Omani model – Regulation andPrivatisation of the Electricity and

Related Water Sector

Naif Al- AbriProjects Development Director15th Feb 2017

OPWP was established by the Law for Regulation and Privatisation of theElectricity and Related Water Sector, commonly referred to as the Sector Law.

The Sector Law issued by Royal Decree no. (78/2004) states the functions andduties of the sector companies.

The Transfer Scheme came into effect from 1 May 2005 Electricity Holding Company (EHC)

Transmission: Oman Electricity Transmission Company (OETC)

Distribution:

- Muscat Electricity Distribution Company (MEDC)

- Mazoon Electricity Distribution Company (MZEC)

- Majan Electricity Distribution Company (MJEC)

- Dhofar Power Company (DPC)

Rural Areas Electricity Company (RAEC)

Oman Power & Water Procurement Company (OPWP)

Authority for Electricity Regulation Oman (AER)

Introduction to OPWP and Sector Law

Functions and Duties of OPWP• Secure new capacity and output (of power) to enable it to comply with its duties under

the Sector Law and OPWP’s licence;

• Forecast and plan to meet reasonable demands for electricity;

• Meet the requirements for new capacity through financing, ownership and operation bylocal and foreign private sector investors;

• Procure through fair and transparent competition with no discrimination;

• Support fuel use and pricing policy;

• Procure on the basis on economic purchase; and

• Provide consultation and technical support to PAEW on its request in relation to futureforecasts in relation to potable water demand.

Main Integrated System(North Oman)

Dhofar System

OPWP’s Role – Areas / Systems

General Market Structure

EHC

AER

IWPP/IPP/IWPsDISCos

OETC

OPWP

PAEW/DGWShareholding

Regulation

WaterDepartment

(Client)

Distribution

GenerationTransmission

Current status (ownership structure)

0.01 %

99.99 %

Electricity System Structure

MIS

Dhofar System

Duqm

Muscat

Salalah

• There are 2 main systems in Oman, which are the MainInterconnected System (MIS) and the Dhofar Region System.

• Other standalone systems are the Duqm and Musandamsystems.

Musandam

Water System Structure

The water sector in Oman is divided into 5

geographic zones:

Interconnected Zone (MIS)

Sharqiyah Zone

Musandam Zone

Duqm Zone

Dhofar Zone

Musandam Zone

Salalah

Dhofar Zone

DuqmZone

SharqiyahZone

InterconnectedZone

Water Departments in Oman

OPWP receives annually water demand projection from water departments

Public Authority for Electricity and Water (PAEW) – Provides OPWP with the

potable water demand of :

1. MIS Zone

2. Sharqiyah Zone,

3. Musandam Zone and

4. Duqm Zone

Directorate General of Water (DGW) – Provides OPWP with potable water

demand of Dhofar Zone

Majis Industrial Services Company (MISC) – Provides OPWP with the process

water demand which is used by industry in the Sohar Industrial Port area.

Current Market Structure and Regulatory Framework

Oman Power & WaterProcurement Company SAOC

Muscat Electricity DistributionCompany SAOC

Majan Electricity Company SAOC

Mazoon Electricity CompanySAOC

PWP pays Production Facilities for•Capacity and Output in accordancewith terms of PPA/WPA/PWPA

United Power CompanySAOG

Al Rusail PowerCompany SAOC

Wadi Jizzi PowerCompany SAOC

Al Kamil PowerCompany SAOG

ACWA Barka SAOG

Al Ghubrah Power &Desalination Company

SAOC

Future Projects

Direction of payments

Discos pay PWP for•bulk purchases of electricity chargedat a cost reflective Bulk Supply Tariff(BST);•Electricity BST includes PWP’s costsof electricity procurement activities

Oman Electricity TransmissionCompany SAOC

Production Facilities & Otherspay OETC for•Connection to TransmissionSystem

Discos pay OETC for•Connection to OETC’s TransmissionSystem (Distribution business)•Use of OETC’s Transmission System(Supply business)

