, reduce the need for (and the costs associated with) installation and maintenance of reserve generating capacity, and provide outlets for surplus generating capacity (mainly from Israel to Jordan). The two countries also have talked about linking their power grids and have discussed several proposed joint power stations, including a $1 billion, 1,000-MW plant to be located on the two countries' border, a 100-MW wind farm, and an 800-MW plant in Jordan that would supply power to Israel. Regional tensions have precluded progress in this area.

The Palestinian Authority (PA) is traditionally served by three power companies, with the majority of their energy needs being satisfied by imports from neighboring Israel. There are no power plants in the West Bank. Rather, the Jerusalem District Electric Company (JDECO) serving the Jerusalem-Jericho-Ramallah-Bethlehem area; and National Electric Company (NEC) serving the northern West Bank; purchase electricity in bulk from the Israel Electric Corporation (IEC), and transmit power over a grid that is also owned by IEC. Approximately 95 percent of the electric power used in the West Bank is imported from Israel while the remaining five percent is provided by standalone diesel generators. In late August 2006, Jordan . signed a deal with the Palestinian Authority to provide the Jericho region with power imports. Jericho will import power from the the Suwayma plant near the Dead Sea through an 18.6 mile power line, the agency said.

The Gaza Strip has the single diesel-fired power plant at Nusseirat which was crippled in a July 2006 bombing. The Gaza plant reportedly supplies two-thirds of Gaza’s power needs, and is expected to be offline for several months. The US-based Morganti Group, a subsidiary of Lebanese-owned CCC, which has a 33 percent share in the plant, is planning to repair the 140-MW facility at the cost of $10 million. The Nusseirat plant began operations in 2002, reaching full capacity in March 2004. Gaza Power Generating Company (GPGC), wholly owned by Palestinian Electric Company (PEC), is the holding company for the project. Since 1999, PEC has been the sole provider of electricity to the Gaza Strip. The Palestinian Energy Authority has negotiated with Cairo to provide a short- term solution to Gaza ’s power shortages. Some 17 MW of electricity is temporarily being supplied to Gaza through a 22-kV cable link at Rafah . A permanent link is also under discussion.

Electrification is not universal in the Palestinian Authority and improving coverage while reducing dependency on electricity imports remains an important goal. Consumers in the Palestinian Authority reportedly pay some of the highest electricity costs in the world (more than 11 cents/Kwh). According to CCC, the conversion to natural gas (found off Gaza’s coastline) could cut end-user costs by two-thirds.

The majority of electricity production in Jordan is managed by the National Electric Power Company (NEPCO), a state-owned utility, and its subsidiaries the Central Electric Generating Company (CEGCO) and distribution companies Electric Distribution Company (EDCO) and Irbid District Electricity Company (IDECO). Only the Jordan Electric Power Company (JEPCO), which has the greater Amman and central Jordan concession, is both privately owned and a significant player in Jordan’s electricity sector.

In 2005, the total generating capacity in Jordan was approximately 1.9 GW and the total installed capacity was 2.0 GW, according to NEPCO. An estimated 95 percent of power is generated by more than a dozen power plants, the remainder being produced by large industrial companies. The three main power generation facilities are the Hussein power plant in Zarqa, with a capacity of 400 MW, the Aqaba power plant, with a capacity of 650 MW, and the Rihab facility with a capacity of 360 MW. Much of Jordan’s power generation has been switched over from fuel oil powered to natural-gas fired, since Egyptian gas imports became available in 2003.

Deregulation

According to Jordan’s Ministry of Energy and Mineral Resources (MEMR) Jordan’s electricity demand is forecast to grow at more than six percent annually through the end of the decade. Since 2000, the Jordanian government has been pursuing privatization and deregulation as a way to attract foreign capital to fund additional capacity. Under Jordan's proposed privatization scheme NEPCO will maintain ownership of transmission assets, but rely on the network of privatized power generation and distribution assess. Under a modified decision adopted by the Jordanian cabinet in March 2004, NEPCO's distribution subsidiaries including the 100 percent government-owned EDCO and majority government-controlled (55.4 percent) IDECO will be sold off, along with a 51 percent stake in CEGCO.

In 2005, an initial call for CEGCO bids failed to produce any qualified investors. However the bid was re-announced earlier this year and the privatization committee is now in talks with prospective investors including Amman-based JD Capital, Kuwait’s Kharafi National, and Dubai-based Abraaj Capital. It is expected that a contract will be awarded by end-August 2006.

