Kuwait Fund Grants $102 Million Loan to Boost Bahrain’s National Grid with 400 kV Expansion
In a significant move to bolster regional energy infrastructure, the Kingdom of Bahrain and the Kuwait Fund for Arab Economic Development (KFAED) have signed a new loan agreement worth KD 31.3 million (approximately US$102 million). The financing is dedicated to the strategic “Developing 400 kV Electricity Transmission Networks Project,” a cornerstone initiative for upgrading Bahrain’s electricity grid.
The agreement was formally signed by His Royal Highness Salman bin Hamad Al Khalifa, the Crown Prince of Bahrain, and Mr. Waleed Sh. Albahar, the Acting Director General of KFAED. This marks the fourth loan provided by the Kuwait Fund to strengthen Bahrain’s high-voltage power infrastructure, highlighting a enduring partnership in the energy sector.
Strategic Project Scope: Enhancing Grid Capacity and Reliability
The loan will fund a large-scale expansion designed to enhance the capacity, reliability, and efficiency of Bahrain’s national power network. Key components of the 400 kV transmission network project include:
Construction of Three New Substations: Building 400/220 kV substations in the Hadd, Umm Al Hassam, and Riffa regions.
New Interconnection Station: Establishing a 400 kV interconnection station at Ras Laqrin, which will be directly linked to the output of the Al Dur 2 power plant.
Advanced Underground Cabling: Installing 400 kV ground cables to connect the new terminals to the existing grid.
220 kV Network Upgrades: Reinforcing the current 220 kV network to ensure seamless integration with the new higher-voltage system.
By upgrading to a 400 kV system, the project aims to reduce electrical losses, alleviate stress on existing equipment, and enable safer, more flexible, and cost-effective power transmission. A critical benefit is the enhanced ability to participate in power exchanges via the GCC interconnection system.
Financing Structure and Loan Terms
The total estimated cost of the ambitious infrastructure project is approximately KD 260.8 million (US$851.2 million). The newly signed loan from KFAED will cover roughly 11.6% of the total project cost, forming a part of a broader financing program.
The loan carries favorable terms, featuring a 20-year repayment period. This includes a 4-year grace period, followed by 32 semi-annual installments. The interest rate is set at 2% per annum, with an additional administrative fee of 0.5%.
Long-Standing Cooperation and Strategic Significance
This agreement underscores the deep-rooted bilateral cooperation between Bahrain and Kuwait in development financing. For Bahrain, this grid modernization is critical for meeting rising electricity demand, improving system resilience, and fully leveraging the GCC power interconnection.
The focus on high-voltage transmission aligns with Bahrain’s long-term goals for economic diversification and energy security. It paves the way for integrating future generation capacity and enables more dynamic regional energy trading.
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The Road Ahead: Implementation and Future Benefits
With the financing milestone achieved, the focus now shifts to project implementation. This involves the procurement of equipment, contracting for civil works, laying high-voltage underground cables, and constructing the new substations.
Upon completion, the upgraded 400 kV transmission network is expected to deliver long-term benefits, including greater grid stability, reduced transmission bottlenecks, and a more robust platform for Bahrain’s economic growth. This strategic investment not only modernizes the nation’s power backbone but also solidifies its role in a more integrated and efficient Gulf energy landscape.
