Divestment in United Power Co to be formalised by June 30
MUSCAT -- French utility giant GDF Suez Group says it has agreed a deal with Dubai based MENA Infrastructure Fund to sell its 32.81 per cent stake in United Power Company SAOG (UPC), which owns and operates the Manah power project. The sale is in accordance with a stipulation made by the Sultanate's power regulator back in December 2006, requiring the company to completely divest its equity interest in UPC. The divestment is in line with the provisions of the Sector Law, which limits ownership size in the Sultanate's now substantially privatised power and water sector.
It was against this commitment to sell its stake in UPC that the GDF Suez Group's successful bid for the Barka II and Al Rusail Power projects won official approval in December 2006. On Thursday, UPC announced that it was informed by its principal shareholder GDF Suez Group of its decision to sell the equity interest in the company to the investments holding company of the MENA Infrastructure Fund. The announcement came in a notification to the Muscat Securities Market (MSM). GDF Suez's agreement to sell its take to the MENA Infrastructure Fund, the UPC notification added, has already been endorsed by the Authority for Electricity Regulation -- Oman, the country's power sector regulator.
The MENA Infrastructure Fund is a specialist $500 million private equity fund established in the Dubai International Finance Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA). It is a regional investor, targeting investments in the infrastructure and energy sectors across the Middle East and North Africa.
The Fund is sponsored by three prominent business groups in the MENA region: DICAM (a wholly owned subsidiary of Dubai International Capital which focuses primarily on direct private equity transactions, private equity funds as well as structured investments in listed equities throughout the world), HSBC Bank Middle East, and Waha Capital (an Abu Dhabi based listed holding company, focusing on the leasing, financial services, real estate and maritime sectors).
Four other regional and international investment entities had also bid for GDF Suez's stake in United Power Company, it is learnt. The necessary regulatory approvals for the sale are expected to be concluded by June 30, 2009. Significantly, the divestment does not entail GDF Suez's complete departure from the 280MW Manah power project -- the first private-led power venture in the Gulf region.
To ensure that it benefits from the international power giant's technical and operational expertise, UPC has finalised a comprehensive operation and maintenance (O&M) agreement with Suez Tractebel Operation & Maintenance (Oman) LLC (STOMO), a GDF Suez Group company. STOMO also operates Sohar and Al Rusail power plants (and will also operate the Barka II plant once it is commissioned).
In the Sultanate, GDF Suez is by far the biggest private investor in the country's power and related water sector. Starting with its maiden investment in the Manah power project in 1994 the first independent power project in the Gulf -- GDF Suez has since emerged as a dominant player in Oman's utility sector as well as in the region.
The Group has a 45 per cent equity stake in the Sohar IWPP comprising a 585 MW combined cycle gas turbine and 6,250 cubic metres/hour of water desalination capacity. Further, in December 2006, a consortium led by GDF Suez was awarded the acquisition of a 100 per cent stake in the state-owned Al Rusail Power Company, which operates a 665 MW power plant at Al Rusail.
In the biggest of its investments in the Sultanate, combined with the Al Rusail acquisition, GDF Suez won a concession to construct and operate the Barka II IWPP comprising 678 MW of power and 120,000 cubic metres/day of desalination capacity. The Group's dominant presence extends across the Middle East as it oversees a combined installed power generation capacity of around 14,000 MW, 2.5 million cubic metres/day of seawater desalination capacity, and nearly 400,000 cubic metres/day of wastewater recycling capacity.
By Conrad Prabhu
© Oman Daily Observer 2009
