Sector milestone: OPWP weighs sale of Manah IPP upon expiry of existing Power Purchase Agreement -
Muscat - The Manah power plant - Oman's first Independent Power Project (IPP) which also blazed a new trail in privately procured power generation capacity in the Middle East when it launched two decades ago -- transfers to government ownership in 2020.
The transfer, which will mark the end of the 20-year Power Purchase Agreement (PPA) underpinning the procurement of the project, is billed as a significant milestone in the ongoing evolution of the process of liberalisation and privatisation underway in Oman's power and water industry.
Located in Dakhiliyah Governorate, the 264 megawatt (MW) capacity gas-fired facility was the first privately developed and owned power plant when it was brought into operation in stages starting in 1996.
The project provided a useful template for the procurement of new privately developed and financed power and water schemes that underscore the success of the Omani government's pioneering efforts to unbundle, restructure and privatise this critical sector.
"(Manah IPP's) Power Purchase Agreement (PPA) expires in December 2020, at which time ownership of the plant transfers to the Government," said the Oman Power and Water Procurement Company (OPWP), which is the sole off-taker of output from Manah, as indeed other power plants in operation across the Sultanate.
"OPWP is considering several options for the continued operation of the plant, including a competitive tender for sale of the asset, backed by a multi-year PPA with OPWP," the state-owned utility -- a wholly owned subsidiary of Nama Group -- added in its newly released 7-Year Outlook Statement.
Significantly, Manah IPP is the first privately developed power plant that is scheduled to fall out contract. Next in line to fall out of contract are the Al Kamil and Barka 1 power plants, which are currently in the process of negotiations for contract extensions to the year 2021.
The latter schemes will also be eligible to bid in a revamped competitive process for new Power / Water Purchase Agreements due to be rolled out by OPWP in 2022.
The revamped competitive process, currently under development by OPWP, envisages a new methodology for the procurement of new electricity generation capacity. "It will allow existing generators, those approaching contract expiration, to compete for new long-term contracts.
The first capacity procurement to use this new methodology is expected to be for contract terms beginning in 2022," according to the utility.
Manah IPP, owned by United Power Company SAOG (UPC), transfers to the government on December 31, 2020.
© Oman Daily Observer 2016
