As demand for water continues to rise in the sultanate, private and foreign investors are expected to play a greater role in the sector. Several projects are in the pipeline to increase supply, and private firms are taking the lead in a number of these developments. “The pace of building required to meet Oman’s increasing demand for water would be difficult to maintain without private and overseas investment,” said Mahmood Ibrahim Al Bahlani, senior planner of pricing and generation at the Oman Water and Power Procurement Company (OPWPC). He added, “Yet these investors do more than supply additional capacity. Private and foreign firms diversify and strengthen the sector.”

Similar to other supply areas, the primary drivers of the growing demand for water are economic development, a growing population and an increase of water supply networks, according to the OPWPC, the sole procurer in the country. Water requirements have been lessened to some degree, however, with the implementation of loss prevention efforts.

National System

Oman’s water networks are primarily divided into two main areas: the Main Supply Zones (MSZs), which connects the north of Oman, and the Salalah System, an isolated network in the south. In its most recent annual forecast, the OPWPC predicted water demand to increase by 5% per annum in the MSZs, from 196m cu metres of water per day in 2011 to almost 270m cu metres in 2018. This represents growth of around 37% over a seven-year period.

OPWPC analysis of water networks in the MSZs is broken down into three zones. In terms of water demand, the Interconnected Zone is the largest and includes the Muscat governorate. In order to meet the rising demand, Oman’s Public Authority for Electricity and Water (PAEW) requested the OPWPC secure a further 405bn cu metres for the Interconnected Zone by 2018, according to the OPWPC. The eastern region of Al Sharqiyah makes up the next largest area, known as the Sur Zone, of the MSZs, and the Al Duqm Zone is the smallest of the three. While peak water demand is forecast to rise by an average of 3% per year between 2011 and 2018 in the larger Interconnected Zone, the most substantial growth in demand should occur in the Al Duqm Zone.

In fact, the OPWPC expects water requirements to increase by an average of 53% per annum in Al Duqm over the same period, from 2000 cu metres of water per day in 2011 to 40,000 cu metres per day in 2018.

Supply & Demand

The OPWPC attributes this rise in demand to the accelerating pace of economic development in the region. The general manager of Oman’s Rural Areas Electricity Company, Hamed bin Salem Al Maghderi, told OBG, “The opening of major industrial zones in areas like Duqm are having a major impact on demand and will require much more power and water capacity in the coming years to meet demand.”

Demand in the Salalah System is growing slightly faster than average in the MSZs. With peak water needs expected to rise from 62,000 cu metres per day in 2011 to 95,000 cu metres in 2018, demand is expected to increase by 6% annually, according to OPWPC estimates. Over the seven-year period water demand should grow by more than 50%.

However, demand is not the only challenge facing the sultanate’s water sector. According to recent figures provided by Haya Water, a state-owned firm which operates a water reuse system in the capital, there is already a serious shortage of water. The CEO of Haya Water, Hussain Hassan Ali Abdul Hussain, told OBG, “The importance of water cannot be understated, particularly in the arid region that we live in. Each year there is a shortage of 350m cu metres of water in Oman, and if people do no start to look after this vital resource immediately we will not be able to continue.” The PAEW, which acts as an unofficial regulator of the water sector, has set a number of goals to ensure supply is increased. To this end, the authority aims to invest OR150m ($390.9) every year for another 15 years, according to data provided by the PAEW.

International Partners

One of the authority’s larger upcoming projects is a reverse osmosis water desalination plant in the Muscat suburb of Al Ghubrah. Expected to be commissioned in April 2014, the independent water project (IWP) will be built next to an existing power and desalination facility. However, unlike the majority of desalination plants, the new Al Ghubrah IWP will not be co-located with an electricity generation plant. Rather, the IWP will be powered with electricity from the grid system. The OPWPC, which is managing the procurement process on behalf of the PAEW, recently reported that the new plant has been contracted to supply 191,000 cu metres of water per day. Around $300m is expected to be invested in the facility, according to the procurement body.


With the initial call for tenders for the IWP project issued in September 2011, five companies have moved past the prequalification phase and have been shortlisted for the job. These include: the Tokyo-headquartered Marubeni Corporation; Acciona Agua, a Spanish company focused on wastewater utility and potable water; another Spanish firm, the water utility company Grupo Cobra; Malakoff International, a subsidiary of the Malaysian Malakoff Corporation; and the Singapore-based Hyflux, an integrated water and environmental solutions provider. All five companies have submitted construction and development plans for the IWP, and the winning bidder will be licensed to design, build, finance, own and operate the new facility. The tendering process was expected to be completed in the fourth quarter of 2012, and a consortium of private sector, international firms have guided the PAEW in the tendering. KMPG provided the authority with financial advice, while the international law firm, SNR Denton, gave legal counsel. Technical guidance came from Fichtner, a German engineering consultancy.

Owned by the Al Ghubrah Power and Desalination Company (GPDC), the existing 182,000-cu-metres-per-day plant at Ghubrah is being decommissioned in stages. One of the facility’s seven multi-stage flash units was retired in 2011, and another unit is set to go offline following the peak months in the summer of 2013. Although the GPDC upgraded two other units in order to increase supply by 5000 cu metres per day, the entire facility will be decommissioned by 2018, according to the OPWPC’s latest annual forecast report.

Another significant water project is the expansion of ACWA Power Barka’s (ACWA PB) desalination facility. Located around 65 km up the coast from Muscat, the plant is the first privately funded water project in Oman. The OPWPC reports that the planned expansion should add roughly 45,000 cu metres of capacity per day, bringing the facility’s total desalination capacity to over 135,000 cu metres. ACWA Power International, a private Saudi Arabia-based utilities firm, is the majority stakeholder of ACWA PB. In early September 2012 it was announced that the OPWPC had signed a water purchase deal with ACWA PB. ACWA PB will also sign a water connection contract with the PAEW as well as a usufruct agreement with Oman’s Ministry of Housing. According to an August 2012 Reuters report, ACWA PB is looking to raise a loan of $1.54m to finance the project.

Although the expansion will be a separate facility from the existing plant, it will still be located nearby. Construction began in November of 2012, and the IWP is slated to become fully operational by the fourth quarter of 2013. The project is to be developed on a build-own-operate (BOO) basis. As the expansion should help to meet rising desalinated water demands in Oman, the PAEW has requested that the project be fast-tracked.

Advancing The Sector

Private sector companies operating in Oman’s utilities industry are not focused solely on increasing capacity. In fact, one firm made recent technological advances when it installed and commissioned its forward osmosis desalination plant at Al Najdah in the central Al Wusta governorate. Modern Water, a UK-based water technology firm, is the first company in the world to commission a commercial forward osmosis desalination facility.

Worth OR250,000 ($651,512), the PAEW awarded Modern Water the contract to construct and operate the facility in June 2011. Production at the 200-cu-metre-per-day plant began in July 2012, and Modern Water has entered into a 12-month operation and maintenance stage, the firm reported in September 2012. In addition to providing potable water to nearby areas in the region, the Al Najdah plant is also working to increase the Omanisation of its workforce. As of September 2012, Modern Water was in the process of training a number of nationals it had recruited to join the site’s operations team.

Private and international investments in Oman’s water sector are not entirely new developments. For example, the Paris-based Veolia Water was awarded a five-year contract in 2006 to manage the Oman Wastewater Services Company, and in 2007 the firm entered a BOO contract for the Sur water desalination plant. Yet the future of the sultanate’s water sector looks to be increasingly intertwined with private investment over the coming years. Fortunately, this should be a positive development on both accounts.