IMPLEMENTING SUCCESS

Kuwait 2017 | ENERGY | INTERVIEW

TBY talks to HE Essam Abdul Mohsen Al-Marzouq, Minister of Oil & Minister of Electricity and Water, on cooperation with other ministries, the private sector's role in energy, and upcoming regulations.

HE Essam Abdul Mohsen Al-Marzouq
BIOGRAPHY
HE Essam Abdul Mohsen Al-Marzouq was appointed Minister of Oil and Minister of Electricity and Water in December 2016. He started his career as a mechanical construction engineer with the Kuwait National Petroleum Company and worked as Training Engineer at the Japanese Gas Company and Planning Engineer at the Kuwait Petroleum Corporation (KPC), before taking on executive roles. He served as the General Manager of the Kuwait Industrial Refinery Maintenance & Engineering Company, Board Director of the Kuwait Shipbuilding & Repair Company, Chairman and Managing Director of Gulf Dredging Company, and lastly as Chairman of the Board at Boursa Kuwait, the national stock exchange.

What defines the strategy you intend to bring to the ministries?

Certainly, I envision bringing my private-sector experience in, and the priority for me now is governance. In the oil sector, I feel confident, as there has been strong leadership in our industries. Over the past 35 years the oil sector has developed to an acceptable level of governance, performance, achievements, and leadership, so I intend to emulate this success into the electricity and water industry. Prior to my arrival, there was already a law to be presented to the parliament to establish the Electricity and Water Corporation as a vehicle to commercialize the power operations that are currently under the ministry. These activities should be under a commercialized entity rather than a public service. This process of implementation should take around two to three years, and we will leverage on the GCC's experience in incorporating these activities.

An important step in this direction is the new power plant, Al-Zour North, which was constructed in a public-private partnership (PPP) model. Does the involvement of the private sector in this project represent more opportunities for the private sector to assist Kuwait in meeting its future energy needs?

Part of the Kuwaiti vision for the future is to encourage the private sector to become the primary creator of jobs, and we need this social security for our people. By having an active and engaged public sector, we can absorb the excess manpower that the government has, which is hindering us from achieving the best services for the people. Creating more jobs in the private sector and encouraging people to work in this sector will ultimately build a more sustainable society for future generations. Our first and foremost priority for these PPP projects is to create social security. Secondly, we will be enhancing the diversification of income of our country and moving away from a near-total reliance on oil revenues. The private sector should be a larger contributor to our GDP. We have already pinpointed future projects, including the second, third, and fourth phases of the Al Zour project. The PPP model can be emulated in other governmental sectors like health and aviation. In the Ministry of Oil, however, we are bound by the constitution. We do not have any other privatization initiatives except for gas stations. We are taking another look at the program that has been established for the privatization of the petrol stations, and we have another model that we will be adopting in the future for the remaining petrol stations.

What effects will the forthcoming implementation of new tariffs have on water and electricity? What price regimes may consumers and industries expect?

Halfway through January, we had the first inaugural meeting of the Tariff Committee, after the parliament approved the law for increasing the tariff of electricity and water. The current tariffs do not even represent 1/20th of the actual cost of electricity and water. Our objective is not simply to increase our revenues, but rather to encourage people to conserve energy. Unless they have some sense of the reflection of their usage on their disposable income, there will be very limited motives to reduce consumption. A conventional light bulb in Kuwait costs 60 fulus, an LED or saving bulb around KWD1, which is around 20 times the price. A conventional light bulb uses seven times the amount of energy as a LED bulb, but there need to be incentives to purchase the latter to make it attractive. We want to increase awareness of conserving energy. The Tariff Committee consists of representatives from the Ministry of Electricity and Water, the Ministry of Finance, the Ministry of Commerce, and the Legal Bureau of Kuwait. We are combining all these entities because we want to have a balance between increasing income with the effect of the rise in the inflation and increasing the prices of goods in the market.