DECEMBER 23, 2012

Muscat: The state-owned Oman Power and Water Procurement Company (OPWP) has floated a tender to pre-qualify companies for developing an independent power project (IPP) with a generation capacity in the region of 300MW-400MW at Raysut in Salalah.

Once the pre-qualification process is complete (which is expected in May, 2013), a request for proposal (RfP) will be issued asking the qualified firms to submit their bids for developing Salalah IPP 2 and for taking over the existing plant of Dhofar Power Company (DPC). 

The successful bidder will have to take over and operate the existing 248MW power project of the state-owned DPC, which will be part of the proposed concession agreement. In effect, the concession winner will produce around 550MW-650MW once they commission the project, which is seen in the second quarter of 2016. 

The pre-qualified companies have to conduct a due diligence on the assets of the DPC power plant (which was set up almost nine to ten years ago) for submitting the RfP, as they have to mention the value of the project in their bid along with the new IPP. Dhofar Power Company's shares were bought back by Electricity Holding Company (EHC) through an open offer to make it a state-owned firm.

Apart from generating power, DPC owns and operates the Salalah Power System, an integrated power generation, transmission and distribution system serving an estimated 63,000 customers across a wide area of Dhofar Governorate. It is not clear how the authorities deal with the transmission and distribution business of DPC. Sources said that the government may bifurcate the transmission and distribution business and hand it over to a different company, once the power plant is transferred to the winning firm. 

Sources said that earlier the proposal was to develop Salalah project as an independent water and power project (IWPP). However, now the tender is only for IPP. The proposed concession for Salalah IPP 2 is similar to Barka 2 power project development model, where in the government clubbed the concession deal with the Rusayl power project way back in 2006.

As many as eleven companies, including Bahwan Engineering Company, Galfar Engineering and Contracting Company, Marbeni Corporation, Siemens, Sojitz Corporation and Itochu Corporation, have bought the tender document for pre-qualification from Tender Board. The tender documents will open on February 4, 2013. 

Timely implementation
The government's plan is to ensure the project's timely implementation to meet the growing demand for power in Dhofar region, mainly driven by a growing population, the hospitality industry and industrial projects coming up at the free trade zone. If the tender is awarded by next year, completion of the project is seen sometime in the second quarter of 2016.

Once DPC's project is taken over by the successful winner, there will be only two independent power producers in Salalah. Sembcorp Salalah Power and Water Company owns and operates a 445MW gas-fired power plant and a desalination capacity of 15 MIGD. Peak power demand in the Salalah System is projected to grow by 10 per cent annually from 348 MW in 2011 to 689 MW in 2018. 

Similarly, the average power demand is expected to grow by 10 per cent per annum from 228 MW to 458 MW between 2011 and 2018, according to OPWP's seven year projection.

© Times of Oman 2012