Oman to invest $6 billion in power generation

Oman Power Expansion outlines IWPP builds, grid upgrades, and desalination in Muscat, Barka, Sohar, and Salalah to lift capacity toward 2013-2020 targets, with PWP tenders, investors, and EPC bidders driving $6 billion projects.

Demand for energy in Oman has doubled in the past decade as a result of growth in industrial activity, according to Oman's Public Authority for Electricity and Water. In response, the country intends to invest more than $6 billion to increase its power generation capacity through 2016.

Demand for power is expected to reach 4,600 megawatts (MW) by 2016 and could reach 8,000 MW by 2020. Current demand is 3,800 MW, while in 2000, power demand was only 1,800 MW.

Investments will be made in Oman power projects to develop a new power plant, as well as increasing the capacity of two existing power plants. About $5 billion will be spent on power generation, and the remaining $1 billion will be invested in expanding and modernizing the country's electricity grid.

A new power plant is proposed to be set up at Al Ghubrah in Muscat, and preliminary work has already begun on this project. The independent water and power project (IWPP) will have a power generating capacity of between 450 MW and 600 MW, and will also produce 30 million gallons of potable water per day. The project is expected to cost between $1 billion and $1.2 billion.

State-owned Electricity Holding Company, through its subsidiary Oman Power and Water Procurement Company (PWP), has invited potential bidders to show expressions of interest and is expected to select the preferred bidder by July this year, awarding the contract by October 2010. Under the planned schedule, the plant is due to come on line by April 1, 2013. The successful constructor will also enter into a 15-year power and water purchase contract with PWP.

Several consultancy firms are already involved in the Al Ghubrah IWPP, amid significant Saudi power projects investment in the region. Among them are professional services firm Ernst & Young LLP, law firm DLA Piper and the independent power consultant British Power International.

In addition to the Al Ghubrah project, PWP is planning to augment the generating capacity of the existing Barka and Sohar plants. Overall, an additional capacity of between 1,300 MW and 1,500 MW will be split between the Barka Phase III and Sohar Phase II extensions. Requests for proposals for these projects were issued in July 2009 and the bidding closed on December 8. The project schedule calls for completion of capacity augmentation by mid-2013.

Companies that submitted bids for the Barka and Sohar power plant upgrades include Marubeni Group; Suez-Tractabel SA, which is a subsidiary of GDF Suez SA; Lanco Infratech Limited; and International Power plc.

In November last year, Sembcorp Industries Limited was awarded a $1 billion contract to construct a 400-MW IWPP in Salalah, in the Dhofar region of Oman, reflecting ongoing power sector investment in the country. This plant will also provide up to 15 million gallons of desalinated water each day and is scheduled for completion in 2012.

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