Interview : Yaqoob bin Saif Al Kiyumi
To what extent can public-private partnership (PPP) projects play a role in meeting the future demand for water and power?
YAQOOB BIN SAIF AL KIYUMI: Approximately $9.5bn in direct investment can be tracked to the PPP-based independent water and power plant programme that was first introduced as early as 1995. The Manah Independent Power Project was cemented by the introduction of the Sector Law in 2004 and the unbundling of the previously state-run electricity sector in 2005. OPWP sees strong ongoing interest from local and foreign investors in the sector, which will only increase as Oman introduces elements of energy diversification.
How can alternative energy sources contribute to increasing the supply of energy?
AL KIYUMI: The government has announced a policy of energy diversification which aims to deliver 10% of electrical energy production from renewable sources by 2025. The initiative will result in more than 2500 MW of installed renewable capacity by 2025. This will likely consist of a combination of solar and wind energy, both of which Oman is well placed to utilise. OPWP’s first tranche, a 500-MW solar photovoltaic (PV) plant to be located at Ibri, is currently under procurement and a second utility scale project is nearing release to the market. OPWP is seeking proposals in the solar arena for PV production without accompanying storage. We are keenly watching the development of alternative energy such as concentrated solar power, and anticipate introducing these technologies in the future.
What current electricity generation infrastructure projects should be prioritised?
AL KIYUMI: The current electricity generation infrastructure is robust, reliable and efficient. Gas utilisation is kept to maximum efficiency and the recent introduction of new, highly efficient plants further ensures the minimisation of the use of precious natural resources, allowing older, less efficient plants to be utilised only to meet peak demand. Energy source diversification will be undertaken with a careful eye towards sustainability and security of supply to ensure that loss of load risks are kept to a minimum, without incurring unnecessary capital expenditure. The introduction of renewable energy is a welcome enhancement for the range of infrastructure projects that OPWP will manage, in consultation with other sector stakeholders, in order to ensure that the system remains robust and is able to meet electricity demands.
To what extent have reduced subsidies affected the sector’s ability to attract private investment?
AL KIYUMI: Power sector investment takes place via specific power purchase agreements (PPAs) which have been developed, refined and successfully withstood a number of changes to external circumstances, including the introduction of a cost-reflective tariff (CRT). The resulting subsidy changes from the CRT that are now applicable to large consumers of electricity have not directly impacted generators. Lastly, no impact is expected from this on the investment appetite or funding that is available to developers.
How will the Power 2022 Procurement Process help attract investment inflows to the sector?
AL KIYUMI: The Power 2022 Procurement Process methodology is expected to procure power capacity and output for 2022. It will also enable existing plants with expiring PPAs to compete against new generation capacity that comes on line, thereby recognising the potential value of plants that are already in existence. OPWP expects that the procurement programme will enhance Oman’s existing reputation for consistency, transparency and fairness in the procurement of electrical energy, which will in turn further strengthen the country’s existing reputation as a safe haven for large-scale investment into power generation assets.
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