Water Departments

Water Departments pay PWP•for bulk purchases of desalinated watercharged at a cost reflective Bulk SupplyTariff (BST);•Water BST includes the PWP’s costs ofwater procurement activities

Sohar Power CompanySAOC

All intra sector transactions: (i) regulated & (ii) cost reflective (no direct subsidy)

Subsidy

Customers

SMN Barka PowerCompany SAOG

Al Suwaidi PowerCompany SAOC

Al Batinah PowerCompany SAOC

Dhofar Generation Co

SEMBCORP SAOC

Dhofar Power Company SAOC

Muscat Desal. SAOC

Phoenix SAOC

Sharqiyah Desalination

Ownership Structure of IWPP/IPP/IWPs - Sample

Public ShareholdingPrivate Investors

Al Kamil Power Co.Acwa Power Co.

United Power Co.Sohar Power Co.Rusail Power Co.

SMN Barka Power Co.

Al Batinah Power Co.Sembcorp Salalah Power & Water Co.

Al Suwadi Power Co.

Phoenix Power Co.Muscat City Desalination Co.

Qurayyat Desalination Co.

65 % 35 %

65 %

60 %65 %65 %65 %

65 %65 %

65 %

60 %100 %100 %

35 %40 %35 %35 %35 %35 %35 %35 %

40 %--

Sharqiyah Desalination Co.65 % 35 %

OPWP Core Departments

Planning andEconomics

ProjectDevelopment

ProjectImplementation

ClientsContracts andSpot Market

OPWP 7- year Statement

The 7-Year Statement provides a 7-year outlook on the demand of electricityand desalinated water supply. OPWP prepares the 7 year statement annually inaccordance with Condition 5 of its license.

Structure of the 7 year Statement Demand for Electricity

Power Generation Resources

Desalinated Water Requirements

Procurement Activities

Fuel Requirements

Electricity Capacity Growth

Water Capacity Growth

Project Development Stages

Prequalification (RfQ) Process

Release of RfQ

Clarifications byinterested

parties

Receipt andevaluation ofStatement ofQualifications

(SOQs)

Announcementof prequalified

bidders

Total Period (16 weeks)

Purchase ofDocument (2 weeks)

Clarificationsand Responses

RfQ Tender Period (6 weeks)

Evaluations, clarifications andapprovals from ITC & AER (10 weeks)

RfP Tendering Process

Release ofRfp toPrequalifiedbidders

Clarifications frombidders -1

OPWPresponse

Clarifications frombidders - 2

OPWPresponses

Receipt ofTechnicalQualifications (TQ)

OPWPresponsesand Re-issue ofDocuments

Bids receiptandevaluation

ProjectAward

Executionof ProjectAgreements

Total period (10 months)

RfP Tendering Period (5 months)

Evaluation, clarification, negotiationand Approvals by ITC & AER ( 5 months)

OPWPElectricity Holding Company

(EHC)

Ministry of Housing(MOH)

Ministry of Oil & Gas(MOG)

Public Authority forElectricity & Water

(PAEW) or DirectorateGeneral of Water (DGW)

Oman ElectricityTransmission Company

(OETC) and/orDistribution companies

WaterConnection

Agreement (WCA)

ElectricalConnection/Supply

Agreement(ECA)/(ESA)

Natural GasSales Agreement

(NGSA)

Power &/or WaterPurchase Agreement

(PPA/WPA/PWPA)

UsufructAgreements

(UA)

Project Company

Project FoundersAgreement(PFA)

