GE Energy, for example, has received contracts totaling more than $1.8 billion to supply 32 gas turbines and additional equipment for power plant projects in Kuwait and Qatar. All told, five gigawatts of capacity will be added to help meet demand. The major components will be supplied by GE. Construction on one of the facilities will be done by Spain's Iberdrola. However, the facilities will still be owned and operated by the respective governments.

"To support the region's dynamic growth, the Middle East urgently needs to increase its power and water capacity," says Joseph Anis, GE Energy's region executive for the Middle East. He adds that GE already has a strong presence in the region, noting that Saudi Arabia has committed to buy gas turbines so that it can add 6.3 gigawatts of power there at a cost of nearly $2 billion.

Prior to 1970, it was common to have foreign interests throughout the region. But the host countries had perceived inequities, giving them additional incentives to nationalize industries. Now, with the population of both the Middle East and North Africa predicted to hit 600 million by 2025, they need to take action to attract private investment. Some experts say, however, that any rapid evolution could lead to social chaos, although all acknowledge that reforms are necessary.

According to the World Bank, high economic growth in the area has been accompanied by strong job creation and declining unemployment in recent years. But for this performance to be sustainable it needs to be supported by deeper structural reforms.

Gross domestic product reached 6.3 percent for the region in 2006. That's up from an average of 3.6 percent a year during the 1990s, the bank says. This is the fourth year in a row of robust growth performance, driven by high oil prices, economic recovery in Europe and other successful reforms. As a result, many jobs have been generated, primarily by the private sector. Indicators reveal that employment grew 4.5 percent annually in the area from 2000 to 2005.

"Countries in the Middle East and North Africa need to remove the remaining barriers that hinder the business environment for the private sector in order to maintain growth, increase private investment and generate more jobs," says Daniela Gressani, World Bank Vice President for that region.

Rich Promises

The area is rich with promise. The International Energy Agency has said that the Middle East and North African nations need to install at least 100,000 megawatts of new generation before 2030. That will necessitate $100 billion of new capital investment.

Obviously, a number of risks are present in the region, namely the threat of worsening violence. Beyond that, investors are concerned about the pace of regulatory reform and whether any changes would have a meaningful affect on economic conditions. Private interests must be able to enter the marketplaces without a lot of bureaucratic wrangling or political risks that could wreck potential deals. Such progress could increase capital flows that are essential to the creation of jobs and prosperity.

Oman and Abu Dhabi are considered by some to be the regional models. They have laid the fundamentals to open their power industries to the private sector. This is based on the transparency of the bidding process for power generation projects and the commitments of the governments in each of these countries to establishing a fair and above board investment climate for power investors.

Saudi Arabia, too, has said it will move forward with private participation in its power sector because it can no longer afford to subsidize power consumption. The government there has signed a deal with Italian utility Enel to advance environmentally friendly technologies. Such projects will include advanced meters that can help curb consumption as well as the development of green energy programs such as those in the solar sector.

"This agreement is an important opportunity for Enel and Italy to strengthen our co-operation with one of the countries with a key role in the world's energy future," says Fulvio Conti, CEO of Enel. "It offers us an opportunity to apply all of the most advanced innovations in the generation, transport and distribution of electricity on a large scale."

A select group of fast-growth economies in the Middle East is open to international capital. Enlightened nations realize that state-run enterprises have simply not produced. But the histories of Latin America and the former nations of the Soviet Union suggest that reforms must be reasoned. All-out privatization would disrupt their societies and jeopardize any opportunity to achieve open markets.

Ultimately, foreign investment in the region's electricity markets will be judged by results. Historically, those outcomes have been poor, largely because outsiders and government leaders are perceived to have exploited the continent for their own purposes.