Oman’s utilities sector is undergoing notable transformation, with the government prioritising renewable energy production. The country’s population – 5.5m as of early 2025 – is expanding, so sector operators are working to raise the efficiency and cost-effectiveness of electricity and water distribution networks through a range of regulatory and infrastructure upgrades. Private investment is being sought in power and water production projects, with the latter of key significance due to the scarcity of groundwater in Oman. Meanwhile, the introduction of an electricity spot market hints at an intention to liberalise electricity procurement in the coming years, opening up opportunities for global investors.
Structure
Utilities-related governance frameworks have undergone restructuring in recent years. The Ministry of Energy and Minerals supervises and sets energy sector policy, while the Ministry of Agriculture, Fisheries and Water Resources (MAFWR) has seen its supervisory duties expanded since the November 2023 issuance of the Law on the Regulation of the Water and Wastewater Sector, which positions it as the government body in water sector-related policy implementation. The Authority for Public Services Regulation (APSR) oversees the utilities sector, while Nama Group (Nama) contains Oman’s key utilities operators and service providers.
A 2020 royal decree saw the APSR mandate updated. It has since been responsible for regulating natural gas transport and the water and wastewater segments, in addition to its role as electricity sector regulator. Transparency and efficiency in providing services are chief among the APSR’s guiding operational principles as it works to satisfy the interests of customers and sector stakeholders.
Nama Power and Water Procurement Company (Nama PWP) is the country’s sole electricity and water offtaker. Nama PWP is responsible for ensuring Oman’s electricity and water production capacities meet national needs and keep pace with rising power demand. Forward planning is key and each year Nama PWP updates its seven-year statement, in which it identifies new independent power projects (IPPs) and independent water projects (IWPs), in line with projected future power requirements. Nama PWP then issues competitive tenders for IPPs and IWPs, entering into long-term power purchase agreements (PPAs) with contracted bidders. The duration of the PPAs is 15 years for IPPs and 20 years for IWPs. The government’s sustainability targets see Oman working to achieve 30% of power generation from renewable sources by 2030 and 70% by 2040, while the country’s carbon-neutral target year is 2050.
Oversight
Oman Investment Authority, the country’s sovereign wealth fund, is central to utilities sector activities, as it owns Nama. Nama PWP and the country’s key generation, distribution, transmission and utilities sector talent development entities operate under the Nama umbrella, servicing the entire population. A 2023 restructuring aligned with a broader initiative to merge the country’s northern and southern power grids saw the formation of two new entities – Nama Electricity Distribution Company (NEDC) and Nama Supply Company – to absorb the operational activities and duties of Muscat Electricity Distribution Company, Majan Electricity Company, Mazoon Electricity Company and the Rural Areas Electricity Company. NEDC is now the sole distributor of electricity to public, private and residential customers outside of Dhofar Governorate – which is covered by Nama Dhofar Services – and is responsible for maintaining and upgrading distribution infrastructure in the areas under its jurisdiction.
Nama Supply Company is Oman’s main supplier of electricity, additionally carrying out billing and collections activities. The consolidation was designed to bring down electricity sector costs, increase efficiency and improve the quality of customer service.
Nama-owned Oman Electricity Transmission Company (OETC) owns and operates the country’s main transmission network, transporting electricity from power generating stations to distribution load centres. OETC is responsible for financing, developing and maintaining those systems, and is also licensed to design, own, operate and maintain global transmission interconnections. The government has worked in recent years to raise finance through the divestment of assets across economic sectors, with 2024 seeing $2.5bn generated through initial public offerings (IPOs). Notably, in 2020, 49% of OETC was sold to State Grid Corporation of China for close to $1bn.
The restructuring of the water sector’s assets began in 2020, with Nama Water Services (NWS) created through a consolidation of duties of the Public Authority for Water and the Oman Water and Wastewater Services Company, thereby streamlining and centralising service provision within the water and wastewater sector. NWS is the key water sector service provider, responsible for transmission, distribution, supply and purchase-related water and wastewater services in northern Oman.
Nama Dhofar Services Company provides all electricity, water and wastewater services in Dhofar. One of its key pieces of infrastructure is the Salalah II IPP installation, which comprises two power generation plants with a combined capacity of 718 MW. The newest of the plants came online in 2018 and accounts for 445 MW of the aforementioned capacity, with the two in tandem providing 62% of the total power on the Dhofar Power System (DPS), while the organisation’s revenue is generated primarily through its PPA with Nama PWP, which runs until January 2033.