Project Founders

Contractual Arrangement for a Project

List of Generators - PowerProject Name

Manah IPP

Project Company / Details

United Power Company SAOG

Salalah II IPP

Al Kamil IPP

Dhofar Generating Company SAOC- Expansion 1: Increase in power capacity

Al Kamil Power Company SAOG

Al Rusail IPP Al Rusail Power Company SAOC

Wadi Al Jizzi IPP Wadi Al Jizzi Power Company SAOC

Sohar II IPP Al Batinah Power Company SAOG

Barka III IPP Al Suwadi Power Company SAOG

Sur IPP IPP Phoenix Power Company SAOG

Musandam IPP Musandam Power Company SAOC

Ibri IPP Ad-Dhahirah Generating Company SAOC

Sohar III IPP Shinas Generating Company SAOC

Capacity

273 MW

273 MW+ 445 MW

281 MW

665 MW

245 MW

744 MW

741 MW

2000 MW

120 MW

1509 MW

1710 MW

List of Generators - Water

Project Name

Sur IWP

Project Company / Details

Sharqiyah Desalination Company SAOG- Expansion 1: increase in water capacity

Ghubrah IWP

Qurayyat IWP

Muscat City Desalination Company SAOC

Qurayyat Desalination Company SAOC

Barka IWP Barka Desalination Company SAOC

Sohar IWP Myah Gulf Oman Desalination Company SAOC

Capacity

17.6 MIGD+ 11.4 MIGD

42 MIGD

44 MIGD

61.8 MIGD

55 MIGD

ACWA Power Barka SAOG- Expansion 1: increase in water capacity- Expansion 2: increase in water capacity

List of Generators - Power & Water

Project Name

Barka I

Project Company / Details

GDPCo

Sohar I

Al Ghubrah Power and Water DesalinationCompany SAOC

Sohar Power Company SAOG

Barka II SMN Barka Power Company SAOC

Salalah I Sembcorp Salalah Power and WaterCompany SAOG

Capacity

427 MW / 22.5 MIGD+ 10 MIGD+ 10 MIGD

448 MW / 31 MIGD

585 MW / 33 MIGD

678 MW / 26.4 MIGD

445 MW / 15 MIGD

Projects under Implementation

Project Capacity (MW) Scheduled COD Project company

1 Salalah II IPP 445 1-Jan-18 Dhofar Generating CompanyS.A.O.C

2 Musandam IPP 120 18-Dec-16 Musandam Power Company

3 Ibri IPP 978 (EP)1,509

1 Apr 20181 Apr 2019

Ad-Dhahirah GeneratingCompany

4 Sohar 3 IPP 1,710 1-Jan-19 Shinas Generating Company

Power

Projects Under Implementation

Project Capacity (m3/d) Scheduled COD Project company

1 Barka IV IWP 281,000 1-Apr-18 Barka Desalination Company

2 Sohar IWP 250,000 1-Apr-18 Myah Gulf Oman DesalinationCompany SAOC

3 Temporary Water– Qurayyat 8,000 29-Jun-16 Muscat Water

4 Temporary Water– Aseelah 10,000 29-Jul-16 Muscat Water

5 Qurayyat IWP 200,000 31-May-17 Qurayyat Desalination Company

6 Sur IWPexpansion 48,189 15-Sep-16 Sharqiyah Desalination Company

Water

Projects under Development

Dhofar WindProject

Power 2021 Power 2022 Manah IPP(BOOT

Transfer)

Solar IPP

Capacity(MW)

50 800 –1000

2500 – 3000(including existing

contracts)

264 Excess of 200MW

Award Dec 2015 * Oct2017

Oct2018

before April2020

Aug 2018

SCOD May 2017* 1 Jan 2021 1 Jan 2022 1 Jan 2021 Apr 2020

Power

Projects under Development

SalalahIWP

SharqiyahIWP

Duqm IWP KhasabIWP

Water 2021(Ghubrah)

Water2022

(Shinas)Capacity(m3/d)

100,000 80,000 60,000 16,000 300,000 200,000

Award Feb 2017 Feb 2017 Q3 2017 Oct 2017 April 2018 April 2019

SCOD Dec 2019 May 2020 Q4 2019 Q1 2021 Q1 2021 Q1 2022

Water

Other ongoing Initiatives

• New Procurement Methodology to take into account expiringPPA/PWPAs – Implementation 2017

• Spot Market – To cater for expiring PPAs/PWPAs and also excesscapacity - Operational 2020

• Renewable energy and fuel diversification in support ofdeveloping the National Energy Strategy.

Questions & DiscussionFurther information available at: www.omanpwp.com

Thank You