Project cost estimated at over $2bn if bidders exercise option to increase capacity
MUSCAT: Leading international energy firms are among 10 companies bidding for a licence to develop a huge Independent Power Project (IPP) in Sur in the Sharqiyah region. Yesterday was the deadline for the submission of qualifications (SoQ) in an international competitive tender leading to the award of a licence to build the massive facility -- the biggest greenfield power scheme ever to be developed in the Sultanate.
In contention for the power scheme are Marubeni Corporation, Mitsui & Co Ltd, International Company for Water & Power, Saudi Oger, AES Oasis Energy, Sembcorp Utilities, Tokyo Electric Power, Procomon & Asociados, Enka Insaat Ve Sanayi and Posco Plant. They were among a total of 29 firms that had earlier registered their intent to participate in the competitive tender.
The Sur IPP, which does not have a water desalination component, is sized at a minimum of 1,500 megawatts (MW) of power generation capacity. Project costs are estimated to range from $1.6 billion to $1.8 billion, with the price tag likely to escalate to well over $2 billion should bidders exercise the option to ramp up generation capacity to a maximum of 2,000 MW.
As with all new power and related water schemes, the Oman Power and Water Company (OPWP), a wholly owned subsidiary of the state-owned Electricity Holding Company, is overseeing the development of the Sur project. The company's principal brief is to secure new capacity and output to address the country's growing electricity demands.
The IPP will be located at the Sur Industrial Estate, about 12 kilometres north of Sur city. The project includes the design, construction, ownership, financing, operation and maintenance of a high-efficiency gas-fired power generation facility with a minimum capacity of 1,500 MW. The successful bidder will also be responsible for designing, financing, constructing, owning, operating and maintaining the seawater intake and outfall facilities linked to the project.
The IPP will be developed in two phases: around 400MW of early power will be available ahead of summer peak demand in 2013, while the plant's full capacity of 1,500 MW is slated for full commissioning ahead of peak summer demand in 2014. The entire output will be committed to OPWP under a 15-year-long off-take arrangement.
According to officials, competition for the prestigious licence will pick up pace later next month when a shortlist of qualified bidders is notified by the Tender Board. Once notified, the qualified bidders will be required to submit their technical offers by late December 2010, and a Final Bid Submission (incorporating the final Technical and Financial offers) by March 5, 2011. A shortlist of bidders for final negotiations will be announced on March 31, followed by the selection of a preferred bidder a fortnight thereafter.
International interest in the competitive tender for the Sur IPP has been strong from the outset. But conspicuous by its absence on the list of contenders for the IPP is Suez Energy, one of the world's biggest energy utilities and currently the largest generator of electricity in the Sultanate. Suez Energy currently has interests in existing and under-development power projects in the Sultanate with a production capacity aggregating in excess of 3,600 MW.
Market share restrictions set by the electricity regulator limit the share of any licensee to no more than 25 per cent of total domestic production capacity of licensed facilities generating electricity delivered into the grid.
Importantly, the Sur IPP, as well as a pair of recently awarded IPPs (Barka 3 and Sohar 2) under development in the Batinah region, will go a long way in meeting the galloping demand for electricity within the Main Interconnected System (MIS). An estimated half a million customers are served by the MIS, an area encompassing the governorates of Muscat and Buraimi, and most of the South Batinah, Dakhiliyah, Sharqiyah, North Batinah and Dhahirah regions.
According to OPWP, electricity demand in the MIS is projected to rise from 3,424 MW in 2009 to 6,043 MW by 2016, representing an average increase of around 8.5 per cent or 374 MW per year.
Conrad Prabhu
© Oman Daily Observer 2010
