Government subsidy to Oman’s electricity sector rose 10.9 per cent to reach a record RO 624.69 million (approximately $1.6 billion) in 2019, notwithstanding far-reaching measures adopted in recent years to reduce state assistance to this key industry.
A top official of Nama Group (formerly The Electricity Holding Company) attributed the uptick to new investments in power generation capacity as well as the construction of high-voltage transmission infrastructure.
The announcement came at the annual briefing of Nama Group, the holding company of state-owned electricity network companies, on Monday. Presenting the financial performance of the group for 2019, Eng Omar al Wahaibi (pictured), CEO, said Nama Group achieved an operating revenue of RO 1.251 billion last year, down from RO 1.290 billion in 2018, a decline attributable to the implementation of a new International Accounting Standard (IFRS 16). Net profit after tax dipped 15.4 per cent to RO 60.4 million in 2019, compared to RO 71.4 million in 2018.
On the other hand, the impact of IFRS 16 resulted in an increase in the Group’s total assets by 56.3 per cent to RO 6.9 billion in 2019, up from RO 4.4 billion in 2018. The increase in the total assets is primarily driven by an increase in the ‘Right of Use’ of assets of its wholly-owned subsidiary Oman Power and Water Procurement Company (OPWP), he stated.
“The Group pressed ahead with the implementation of its integrated strategy to increase operating efficiency and provide safe and sustainable electricity services to all customers in the Sultanate,” said the CEO.
Capital expenditure however slumped around 25 per cent to RO 285 million last year, down from RO 378 million in 2018 – a decline attributed to the “maturity of the electricity network and a slowdown in economic growth”.
A key highlight of 2019, Al Wahaibi said, was the successful completion of the partial privatisation of Oman Electricity Transmission Company (OETC), which owns and operates the country’s main transmission grids. Chinese state-owned State Grid International Development Ltd (SGID) picked up a 49 per cent stake company at a cost of around $1 billion.
Nama Group intends to finalise the sale of 70 per cent of its shares in Muscat Electricity Distribution Company (MEDC) in line with its strategy for the privatisation of electricity distribution companies. “It is planned to receive the bids and complete the privatisation transaction in 2020,” said the CEO.
Also making headway is the implementation of the ambitious North-South Interconnection Project, which will link the Main Interconnected System (MIS) with the PDO network and the Dhofar Power System (DPS). Total investment in Phase 1 of the landmark project, which will add 660 kilometres of overhead lines, is estimated at RO 240 million. The project, due for completion in 2023, will enhance the efficiency of the electricity networks and enable the implementation of several key renewable energy initiatives as well.
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