هذه الصفحة متوفرة بهذه اللغة: العربية
16 January 2021
MUSCAT (WAF): It comes as no surprise that Oman is delaying the award of new IPPs (Independent Power Projects) with the current 36% surplus in contracted capacity opposite the actual peak demand. A gap widened by slower growth in electricity demand.
The government’s contracted electricity capacity, represented by Nama Group, was 10,927 MW in 2019, the group’s annual report shows. While the actual peak demand was 6,353 MW in the Main Interconnected System (MIS), and 549 MW in Dhofar power system. The gap leaves the group with around 4000 MW available to accommodate future demand growth.
Reports by Oman Power and Water Procurement Company SAOC (OPWP), a subsidiary of Nama Group, and data from the National Center for Statistics and Information (NCSI) show a decline in electricity production in the Sultanate and a slower growth in future electricity demand.
From 2005 to 2018, the average annual growth in electricity demand was at 9%. OPWP’s 7-year statement for the period between 2014-2020, forecasted an average yearly growth of 10%. But, the actual growth during the ninth five-year plan ( 2016-2020) was subpar.
In 2016, the demand grew with only 3.9%, 6.4% in 2017, 4.8% in 2018, and continued with a peak growth rate of demand not exceeding 4% in 2019.
OPWP revised its electricity demand growth forecast to an average of 5% during the period from 2019 to 2025, before the pandemic’s effects began.
In 2020, for the first time – in at least ten years – the Sultanate’s accumulated electricity production has decreased. Data by NCSI showed a 3% decrease in total electricity production during the first ten months of the previous year compared to the same period in 2019.
The decline in electricity demand during the past few years is due to the rate of growth of the Omani economy on the one hand, and the implementation of policies such as cost-reflective tariffs and energy efficiency programs on the other hand. However, the pandemic’s effects on the Sultanate’s economy during the past year, and the accompanying closure of commercial and tourism activities, had the most evident impact on the production and consumption of electricity in 2020. Therefore, the Omani government will have to reconsider the demand projections for electricity before awarding any new IPPs, considering the impacts of the pandemic and the fiscal balance plan.
Last week, ACWA Power Barka SAOG and Al Kamil Power Company SAOG -disclosed to Muscat Stock Exchange – the decline in their assets’ value. Both companies enjoy a Power Purchase Agreement (PPA) or Water Purchase Agreement (PWPA) expiring by the end of 2021 and yet secure new agreements.
Due to the uncertainty, the two companies revealed a non-cash impact close to RO30 million. ACWA Power Barka disclosed an impairment loss of RO22.7 million, and Al Kamil Power announced a similar loss of RO7 million.
During the current five-year plan (2021-2025), the PPAs and PWPAs for three other companies will expire, namely Sohar Power Co. SAOG, SMN Barka Power Co. SAOC, and Rusail Power Co. SAOC. These companies will face similar pressure to secure new contracts.
The following table shows companies with PPAs/PWPAs expiring by 2025, in conjunction with economic challenges imposed by the continuing impacts of the Covid-19 pandemic and the government’s corrective fiscal medium-term plan (Tawazun). The total capacity of these IPPs combined amounts to 2,667 Megawatts.