Sector Laws
The Regulation and Privatisation of the Electricity and Related Water Sector Law of 2004 – known as the Electricity Sector Law, promulgated by Royal Decree No. 78 of 2004 and amended thereafter – set the terms of competition within Oman’s electricity market. Nama PWP works to satisfy electricity and water requirements by offering tenders for IPPs and IWPs. Revised tendering processes are available once original PPAs expire. The law was amended in 2009, 2013 and 2018. Meanwhile, in order to increase competition, improve price efficiency and lay the foundation for future market liberalisation, the sultanate introduced an electricity and water spot market in January 2022, diversifying generation and procurement options and activities for plants in possession of excess supply and those whose PPAs are expired or expiring, with Nama PWP remaining the sole offtaker.
The law has been well received by stakeholders since its launch, with private and international investors displaying considerable appetite for participation in utilities sector capacity and infrastructure development activities. The law’s general outline was therefore adopted to provide the framework for Royal Decree No. 40 of 2023, regarding the water and wastewater sector, which works to liberalise and privatise the water sector by restructuring the market and allowing for the establishment of new sector operators. Under the new legislation, while Nama PWP remains the chief offtaker of water produced by IWPs, freedom is granted to market operators to enter into procurement contracts with either NWS or Nama Dhofar Services. With the MAFWR responsible for strategic decision making and policy implementation, regulatory duties fall again to the APSR and decisions regarding the future liberalisation of the sector are handled by the Council of Ministers, as is the case with the electricity segment.
Subsidies & Tariffs
Another policy change came in December 2020 when the government announced it would phase out electricity and water subsidies, which were previously extended to all customers, regardless of economic standing. The original date for the removal of subsidies was 2025, but the response from both residential and commercial customers to the proposed increased costs resulted in the government pushing back the date to 2031, with subsidies to be gradually reduced before then. Subsidies have undergone increases in recent years with the government working to shield the population from the effects of inflation in global energy markets. In 2023 these subsidies totalled some OR870m ($2.3bn), up 66% from OR524m ($1.4bn) in 2022. Additionally, the government rolled out a relief initiative in the summer of 2024 to help mitigate elevated household expenses due to high temperatures.
The 2025 budget included a OR1.5bn ($3.9bn) allocation for various subsidies, with the electricity segment allocated OR520m ($1.4bn), the water and sanitation segment allotted some OR194m ($504m) and petroleum products provided OR35m ($91m). Nevertheless, the government remains committed to its subsidy removal plan and in December 2024 announced new tariff measures for large-scale, non-residential customers consuming over 100 MWh of electricity per year. The regulation affords customers the opportunity to choose between a variable tariff based on the scheme’s cost-reflective structure, or fixed seasonal or non-seasonal tariffs based on load levels and overrules all previously existing conflicting provisions. In September 2024 the government launched the National Subsidy System to help eligible customers manage increases to energy and education costs in a more sustainable manner. The system applies to low-income electricity consumers and as of April 2025 the platform had 297,000 registered recipients.
Size & Performance
Oman’s utilities sector, denoted as the electricity and water supply by the National Centre for Statistics and Information in its accounts records, contributed over OR942m ($2.5bn), or 2.5%, to real GDP in 2023, an increase of 4.9% from OR898m ($2.3bn) in 2022 and 43.6% over a 10-year period, with sector GDP recorded at OR656m ($1.7bn) in 2013. According to Nama’s 2023 annual report, the electricity customer base grew by 4% in 2023 to reach approximately 1.5m, while electricity supply sales rose by 6.2% to 38,711 GWh. The water and wastewater customer base increased by 5.3% to nearly 1.1m over the same period.
Nama’s total asset value dropped from OR9.8bn ($25.5bn) in 2022 to OR7.7bn ($20bn) in 2023, with that decline attributed to one-time non-cash accounting adjustments for fixed asset impairment and annual depreciation. The group’s gross operating revenue increased by 8.9% in 2023 to OR1.7bn ($4.4bn) – a net loss, owing to the restructuring of assets and governance frameworks in the water segment, of around OR2m ($5.2m) recorded in 2023. Retained earnings were not impacted by the various new measures and structures set in place that year.
NEDC’s consolidated financial statement for 2023 illustrates the effect of its restructuring, with the value of total assets rising from around OR1.1bn ($2.9bn) in 2022 to OR2.2bn ($5.7bn) in 2023. Revenue in 2023 was over OR233m ($606m), while operating profit was OR54m ($140m). The company recorded a net loss of OR11.4m ($29.6m) in 2023. NEDC’s interim financial report issued in June 2024 displayed a 1.8% six-month increase in total asset value to reach nearly OR2.2bn ($5.7bn), while revenue for the period January-June 2024 came in at OR151.5m ($394m). Operating profit for the period was OR41.9m ($109m), with a net profit of OR4.6m ($12m), suggesting that the streamlining of operations and cost reduction measures are beginning to register on the company’s bottom line.
