The establishment of the GCC Interconnection Authority by Royal Decree No. M/21 dated 8/5/1422 (29 July 2001) as a joint stock company indicated the realization of the GCC leaders towards the creation of an integrated economy among the gulf countries.

It has long been recognized that electricity is the engine of development of all nations. But the pursuit of power generation, transmission and distribution should consider other factors that can affect other economic activities as well as, its costs. it is in this context that Governments, economists and utility managers debate in depth on how to bring about the lowering of electricity costs, yet, become attractive enough for investors to invest on power projects. It is realized that a regionally integrated electricity market can be the solution.

The formation of the GCC Interconnection Authority is envisioned as the first step in the making of a regionally integrated electricity market where the consumers in the gulf would be the ultimate beneficiaries by the most economical resource allocation, and usage through the advancement of effective investment environment. Whereas, an independent power producer (IPP) or independent water and power producer (IWPP) can select the best plant site for best investment returns.

The interconnection provides the medium to develop the region’s electricity market. This is also in line with the Government pronouncement to attain a competitive electricity market in the future.