A new standard

Oman

Guillaume Baudet, CEO of Sohar Power Company, speaks to TOGY about the need to increase water production and storage capacities in Oman and address the shortage of Omani workers in the power generation sector. Sohar Power Company was among the first independent water and power projects in Oman.

Will independent power project and independent water project agreements with state-owned Oman Power and Water Procurement Company (OPWP) be renewed?
Our agreement with OPWP comes to an end in 2022. There will be two options. We can either extend the contract with OPWP, the single buyer for all independent water and power projects, or decide to sell power into a pool spot market.
OPWP has announced the introduction of spot market prices for power from 2020. This means that all contracts with independent power plants expiring from 2020 onwards will fall into this market and OPWP will be the single buyer.
However, the company has not talked about new market rules for water supply from 2020 and it is unclear how assets combining simultaneous production of power and water will be considered in this market. Clarifications on this point are expected over time from OPWP.

What developments are anticipated in Sohar’s power and water sector?
We supply the areas of Al Batinah South and North up to Al Buraimi. It is getting more difficult to obtain windows for maintenance for the water units due to the lack of storage and production capacities in the region. Water storage capacity is limited at the moment and does not allow for shutdown of the plant for maintenance or upgrades activities for more than three days, as it would lead to water shortages.
This brings additional risks linked to the reliability of the plant, which may result in unexpected prolonged shutdowns and shortages of supply.
Another independent water and power project was tendered in 2015 and is expected to be operational in 2018. This additional plant will increase the production and storage capacities of water in the area. Being the only plant in the area, we expect the limited storage and supply capacities of water to be a challenge until 2018.
In parallel, we understand that the distribution network is expanding in the region, contributing to increasing demand. Once this new plant is in operation, we believe that we will have access to wider windows with which to undertake longer required maintenance activities.

Do you believe Oman is capable of exporting power and water to neighbouring countries?
OPWP foresees an increase in demand of nearly 9 percent for power and 6 percent for water per year for the coming years. Oman’s first priority is to ensure that plants are being built within the required timeframe and are meeting increasing demand. This effort will prevent power cuts and shortages in water supply.
Over the last decade, the GCC countries have all been investing in infrastructure projects to primarily meet their own growth in demand. Oman’s and the UAE’s power supplies have been interconnected, but the supply of electricity is kept as a reserve for emergency cases.

Oman’s Ministry of Manpower demands 100-percent Omanisation in the electricity and water sectors by 2019. Is this achievable?
Although we are making efforts to hire, develop and retain locals, we see some value for the sector and the country to retain expatriates in certain jobs where the required level of experience and expertise is unavailable amongst locals.
In addition to the shortage of labour, the sector has to compete with the oil and gas industry, which looks for similar candidates. Many industrial projects in the country are expected to put additional strain on an employment market that is already tight.
The sustained demand for experienced and qualified nationals has led to some volatility in the employment market and to a rise in the cost of labour in Oman. I think that meeting new Omanisation requirements of the sector will take time and will be very challenging.

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