The rising demand for electricity will require Oman's power generation capacity to grow at an annual rate of 9.6 per cent over the next five years and the country will need to add 4.8GW capacity by 2020, involving an investment of US$8bn, according to Arab Petroleum Investment Corporation (Apicorp).
In its latest report titled 'MENA Power Investment: Finance and Reform Challenges', the development bank of the Organisation of Arab Petroleum Exporting Countries said Oman's current medium-term plans are for the development of plants with a combined capacity of 3.3GW.
'In Oman, rising demand will require generational capacity to grow at an annual rate of 9.6 per cent. The country will need to add 4.8GW in the medium term, involving investment of US$8bn,' Apicorp said in the report.
According to Apicorp estimates, Oman will need US$6bn investment in power generation and US$2bn in transmission and distribution during the 2016-20 period.
The Oman Power and Water Procurement Co (OPWP) recently signed agreements to establish two major independent power plants in Ibri and Sohar with an expected total installed capacity of 3,219MW. The two gas-fired combined cycle power plants are expected to cost over RO885mn.
OPWP is also planning to
initiate the pre-qualification process for two more major power plants in the sultanate, each with 800MW-1,000MW capacity, a senior official said recently.
Apicorp said GCC countries represents 47 per cent, or 148GW, of current MENA power generation capacity. Despite the large capacity, it said GCC countries will require US$85bn in investments for the addition of 69GW of generating capacity and another US$51bn for transmission and distribution over the next five years. Saudi Arabia leads the drive to make the necessary capacity additions by 2020 as the kingdom will need to invest US$71bn to increase capacity to 114GW.
'In the GCC, governments have coped well with rising electricity demand. As well as adding capacity, some of these countries have recently introduced limited energy-reform programmes. But declining oil revenues mean that GCC governments can no longer continue to support the provision of cheap power,' Apicorp added.
Despite 2015 being an unsettling year for the MENA region, governments in the region, Apicorp said, are continuing to prioritise critical investments in their power sectors.
“The GCC governments will continue to cope well with rising demand and energy-price reform will help temper demand rises. Although GCC governments have announced budget deficits and indicated that government expenditures will be tightened in response to lower oil prices, investments in the power sector should not be affected and will be given priority.”
In the GCC countries, Apicorp said that there is a clear realisation of the importance of restructuring the power sector and establishing a regulatory framework to spur greater participation form the private sector.
Apicorp estimated that in the period between 2016-2020, the MENA region will need to invest US$334bn in the power sector. Of this US$198bn will be needed to add 146GW of generating capacity, while the rest should be invested in transmission and distribution.