Elsewhere, the value of OETC assets rose by around 16.8% from OR1.5bn ($3.9bn) in 2022 to roughly OR1.8bn ($4.7bn) in 2023. Revenue generated through transmission and connection charges increased by 12.3% over the same period, from OR143m ($372m) to approximately OR161m ($418m). However, while operating profit increased by 12.4% to reach OR87.3m ($227m) in 2023, net profit shrank by around 2% to OR41.7m ($108m).
Meanwhile, NWS recorded a slight increase in revenue from OR225m ($585m) in 2022 to OR226m ($587m) in 2023. The company reported net losses of more than OR1.9bn ($4.9bn) in 2023, compared to a OR268m ($697m) net loss in 2022. In the company’s 2023 annual report the higher annual loss is attributed to the effects of an APSR directive instructing companies to account for property, plant and equipment at 35% of its book value. NWS’s capital expenditure initiative saw the company invest OR93m ($242m) in infrastructure development during 2023.
Electricity
India-based market analysis company Mordor Intelligence estimates that Oman’s power supply market will expand at a compound annual rate of 4.4% between 2025 and 2030. Installed capacity is expected to rise from 16.4 GW to 20.3 GW during that period, with increased investment in renewables a key driver of that expansion. The combination of population growth, urbanisation, industrialisation and economic diversification will necessitate sizeable increases in power generation and supply capacity.
Oman’s power grid consists of multiple systems. The largest portion, the Main Interconnected System (MIS), covers the north of the country, while the DPS covers the south. Prior to Nama’s restructuring, rural areas outside Dhofar were supplied by the Rural Areas Electricity Company, which was absorbed by the NEDC, effective June 2023, while Petroleum Development Oman (PDO), the sultanate’s largest domestic hydrocarbons production firm, owns and operates its own system, connecting with the MIS and the Dhofar System. In addition, Al Wusta Governorate, which contains the Special Economic Zone at Duqm, runs on an isolated transmission network.
In November 2020 the government announced its Rabt programme, through which it is working to connect the various sections of the national power grid (see analysis). The first phase was completed in November 2023, with the MIS extending from Nihada in the north to Duqm in the south, having integrated the Al Wusta system and portions of the PDO system. Indeed, as of February 2025 multiple development projects, such as the construction of new power stations and transformer upgrades, were under way on all portions of the grid, as the OETC continues to modernise its power system, with the Rabt programme set to cost a total of OR372m ($967m). “As the energy landscape evolves, the utilities sector in Oman is adapting by integrating renewable energy and modernising infrastructure,” Salim Said Al Kamyani, CEO of Nama Supply Company, told OBG. “These efforts align with global trends and support Oman Vision 2040 goals for sustainable growth.”
One example of the types of collaboration being forged came in April 2024 when Oman and the UAE announced a OR129bn ($335bn) multi-sector investment partnership, one component of which will see the two countries develop solar and wind energy projects valued at OR117bn ($304bn) to both aid the national and regional energy transition, and provide power to strengthen emerging industries, such as green hydrogen and green metals manufacturing.
The OETC’s power network consisted of 9684 km of transmission lines and 113 grid stations in 2023. The system operates at 400 KV, 220 KV and 132 KV. A total of 15 power plants supplied the grid in 2023, with nine on the MIS, four on the DPS and two in Musandam. Total MIS generation capacity in 2023 was 8284 MW, while on the Dhofar and Musandam systems capacity stood at 1211 MW and 200 MW, respectively. Meanwhile, gross demand that year reached 7290 MW on the MIS, 673 MW on the DPS and 86 MW on the Musandam system.
Solar
With one of the highest solar densities in the world and reliably strong night-time winds, Oman’s climate presents opportunities for unbroken renewable energy generation. The sultanate’s first solar farm, Ibri II, located in the northern governorate of Al Dhahirah, launched in January 2022. Oman’s favourable weather conditions, evolving business regulations and increased strategic focus are helping the country attract strong inflows of international investment into its renewable energy industry. According to the Energy Institute’s Statistical Review of World Energy 2024, at 1.6 TWh, renewables accounted for around 3.6% of Oman’s total 44.3-TWh electricity generation in 2023, with solar power providing 1.5 TWh. Oman’s carbon-neutral target by 2050 hinges to a large extent on the success of its planned shift to renewable energy consumption. Milestones include the targets of seeing renewables account for 11% of electricity capacity by 2025, 30% by 2030 and 70% by 2040. According to Oman News Agency, which operates under the supervision of the Ministry of Information, the 2025 target was achieved with significant capacity coming online in 2024 and early 2025. Forecasts suggest that to achieve longer-term goals, the country would need a minimum installed solar capacity of 13 GW by 2030.
