MUSCAT: Oman’s infrastructure and project finance sector is powering forward with a strategic, large-scale capital investment programme designed to ensure long-term energy security and accelerate progress towards the nation’s Oman Vision 2040 goals. This commitment positions the Sultanate of Oman’s utilities for a decade of sustained growth and leadership in the region’s green energy transition. This optimistic assessment of the sector’s trajectory is reinforced, according to Moody’s Report on November 12, by recent improvements in operational efficiency and strong government backing.

At the heart of this strategy is a transformative capital programme. The country’s three main rated utilities — Oman Electricity Transmission Company SAOC (OETC), Nama Electricity Distribution Company SAOC (NEDC) and Dhofar Integrated Services Company SAOC (DISC) — are collectively planning to invest RO 1.4 billion between 2025 and 2027. This investment cycle goes far beyond maintaining existing assets; it lays down the backbone of Oman’s future green super-grid, supporting the national target of sourcing 30% of electricity from renewables by 2030 and meeting projected annual demand growth of around 4%.

This multi-year investment push follows a highly successful sector restructuring undertaken in 2023. The consolidation of five companies into three entities strengthened operational scale, minimised fragmentation and aligned the entire sector under a more coherent planning and regulatory framework. Moody’s notes that this reorganisation is already delivering synergies through unified operations, shared-service efficiencies and improved financial management across both the Main Interconnected System (MIS) and rural networks. These gains were supported by Nama Holding’s significant financial injections totalling approximately RO 225 million between 2021 and 2023, which helped stabilise balance sheets and strengthen the utilities’ regulated asset bases.

The flagship project driving the sector’s next phase is OETC’s Rabt 400 kV transmission interconnector, a milestone initiative linking Oman’s power system from the northern regions down to the central and southern governorates. Once completed, Rabt will integrate areas that have historically depended on costly, carbon-intensive diesel generation, enabling the dispatch of large-scale wind and solar power, improving grid resilience and substantially reducing long-term operating costs. The project is considered a cornerstone in unlocking Oman’s renewable-energy potential and in strengthening the reliability of supply for both industry and households.

Although the investment wave will place pressure on free cash flow and drive increased borrowing over the coming years, the sector’s financial foundation remains robust. The regulatory regime continues to be one of its principal credit strengths, offering predictable returns on a growing regulated asset base, transparent cost-recovery mechanisms and visibility on long-term cash flows. Tariff structures, although evolving to support economic competitiveness, remain supported by clear rules and independent oversight.

A key challenge — and opportunity — lies in the approximately RO 2.3 billion in debt maturing between 2026 and 2027, which Moody’s highlights as a major refinancing event for the sector. Instead of viewing this as a risk, investors see a window for competitive long-term financing, including green bonds, sukuk and sustainability-linked instruments aligned with Oman’s energy transition.

Crucially, government support remains unequivocal: wholly owned entities such as NEDC benefit from Article 67 of the Sector Law, under which the Ministry of Finance commits to ensuring the availability of necessary financing for companies to fulfil their mandates. This institutional backing materially reduces refinancing risk and enhances lender confidence.

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