Oman has rejected a series of previous plans to develop a coal-fired plant, but with concerns growing over future energy sources, it has decided to implement the scheme.
Plans for the independent water and power project (IWPP), which has been confirmed by a source close to the project, include a power capacity of 1,000-1,200 MW. The desalination capacity has yet to be finalised.
One bidding group has already emerged. Korea's LG International has signed a memorandum of understanding with Korea Southern Power Company (Kospo) and Oman Oil Company (OOC) to bid for the $2bn project.
LG has also signed a second memorandum with OOC to establish a coal sales and investment joint venture, with each company holding a 50 per cent stake. Together, they will participate in overseas coal projects and supply coal to the Duqm IWPP.
If the LG consortium wins the contract to develop the project, coal for the plant will be mined in Oman or imported from Australia and Indonesia.
LG, Kospo and OOC had previously commissioned two coal-related feasibility studies, which they then submitted to the Omani government in an attempt to encourage it to begin direct negotiations with them.
The first study, which was carried out by the US' John T Boyd Company, focused on coal mining in the sultanate.
A second study for the Duqm power plant was completed by UK-based PB Power.
However, