Second IPP deal closure

01 August 2000

The sultanate last month announced the successful closure of the Al Kamil power project with Al Kamil Power Company, a unit of the UK?s National Power. This is the second independent power project (IPP) in the sultanate and is the first deal to close as part of the government?s current electricity and water privatisation programme. The project was tendered earlier this year and is for the design, construction, financing, ownership and operation of a new 275-MW, open-cycle, gas-fired power plant at Wilyat, in the Ash-Sharqiya region.

National Power made the lowest bid for the project on the basis of a 230-250 MW capacity. During negotiations, the government and National Power agreed to contract for an additional 25-MW of capacity at no additional cost.

The agreement covers a project life of 15 years, under which the government will purchase capacity and output of the plant, and a 15-year natural gas supply agreement, whereby gas will be supplied to fuel the plant at a price of $1.50/m Btu.

The project company is obliged to offer at least 35% of its shares to the public in Oman, on the Muscat securities market, within four years of its incorporation. It has also committed to implementing a detailed ?Omanisation? plan, which obliges it to employ and train Omani nationals at all administrative and technical levels in its organisation. Some 75% of employees are expected to be Omani citizens by the 15th year of the project.

Oman?s privatisation programme also includes the 400-440 MW Barka Power and Desalination project, for which bids are due in early September, and substantial power and water transmission upgrades, including a new power load dispatch centre.

Under a separate tender by the Ministry of Electricity and Water on 15 July, a preferred bidder was appointed for the Sharqiya Transmission project. This will upgrade the power transmission network in the region and provide interconnection for the Al Kamil plant to the Northern Oman power grid.

Richard Ingham, of ABN AMRO, which leads the international consortium advising on the privatisation programme, said: ?We are continuing to make progress with the restructuring and with the Barka project, which we expect to close in November.?

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