15 June 2015
MUSCAT: The cost to the Omani government of subsidising electricity supply to the nation's estimated 932,000 customers dipped slightly to around RO 302 million in 2014, down 2.5 per cent from the previous year's high of RO 310 million, according to The Electricity Holding Company (Nama Group). The decline, albeit marginal, is noteworthy because it represents the first ever easing of the uptrend in subsidy payouts by the government in nearly five years despite soaring domestic electricity demand during this period.
Nama Group, which groups eleven companies engaged in the procurement, generation, transmission and distribution of electricity and related water services, attributed the fall to "the favourable energy procurement cost passed on through the distribution companies".
Grants provided by the Ministry of Finance have been ballooning from year to year in line with energetic demand growth trends. From RO 144.0 million in 2010, the subsidy amount climbed to RO 153.4 million a year later, soaring to RO 247.4 million in 2012. In 2013, it reached a peak of RO 310.3 million before falling to RO 302.4 million last year.
According to Mohammed bin Abdullah al Mahrouqi, Chairman of the Board of Directors of Nama Group, subsidy enjoyed by electricity consumers declined from an average of RO 361 per customer in 2013 to RO 324 in 2014. Subsidy per unit of electricity fell from RO 13.7 per MWh in 2013 to RO 12.04 per MWh in 2014, he said.
Commenting on the overall operational performance of Nama Group during 2014, the Chairman said: "Oman's electricity and water sector continued to register a strong growth rate in 2014 through increasing the Distribution and Transmission Capital Assets, reaching more customers and new geographic areas, as a result of the growing population that the Sultanate is witnessing. In 2014, the customer base increased by 8 per cent to 932,208 subscribers compared to 2013 and the electricity supplied increased by 11 per cent to 25,121 GWh."
Investment by group companies surged to RO 363 million in 2014, the Chairman said, up from RO 278 million a year earlier. The gross operating revenue of the Group climbed 6 per cent from RO 759 million in 2013 to RO 806 million in 2014. Net profit after tax increased 9 per cent from RO 113.1 million in 2013 to RO 123 million in 2014, Al Mahrouqi stated in the Chairman's Report.
Of the RO 302.4 million in subsidy granted to the electricity sector in 2014, Mazoon Electricity Company received the lion's share of RO 97.5 million, followed by Muscat Electricity Distribution Company with RO 71.4 million. Other beneficiaries were Majan Electricity Company (RO 66.5 million), Rural Areas Electricity Company (RO 42.3 million) and the Salalah System (RO 27.8 million).
Commenting on privatisation initiatives within the group, Al Mahrouqi added: "Based on the request of the (Public Authority for Electricity and Water), EHC started implementing the government directives to commence a study to assess the readiness of Muscat Electricity Distribution Company (MEDC) for privatisation. The group formed a committee responsible for managing this process firstly, to ensure the participation of related parties and secondly, to choose the best consultants for this project."
MUSCAT: The cost to the Omani government of subsidising electricity supply to the nation's estimated 932,000 customers dipped slightly to around RO 302 million in 2014, down 2.5 per cent from the previous year's high of RO 310 million, according to The Electricity Holding Company (Nama Group). The decline, albeit marginal, is noteworthy because it represents the first ever easing of the uptrend in subsidy payouts by the government in nearly five years despite soaring domestic electricity demand during this period.
Nama Group, which groups eleven companies engaged in the procurement, generation, transmission and distribution of electricity and related water services, attributed the fall to "the favourable energy procurement cost passed on through the distribution companies".
Grants provided by the Ministry of Finance have been ballooning from year to year in line with energetic demand growth trends. From RO 144.0 million in 2010, the subsidy amount climbed to RO 153.4 million a year later, soaring to RO 247.4 million in 2012. In 2013, it reached a peak of RO 310.3 million before falling to RO 302.4 million last year.
According to Mohammed bin Abdullah al Mahrouqi, Chairman of the Board of Directors of Nama Group, subsidy enjoyed by electricity consumers declined from an average of RO 361 per customer in 2013 to RO 324 in 2014. Subsidy per unit of electricity fell from RO 13.7 per MWh in 2013 to RO 12.04 per MWh in 2014, he said.
Commenting on the overall operational performance of Nama Group during 2014, the Chairman said: "Oman's electricity and water sector continued to register a strong growth rate in 2014 through increasing the Distribution and Transmission Capital Assets, reaching more customers and new geographic areas, as a result of the growing population that the Sultanate is witnessing. In 2014, the customer base increased by 8 per cent to 932,208 subscribers compared to 2013 and the electricity supplied increased by 11 per cent to 25,121 GWh."
Investment by group companies surged to RO 363 million in 2014, the Chairman said, up from RO 278 million a year earlier. The gross operating revenue of the Group climbed 6 per cent from RO 759 million in 2013 to RO 806 million in 2014. Net profit after tax increased 9 per cent from RO 113.1 million in 2013 to RO 123 million in 2014, Al Mahrouqi stated in the Chairman's Report.
Of the RO 302.4 million in subsidy granted to the electricity sector in 2014, Mazoon Electricity Company received the lion's share of RO 97.5 million, followed by Muscat Electricity Distribution Company with RO 71.4 million. Other beneficiaries were Majan Electricity Company (RO 66.5 million), Rural Areas Electricity Company (RO 42.3 million) and the Salalah System (RO 27.8 million).
Commenting on privatisation initiatives within the group, Al Mahrouqi added: "Based on the request of the (Public Authority for Electricity and Water), EHC started implementing the government directives to commence a study to assess the readiness of Muscat Electricity Distribution Company (MEDC) for privatisation. The group formed a committee responsible for managing this process firstly, to ensure the participation of related parties and secondly, to choose the best consultants for this project."
© Oman Daily Observer 2015
