RfP for sale of Oman’s first private power project

By Conrad Prabhu — MUSCAT: MAY 28 – A competitive process for the sale of the Manah Independent Power Project (IPP) — the first-ever privately procured power plant in the Sultanate, and indeed in the wider Middle East — is expected to commence before the end of this year, according to state-owned power procurement utility Oman Power and Water Procurement Company (OPWP).
The 264-megawatt (MW) plant in Al Dakhiliyah Governorate, owned and operated by United Power Co, transfers to government ownership in April 2020 upon the conclusion of the current Power Purchase Agreement.
Unlike all of the Independent Power Projects (IPPs) that followed in the wake of Manah — a trailblazer at the time in private-led power sector investment — Manah IPP was developed under the ‘Build-Own-Operate-Transfer (BOOT)’ model.  Ownership of the asset reverts to the government in less than three years — a transfer that is also a first for the national power industry.
“OPWP is currently evaluating the options available toward continuing operations at the Manah IPP after asset ownership transfers to the government in April 2020. OPWP expects to issue a tender in 2017 for sale of the asset, supported by a Power Purchase Agreement (PPA) with OPWP,” the utility said in its newly published 7-Year Outlook Statement. As a first step in the sale of the asset, OPWP plans to issue a Request for Proposals (RfP) in the fourth quarter of this year, it noted.
A new PPA will allow for the continued operation of Manah IPP well beyond the expiry of the current contract with OPWP in April 2020.
Significantly, contracts governing the operation of at least two other privately procured power plants are up for extensions.  Al Kamil IPP, a 280 MW power plant in Sharqiyah South Governorate, will receive a three-year contract extension to December 2021 pending final approval by the government.
Likewise, OPWP has finalised negotiations with the Barka Independent Power and Water Project (IWPP) for an extension of the contract covering the power generation component of the plant. Under the new agreement, around 388 MW of generation capacity will be available in combined cycle generation mode beyond the expiry of the current contract in April 2018 to December 2021. However, the plant’s water desalination capacity, which is based on old-style multi-stage flash (MSF) technology, will not be tapped as part of the deal.
Peak power demand in the Main Interconnected System (MIS), covering much of the northern half of the Sultanate, is projected to grow at an average rate of about six per cent annually to 8,960 MW in 2023, up from 5,920 MW in 2016.  “This growth rate, lower than previous forecasts, reflects economic trends and the introduction of cost reflective tariffs to large consumers. Energy consumption is expected to grow at 7 per cent per year,” says OPWP.  In 2016, average demand grew by a modest 3.9 per cent compared to previous years.