At the same time, Jordan has attempted to award contracts to independent power producers (IPP) to build new capacity, although progress has been slow going and several potential projects have collapsed. In late 2005, Jordan announced the first successful IPP concession for the Amman East -Al-Manakher area combined cycle power plant with a planned generating capacity of 280-400 MW. The concession was awarded to Dubai bases AES Oasis and the Japan based Mitsui & Company. This $280 million project is expected to add capacity by 2008. The government of Jordan is seeking another $1 billion investment for four new power plants, with a total capacity of 1500 MW to be online by 2015. According to the Ministry, plans are in place for a second IPP, which will have a 280-400 MW and will be operational by 2010.

However, private investment alone is not expected to meet electricity demand growth in the near-term. For that reason, the government has funded generation projects which include CEGCO’s completed conversion of Rehab power station and linkage to the gas pipeline in March 2006. This combined cycle set began operation in the second quarter of 2005, raising the total capacity of the station to 360 MW, of which 300 MW is combined cycle unit and the remainder is two gas turbines of 30 MW each. In addition, Al-Risha power station was upgraded to 150-MW capacity (although reports indicate the Risha field is not producing sufficient gas to power the added capacity). The 200-MW gas-fired Is-Samra power plant (originally an IPP) came online in September 2005, and is currently undergoing an upgrade that will include at least one additional 100 MW steam turbine, to be online by 2008. The contract for the expansion of the facility was awarded to US-based General Electric. Is-Samra has also begun distribution of power under the subsidiary distribution company SEPGCO, established in 2003. SEPGCO will reportedly be privatized through competitive tender.

During 2005, NEPCO also expanded and upgraded the national network of 132kV and 400kV transmission lines, increasing connections to the national grid as well as 33 major of substations throughout the country. It services 99.9% of the population.

An area of regional cooperation involves integration of individual national power transmission grids into a regional power network, with Jordan at the crossroads of the connection. The government of Jordan supports the proposed, Seven Countries Electric Interconnection Project (EIJLLST) which aims to connect the electric networks of Egypt, Iraq, Jordan, Lebanon, Libya, Syria and Turkey. The connection of the electric networks in Jordan, Egypt, Syria and Libya has been only accomplished to date. Israel, for the time being, has been excluded from the grid linking projects, but has continued discussions with Jordan on the subject and may join the network in the event that political hurdles related to the Arab-Israeli peace process are overcome.

In October 1998, the Egyptian and Jordanian power grids were linked via an underwater cable between Aqaba and Taba, across the Gulf of Aqaba in Sinai. In 2005, Jordan imported 741 Gigawatt-hours (Gwh) from Egypt (of the 8.4 billion kilowatt hours consumed), according to the NEPCO annual report. Syria and Jordan linked electric grids in 2004 through which Jordan reportedly imported 241 Gwh of electricity last year. Studies support the linking of the Iraqi and Jordanian grids from Al-Qaim to Risha respectively.

The government of Jordan is also studying the commercial viability of large scale electricity generation from renewable resources, including wind, biogas, and solar energy. According to the Natural Resources Authority, Jordan has nearly unlimited generation capacity from renewable resources (particularly solar). The MEMR has targeted five percent of total energy needs to be derived from renewables by 2015. Presently, Jordan has a 1-MW biogas plant that recycles waste methane into electricity. CEGCO also produces approximately 2 MW of electricity from wind at Hofa and Al-Ibrahimiyah wind farms, in the north. The MEMR recently received a $350,000 grant from the Global Environment Facility (GEF) to study wind power development and energy efficiency.

Electricité du Liban (EdL), Lebanon's state-owned public utility, is operated under the Ministry of Energy and Water Resources and the Ministry of Finance. EdL is in charge of the majority of power generation, transmission, and distribution. The utility generates over 90 percent of Lebanon’s electricity. The reform and possible privatization of EdL, which is a major drain on state fiscal resources and is contributing to the growing public deficit, is being debated in parliament.

According to the IMF, EdL’s half-year performance was already on track for more than $1 billion in losses (1.5% GDP) by year-end (prior to renewed tensions with Israel in July 2006). EDL is calling also parliament for the adoption of an electricity tariff that reflects that high international prices of oil. Tariffs have not been raised since 1994. In 2005, the Ministry of Energy and Water Resources began to work on a five-year, emergency energy plan to reform EdL. If implemented, the plan will require a $1 billion investment to be funded by the World Bank and others.

Lebanon has seven thermal electricity generating plants, which have a total installed capacity of over 2,259 MW. Zouk, Deir-Ammar Beddawi and Zahrani are the three largest. The Deir-Ammar Beddawi power station is expected to be the first to convert to natural gas in the near future.

Edl also purchases quantities hydroelectric power from the Litani, Al-Bared and Safa power plants (total installed capacity is 221 MW). There are four private and one public electricity distribution concessions in Lebanon. The transmission system measures approximately 1000 miles and there are 58 major power substations in the country.

To complement planned new gas pipeline, the energy and water ministry planed to launch independent power plant (IPP) tender for a second combined-cycle gas-turbine (CCGT) plant at Zahrani, doubling its capacity.

