Tariff revisions that recently came into effect for the first time for residential consumers in the Sultanate are beginning to yield results chiefly in terms of driving energy efficiency in the electricity sector, a top official of the Authority for Public Services Regulation (APSR) — the sector regulator — revealed here on Wednesday.
Shaikh Dr Mansoor bin Talib al Hinai, Chairman, said the upward revisions — part of a “price signalling” initiative by Oman’s authorities to reduce the hefty financial burden that the government has long shouldered in subsidising the electricity sector — is pushing consumers to curb their consumption and thereby contribute to efficient energy use.
While subsidy-free Cost Reflective Tariffs (CRT) came into effect for major customers nearly four years ago, electricity consumption by residential customers became subject to a tariff increase for the first time in several decades starting from January 1, 2021.
It has already come into effect for non-Omanis, but for citizens, the subsidy will be gradually phased out over a five-year timeframe.
Speaking at a ‘majlis’ on energy efficiency hosted by Petroleum Development Oman (PDO) last week, Dr Al Hinai said the price signalling initiated by the government has begun to pay dividends.
“In the last three years in Oman, we are seeing for the first time that tariffs are changing’’, the Chairman said.
“Price signalling is a very strong tool — this will definitely affect how industrial and commercial customers think about their consumption behaviour and how to embrace efficiency.”
Equally noteworthy are the results emerging from the residential sector, he pointed out.
“When it comes to residential homes, what started a couple of months ago is something remarkable. It was the first time ever that we are seeing the prices of electricity in Oman starting to move.
From the numbers we are seeing from the distribution companies, price signalling is starting to bear some fruits from the energy efficiency perspective in residential households. This is a very good starting point and this is where energy conservation and energy efficiency will start to gain more momentum here in Oman.”
The ‘majlis’ featured a keynote address by Abdulamir al Ajmi, External Affairs and Value Creation Director at PDO, and a panel discussion on the theme, ‘Towards a National Energy Efficiency Action Plan’.
Taking part in the discussions, moderated by Dr Syham Bentouati, Managing Director — NAFAS International, were Eng Hilal al Ghaithi, Director of Customer Affairs — APSR; Omar al Mahrizi, CEO — Sohar Freezone and Deputy CEO — Sohar Port and Aiman al Shukaili, Head of Renewables Energy — PDO.
Aside from the price-signalling initiatives of the government, the Authority is working on a number of regulations that will help further enhance energy efficiency in the Sultanate, said Dr Al Hinai. It includes a plan to legalise direct power purchase agreements between major consumers and electricity producers — a process dubbed as ‘bilaterals’.
Also on the anvil is the concept of energy wheeling — the transportation of electrical power via a utility’s transmission or distribution system between different grids or network service areas.
Both initiatives were unveiled by Eng Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Energy and Minerals, during a conference hosted by OQ — the Sultanate’s integrated energy group — earlier this year.
“Price signalling, coupled with a number of regulations that the regulator is currently working on, will definitely help in improving overall energy efficiency here in Oman’’, said the Chairman.
“Some of these are related to investors here in Oman — and the private sector is looking forward too — wheeling, bilaterals and several other aspects that Eng Salim al Aufi spoke about in January. On all of these we are working closely with the Ministry of Energy and Minerals to get them done and approved. This will be another important milestone in the electricity sector here in Oman’’, he added.
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