In view of vigorous industrial growth in the Sultanate and implementation of heavy engineering industries, the demand on electricity is increasing and as a result the electricity production has been growing at a CAGR of 6.9% over the period 2002-2007 and stood at 14,443GW during 2007. The growth rate is much higher than the MENA sector growth rate of around 5-6% and the world average of 2.7%.
Gulf States have invited bids for the final phase of a project that links their electricity stations in a single grid following the completion of the first two stages. UAE and Oman have already completed their own electricity grid, while the second phase involving four other members is nearly completed. The third stage that is expected to be completed by the end of 2008 includes the interconnection of the South and North Grid, which completes the interconnection of all six GCC countries. The resultant supplies would be shared by the six members with UAE getting 900MW, Saudi Arabia 1,200MW, Oman 400MW, Qatar 750MW and Kuwait 1,200MW. UAE owns 15.4% of the project, while 31.6% is controlled by Saudi Arabia, 26.7% by Kuwait, 11.7% by Qatar, 9% by Bahrain and 5.6% by Oman. The grid would cut power cost requirements by reducing the level of reserves needed in each member.
Electricity Production, Distribution and Connections
(GW/H) 2001 2002 2003 2004 2005 2006 2007
Production 9,737 10,331 10,714 11,499 12,648 13,585 14,443
Distribution 9,178 9,851 10,303 10,959 12,023 13,127 13,856
Connection (000) 447 474 491 511 588 N/A N/A
Source : Ministry Of Economy
The Sultanate has countered the issue of paucity of power by increasing private participation in power projects. Al Kamil, AES Barka, United Power Company and Sohar Power are a few examples. Al Manah and Dofar are the other two major power projects. The three government power enterprises Al Jizzi, Al Ghurbrah and Rusayl are to be privatized in near future. Foreign players have a more relevant role to play as a technology partner and contributors of limited capital. Apart from conventional energy sources, Solar energy has been used to power parking meters in the capital area, as well as in large projects such as a water desalination plant and to generate electricity for lighting projects in some remote areas of the North Batinah and power radio and television booster stations in several regions, including remote mountain areas. Wind energy is used to power the water pump in the Hailat al Rakah desalination plant.
The Sultanate’s water requirements are sufficed by groundwater and limited rainfall of about 100mm annually to the extent of 65% and the balance 35% catered to by desalination of sea water. Water production has grown at a CAGR of 7.9% over 2002-2007 and stood at 33,175m gallons in 2007. The Oman Power and Water Procurement Co SAOC (OPWP) has unveiled plans for a considerable enhancement of power and desalinated water generation capacity to meet a robust increase in projected national demand growth over the next seven years 2008 to 2014. According to OPWP, the demand for additional power capacity is forecast at between 1800MW and 2500MW for the Main Interconnected System (MIS), covering north Oman by 2014. The MIS covers the governorates of Muscat and Buraimi, and most of the North Batinah, South Batinah, and Dakhliya, Sharqiya and Dhahirah regions, serving around 500,000 electricity customers.
Water Production , Distribution and Connections
(million Gallons) 2001 2002 2003 2004 2005 2006 2007
Production 21,538 22,724 23,978 26,639 28,959 33,158 33,175
Distribution 21,529 22,855 23,951 26,431 28,802 33,109 32,794
Connection (000) 128 134 143 154 162 N/A N/A
Source : Ministry Of Economy
To cater to this demand growth, OPWP plans to launch competitive procurement processes during this year, covering new green-field power generation capacity of 750-1000MW to be available from 2011-2012 and located at Barka and/or Sohar. Also envisioned in its procurement strategy for the 2008-2014 is the expansion or redevelopment of the Al Ghubrah Power and Desalination Plant, which will include a new Independent Water and Power Project (IWPP) providing additional power capacity of up to 500MW. This new capacity is proposed to be available from 2011-2012 and will be established alongside Al Ghubrah's existing plant.
In addition, OPWP's procurement strategy also provides for a new independent power project with a potential capacity of up to 1000MW that may be required during the 2013-2014 timeframe, according to its 7-year statement. The company is already overseeing the ongoing procurement process linked to the development of a new IWPP in Salalah of a capacity of 370-430MW and 68,000cu.m/day (15m gallons per day MIGD) of desalination capacity. This process is due to be completed during the course of this year to a view to securing full availability of the plant by early 2011. Some 'early power' from the Salalah IWPP is expected to be available from 2010. OPWP's 7-year statement projects strong growth in power and water demand.
The maximum power demand in the Main Interconnected System (MIS) is projected to grow from 2,682MW in 2007 to 5,111MW by 2014, reflecting an average annual demand increase of around 10% or 350MW per year. Under 'high case' assumptions, power demand is expected to top 5,806MW by 2014, says the power and water procurer. Demand for desalinated water in the MIS area is expected to increase from 88m cu.m in 2007 to 236m cu.m by 2014. This tripling of demand, according to OPWP, reflects a policy of reduced reliance on groundwater resources, as well as the effects of demand of population growth and economic development. In the Salalah system, which serves Dhofar Governorate, the maximum demand for power is expected to grow from 251MW in 2007 to 580 by 2014, corresponding to an average annual increase of around 13% or 50MW per year. Desalinated water demand in the Salalah area is not expected to increase beyond 24m cu.m/year, which will be catered for by the Salalah IWPP.
Agriculture is the major consumer of water in the Sultanate with 83% share in 2000 with domestic and manufacturing sectors accounting for the remaining 17%. Over the sixth plan period share of agriculture increased to 92%, leaving a mere 8% share to domestic and manufacturing sectors combined. All power generation and water desalination companies in Oman are set to be privatized by 2009. An agreement for a project that includes the first privatization of Oman’s electricity and related water sector restructuring process under a Share Purchase Agreement signaled the start of the privatization process in earnest.
The Omani government has early 2008 timeframe for privatizing all transmission operations and the distribution and supply companies within the next three years. The now privatised AI-Rusail Power Company is a natural gas fired 668MW open cycle plant consisting of eight Fram 9E units. It is located approximately 40km west of Muscat and is connected to the main interconnected transmission system at 132 kV. It has now been just over a year since the Ministry of National Economy transferred the electricity and water related assets, responsibilities and staff of the Ministry of Housing Electricity and Water to ten successor companies. We believe this sector has an important role to play, acting as the backbone of the economy to help achieve the Sultanate’s targets in the other blooming sectors of the economy.
