Economic growth leads to peak demand for utilities

The demand for water and electricity in Qatar has been witnessing sharp and steady growth over the last several months which peaked in June this year. This can be mainly attributed to rapid growth in economic activities such as, extraordinary growth in the number of new companies, industrial diversification, construction boom, and ramp up in the production of several goods domestically as part of Qatar’s self-sufficiency drive.

According to official data, consumption of water surged to 56,850 thousand cubic metres (thousand m³) in June this year, the all time high. This was nearly 50 percent surge compared to 38,100 thousand m³ in the corresponding month last year. While the demand for electricity has also seen a significant increase of about 28 percent to peak at 4,907 Gigawatt (GWh) in June 2019 against 3,845 GWh in the same month last year.

When compared on monthly basis, the water consumption in June witnessed an increase of 2.4 percent and electricity utilization soared by 16.6 percent compared to May 2019 figures, Time Series data available at the Planning and Statistics Authority show.

Analysts suggest that this unprecedented year-on-year surge in the demand for water and electricity is due to factors other than seasonal variation or population growth, because the annual population growth was only 2.24 percent in June 2019.

“This significant increase in the demand for utilities can be attributed to the massive construction activities, especially the projects related to 2022 Fifa games and several economic zones that are being developed across the country. Additional subscribers and connections to the newly developed housing units; commercial establishments; new factories and production facilities which were set up as part of efforts to boost domestic production of goods may be some of the other important factors that lead to sharp jump in the demand for water and electricity,” said an industry expert who did not wish to be named.

He added: In addition, fast growing agricultural activities (commercial as well as backyard farming by individual households), higher number of tourists and visitors and increase in population may have also contributed to the higher demand for utilities in Qatar.”

The newly introduced economic and labour reforms and business friendly environment in Qatar attracted large number of companies over the last couple of years witnessing double-digit growth annually in the number of newly registered companies. And that trend, especially the number of small and mid-sized enterprises (SMEs), accelerated after the imposition of economic blockade in June 2017.

According to Qatar Chamber, 2017 recorded a 13.4 percent increase in the number of registered companies in Qatar from 12,910 in 2016 to 14,639 in 2017. Some 34,848 companies renewed their commercial registration in 2017, while the total number of companies registered with the chamber increased by 28 percent to reach 76,666 in 2017 compared to the 59,926 recorded in 2016.

The pace of establishing new companies in Qatar has remained unabated till date as the government has enhanced efforts to attract more investors, especially for the upcoming Free Zones and Special Economic Zones. According a report by the Ministry of Commerce and Industry on the business sector for October 2018 revealed the registration of 2,910 new companies, while the number of new commercial records reached 1,678 records and 1,232 sub-records. The report shows that the number of commercial licenses issued, modified or renewed during October was 8,909. The Ministry issued 2,405 licenses, 1,019 amendments and 5,485 commercial licenses.

The number of SMEs alone has surpassed more 20,000, and the Qatar Development Bank (QDB), which is leading from the front in helping and promoting them, has extended a financial support of about QR8bn in 2018 to Qatari companies, including SMEs. Qatar will host high-profile 2020 Micro, Small and Medium Enterprises (MSME) Forum next year, which will further accelerated the economic progress of the country.

Source from: The Peninsula