MUSCAT -- The Rural Areas Electricity Company (RAECO) received RO 39.613 million in government subsidy last year, representing a roughly 25 per cent increase from the previous year's grant of RO 31.621 million, the Omani joint stock company stated in its latest Annual Report for 2012.
The state-owned utility is a major beneficiary of annual government grants to the sector in lieu of the subsidised cost at which electricity and water is made available to consumers across the Sultanate. It is also heavily dependent on government support to finance its extensive and far-flung network because, unlike its peers that distribute and supply electricity based on relatively economical gas-fired generation, RAECO's electricity output comes almost entirely from pricier diesel-based generation.
A subsidiary of the wholly government-owned Electricity Holding Company (EHC), RAECO undertakes the generation, distribution and supply of electricity, as well as water desalination activities, in areas of the Sultanate that lie outside the Main Electricity System (MlS) serving north Oman, and the Salalah Power System, covering Dhofar Governorate.
Its consumers, who have since swelled 12 per cent to over 25,375 customers, are distributed across Musandam Governorate, as well Wusta, Masirah Island, and parts of Dakhiliyah, Dhahirah, Sharqiyah and Dhofar Governorates that are not served by other distribution and supply utilities.
All 45 power stations operated by RAECO within its licensed areas are diesel-fired and thus generate electricity for its customers at a far higher cost than that supplied by fellow utilities, such as Muscat Electricity, Majan Electricity and Mazoon Electricity, which rely on economically priced natural gas-based generation.
Significantly, the subsidy grant of RO 39.6 million accounted for the lion's share (roughly 75 per cent) of RAECO's total revenue of RO 52.711 million during 2012. Electricity sales to private and government consumers, as well as sales of water to the primary offtaker -- the Public Authority for Electricity and Water (PAEW) -- contributed the balance.
Diesel fuel costs accounted for more than half of RAECO's total operating costs of RO 43.090 million in 2012. However, when computed against the actual direct cost of generating electricity, diesel fuel accounted for as much as 79 per cent of the total.
But thanks to an ongoing effort to improve fuel efficiency, the utility has succeeded in cranking out far more electricity from its power plants per litre of diesel on average, according to Nabil bin Abdullah al Ghassani, Chairman of RAECO's Board of Directors. Fuel efficiency reached a targeted average of 3.5 kilowatt-hours (KWh) per litre of fuel in 2012, up from 3.4 KWh per litre a year earlier.
Also contributing to efficiency is an Interlinking Programme involving the closure of small power stations, while ramping up efforts to feed the system through linkages with the nearest efficient stations, Al Ghassani stated in the Chairman's Report.
Output from its sprawling network of diesel based power plants, as well as imports from Petroleum Development Oman's grid, lifted total supplies handled by RAECO's rural systems to 605,204 megawatt-hours (MWh) in 2012, up 18 per cent from 513,038 MWh a year earlier. Water Desalination output surged 40.5 per cent to 1,985,724 m3 in 2012, the bulk of it produced by a new desalination plant that came into operation at Duqm.
Significantly, system losses for the year declined to 11.30 per cent in 2012 compared to 12.62 per cent in 2011, an improvement attributed to efforts by the company to reduce both technical and non-technical losses.
"This was addressed by implementing more effective network maintenance and improvements in the billing system," said Al Ghassani, while also stressing the need for a "comprehensive evaluation of the level of losses" suffered across its operations.
From a high of 14.1 per cent in 2008, system losses declined to 11.14 per cent a year later, dropping further to a low of 9.84 per cent in 2010. The gains were reversed in 2011 when system losses spiked to 12.62 per cent, before easing again to 11.30 per cent last year.
"Currently, the loss is identified by calculating the difference between the power sent to the distribution network and the power consumed by final customers. RAECO has started an initiative to check the exact level of losses and introduce a loss reduction plan," Al Ghassani stated.
© Oman Daily Observer 2013
