Full steam ahead for power privatisation

22 March 2002

The second phase in the government's power privatisation programme is back on track, following the early-March reappointment of the international team of advisers headed by ABN AMRO. The team has been given a 22-week contract to complete the process of unbundling existing assets and preparing the new sector law, which is expected to be enacted in the fourth quarter of 2002. The schedule implies that the first request for proposals (RFP) for an existing asset will be issued to developers in early 2003. The team, which also includes Mott MacDonaldand Denton Wilde Sapte, both of the UK, had been in negotiation with the government about extending its original mandate, which expired last August (MEED 18:1:02).

Speaking at the MEED Congress in Dubai on 20 March, ABN's vice-president for the power & utilities group, Bert Schoen, said that team was now going full steam ahead on the corporatisation of existing government assets. General managers had been appointed for the new entities, while the government was preparing to advertise the post of managing director of the power and water procurement company. At the same time, the boundary demarcation was progressing for the various entities, and their draft business plans were complete. Schoen also said that a specialist had been appointed to assist in the formation of the regulatory body and that a draft of the sector law was under discussion.

'As soon as the new sector law is enacted, the new entities will come into existence and privatisation can follow,' Schoen said. Under the proposed unbundling, three generating and three distribution companies will be created, along with a transmission company. All are earmarked for privatisation, with the generating companies expected to be the first. In addition, there will be the power and water procurement company, a rural systems company and a government holding company.

Mott MacDonald's associate, Bill Howieson, said that while the Al-Kamil independent power project (IPP) and the Barka independent water and power project (IWPP) would meet the sultanate's immediate power requirements, the government would need to think about building new capacity by 2005 to meet the annual increase in power demand, forecast at 3.6 per cent. While there are several options available, one possibility for the government would be to extend the life of older gas turbines in operation, Howieson said.

Muscat power sources say that given that this would only provide a short-term solution, the government is also looking at the possibility of another IPP.

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