Power Engineering - Oman to speed up power privatisation programme

13 April 2004 - Asia Pulse Oman is making remarkable progress in the privatisation of the power sector and officials said the government intend to keep its promise to continue to sell off state-run assets.

A Ministry of National Economy official said the government was on track to announce a new sector law covering power and water by the end of June this year.
"We would like to assure the private sector that there will be no delays at all in the unbundling of the power network. We are also going to give the opportunity to investors to operate the water network as well. It has already been decided and the law will be implemented just before the second half of the year," the official said.

He added that part of the ministry's initiative was to speed up the process by allowing foreign investors to own existing power stations. Oman's three biggest power plants, Rusayl, Wadi Jizzi and Ghubrah, would be offered to the public to run as independent projects.

"It is our ambition to privatise the entire electricity generation and water distribution. We will do this in phases and the plan would be made available once the law has been made public. We are inspired by the success of private companies establishing their own power plants in a programme we started in the 1990s. The best way to run utilities like power generation efficiently and cost-effectively is to let private companies manage them," the official added.

Oman was the first country in the Arabian Gulf region to allow foreign companies to build, own and manage power plants. Private companies already operate power plants at Barka, Al-Kamil, Manah and the vertically integrated Salalah power project run by Dhofar Power Company. A fourth independent water and power project (IWPP), which is currently out to tender, will be built at Sohar.

An official from Al-Kamil Power Company, owned by UK's International
Power, said it was going to float 35 per cent of its shares on the Muscat Securities Market (MSM) in June. The Barka Power officials also said the company was planning to offload some shares to the public this year.

"We have not yet finalised the percentage of the shares we are going to divest or exactly when this year but the decision has already been made to do that," a Barka Power official said. Under the government's regulations for fast-track projects, developers have to sell a stake in the company within five years of a plant's commissioning.

Oman's first private power company in Manah near the historical town of Nizwa, has already divested shares in the local market. United Power Company (UPC) is among the blue chip stocks in the MSM. The power and water privatisation process is part of the government's efforts to sell off some of the state owned assets in a drive to raise funds from foreign investment.

There are also plans to float shares to the public of state-run telecommunications company Omantel while the sultanate's two major airports, Seeb and Salalah are already under the management of private companies.

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