Major Thermal Power Plants	Installed Capacity	Fuel Source
	(MW)
Zouk	607	fuel oil
Deir-Ammar Beddawi	435	fuel oil
Zaharani	434	fuel oil
Jiyyeh	346	fuel oil
Alhreesha	75	fuel oil
Tyre	70	fuel oil
Baalbek	70	fuel oil

All plants operate below their nominal capacity, and the recent outbreak of hostilities with Israel has further crippled electricity infrastructure. According to an early report prepared by Lebanon’s Development and Construction Council losses in the electricity sector are estimated at $180 million, of which $80 million resulted from destruction of the airport's fuel depots and the Al-Jiyyeh plant in mid July 2006. The incident at Al-Jiyyeh also caused approximatly110,000 barrels of fuel oil to be spilled into the Mediterranean. The spill spread northwards and has reportedly contaminated 93 miles of the Lebanese seashore, reaching the southern Syrian coast. In addition, fuel shortages have lead to blackouts all over the country. In August 2006, the substation at Sohmor (Ibrahim Abdel Aal ), which supplies most of the Bekaa Vally and southern Lebanon with electricity was also bombed. Losses in the distribution network were estimated at around $100 million.

In 2004, Lebanon imported 460 million kWh of electricity, including around 200 MW of electricity from Syria. This is down considerably from peak imports of 1.4 billion Kwh in 2000. Lebanon plans to draw more power from others in the Middle East region via the proposed seven-way international grid. This project could allow Lebanon to receive 300 MW in the short term and close to 600 MW in the medium to long term.

As of January 2005, Syria’s total installed electric generating capacity was around 7.5 gigawatts (GW), with fuel oil and natural gas the primary fuels all 11 thermal facilities, and 1.9 GW of hydroelectric capacity provided by three plants on the Euphrates River. The state-run Public Establishment for Electricity Generation and Transmission (PEEGT) controls all aspects of generation and transmission, while the Public Establishment for Distribution and Exploitation of Electrical Energy (PEDEEE) is responsible for sales and distribution.

Syria’s power grid is linked up with those of several neighboring countries, including Jordan and Lebanon, and is considering interconnection projects with Iraq and Turkey.

With Syrian electric power demand growing at more than seven percent annually, adding electricity supply capacity is a national development priority. According to the Ministry of Electricity, the country plans add 3,000 MW of capacity by 2010, at a probable cost of around $2 billion. Progress toward implementing these projects has been slowed by a lack of investment capital, traditionally provided by loans from international development banks and foreign governments. In order to attract the necessary capital, Syria has opened the sector to IPPs (although similar reforms failed in the early1990s). In June 2006, Iran’s Azrab Energy Industries Development Company signed a MOU to build and operate a 450-MW single cycle power plant in Sweidieh. The plant is expected to come online in mid-2009. Also, in March 2006, the Spanish/Polish venture of Iberola and Alstom Poland won a contract to build a 750-MW capacity combined-cycle power plant at Deir az-Zour, also expected to come online in 2009. A German joint venture between Siemens and Koch is currently constructing a 750-MW combined-cycle plant at Deir Ali. The plant is expected to come online in May 2008.

Major Thermal Power Plants	Installed Capacity	Fuel Source
	(MW)
Palmyra-Aleppo	1000	gas
Banias	680	gas
Mharden	630	gas
Tishreen	380	Fuel oil/gas
Zaisoun	380	Fuel oil/gas

In addition to new construction, Syria is in the process of converting oil-fired power plants to natural-gas-fired plants, in order to free up oil for export. Currently, about 50 percent of Syria’s power plants run on gas. Recently converted plants include Palmyra-Aleppo Banias and Mharden in Homs. Natural gas for these plants comes from the Palmyra fields, including Abi Rabah. Syria also increased natural gas usage at their dual-capacity (fuel oil or natural gas) plants, including Tishreen power plant in Damascus, Zaisoun and Suwaidiyah. Gas for Tishreen comes from the Omar treatment plant, while Suwaidiyah operates mainly on associated gas from the nearby giant oil field.

According to a June interview with the Minister of Energy, Dr. Ahman Dhaled Al Ali, Syria’s five-year plan aims to produce five percent total electrical energy production from renewable energies by 2010. A program of wind turbines is currently being developed and 20 meter stations have been installed for testing purposed. By the end of 2007, it is estimated that these projects will generate 100 MW of energy.

Electricity	Installed Capacity (2004E)	Generation (2004E)	Consumption (2004E)
	Gigawatts (GW)	Billion kilowatt-hours (BKWH)
Israel	10.0	46.1	41.4
Jordan	1.8	8.4	8.4
Lebanon	2.5	9.8	9.5
Syria	6.5	29.6	27.6
Total	20.8	93.9	86.9