MPs to vote on Islamic Bankfunded Jasra Power project

TDT | Manama

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A new 400 kV electricity substation in Jasra, backed by a long-term deal with the Islamic Development Bank, is heading to Parliament for approval. The project, tied to the expansion of Bahrain’s regional grid links, involves more than 70 kilometres of high-voltage underground cabling. The draft law before MPs seeks to ratify three agreements signed last September: a framework deal, an agency arrangement, and a government guarantee.

Deferred sale model

The financing structure is based on a deferred sale model. Under the terms, the Bank will buy the project assets and sell them on to the Electricity and Water Authority over a three-year period. The agreement sets out how ownership will pass, how payments will be made, and how the price will be adjusted over time. It will not take effect until Bahrain signs the guarantee agreement and provides a legal opinion from the relevant authority.

The agency agreement puts the Electricity and Water Authority in charge of purchasing equipment and managing contracts, while acting on behalf of the Bank.

The Authority will receive a symbolic fee of one hundred US dollars. It must also make clear in all reports and written material that the funding comes through the Bank. The guarantee binds the government to cover any amounts owed by the Authority under the sale agreement. It states that its terms apply regardless of any domestic legal conflict and will be governed by Islamic and public international law. Disputes are to be settled through arbitration if no settlement is reached.

Riffa, Umm Al Hassam, Seef

Work planned includes a new 400/220 kV station in Jasra and the laying of 42 kilometres of 400 kV and 30 kilometres of 220 kV cable. These will connect to Riffa, Umm Al Hassam, Seef, and other areas. By the end of 2027, the new station is expected to help manage rising demand, reduce pressure on the existing grid, and lift Bahrain’s electricity exchange with its Gulf neighbours. Transmission capacity with the GCC is set to rise from 926 megawatts in 2023 to 1,359 megawatts. Transformer capacity is to double.

Grace period of seven years

The Ministry of Finance and National Economy supports the proposal, describing the loan terms as favourable given current market conditions. The deal offers a grace period of seven years, with repayments spread across 25. The ministry’s role is limited to backing the loan; the Authority is responsible for paying it off.

The Electricity and Water Authority and the Ministry of Electricity and Water Affairs have also supported the project. They argue that borrowing is the only way to press ahead with capital works of this scale without putting pressure on day-today budgets.

Parliament’s Financial and Economic Affairs Committee has examined the bill and backed it without changes.