The Ibri II solar farm carried 500 MW capacity when it came online. The Manah I and II developments brought a total of 1 GW online upon their January 2025 launch. Through public tender processes, the Manah I project was awarded to Korea Western Power Company, while the Manah II project was awarded to a joint venture between China’s Jinko Power Technology and Singapore’s Sembcorp Industries. Meanwhile, January 2024 brought the launch of tender for the 500-MW Ibri III solar development, which is slated to commence operation in 2026.
Three additional tenders for solar farms are due to launch between 2025 and 2029. The projects, which will be situated in the north and north-east of the country, are each designed to add 500 MW additional capacity. The first is due online by 2027 and the other two by 2029. According to a 2024 report by Solar Power Europe, an association representing the European PV solar sector, Oman’s electricity market would benefit from restructuring to allow for multiple buyers and offtakers to operate simultaneously to incentivise investment and foster healthy competition. “The surge in investment within Oman’s power projects is fuelling the growth of the power and utilities sector, fostering job creation and propelling economic diversification,” Abdullah Al Hashimi, CEO of Marafiq, told OBG. “As this sector evolves, it continues to be a cornerstone of Oman’s economic development strategy.”
Wind
Oman’s first wind farm, located in the Dhofar Governorate, was the Middle East’s inaugural industrial-scale wind farm. The project, developed and owned as an IPP by the UAE’s Masdar, was launched in 2019 with an annual capacity of 50 MW. Masdar was also among the 12 bidders selected in September 2024 to implement five new wind farms in Oman. The projects are set to bring online a total of around 850 MW annual capacity upon completion. Other selected bidders include Sembcorp, Saudi Arabia’s ACWA Power and France-based Total Energies. The five facilities are expected to be operational by 2027, with individual annual capacity ranging from 81 MW to 400 MW. Three of the developments will connect with the MIS and two will connect with the DPS.
Water & Wastewater
Water security presents a challenge for GCC countries, in light of a scarcity of ground water due to the region’s desert climate, low rainfall and the high cost of seawater desalination. Desalinated water accounts for 86% of Oman’s water usage, the second-highest in the GCC, according to a 2022 study by French Institute of International Relations. The UN projects that the number of water desalination plants in the Middle East will double by 2030, with the industry rising by up to 12% per year.
Cloud seeding in Oman resulted in an increase of 15-18% of rainfall between 2013-18, according to the MAFWR. As of March 2024 the country had 13 cloud seeding stations, with 11 in the eastern and western Hajar mountains and two in Dhofar. Food production increased by 9.6% during the 2019-22 period, partly due to cloud seeding’s positive impact on groundwater levels and crop cultivation.
In 2023 NWS produced 449m cu metres of potable water, up from 444m cu metres in 2022. The 98.2 cu metres of wastewater reaching treatment plants in 2023 represented 7.2% annual growth. Consequently, the volume of wastewater treated during 2023 rose by 7.9% in 2023 to reach 96m cu metres.
In addition, 2023 saw a number of new developments completed, carrying a value of OR108m ($281m), with 91.2% of the value belonging to the water segment and the remainder to the wastewater segment. NWS also rolled out 21 development projects with a total contract value of OR157m ($408m), with 14 of these allocated to the water segment accounting for 91.5% of the total value.
In August 2024 NWS announced that three new water and wastewater projects had been completed, and that two more were nearing completion. The developments are designed to enable water production and systems to keep pace with projected urban growth until 2050. The three completed projects comprised around 543 km of new pipelines, interconnecting wilayats (provinces) and desalination facilities to improve water security, with pumping stations and various storage facilities capable of processing and holding over 1m cu metres of water at an overall cost of OR364m ($946m).
Outlook
The decision to adapt electricity market legal frameworks to the water sector should prove fruitful, given investor appetite for involvement in water generation and the need for increased production across the value chain of the sector. Moving forwards, renewable energy will likely be harnessed to reduce the emissions-intensive process of water desalination, while eco-friendly saline storage and disposal solutions provide investment opportunities. While losses for key sector entities present challenges, planned IPOs, the integration of the national and regional grids and the potential for more private involvement should reduce costs, free up capital and attract inflows of foreign finance to the sector.
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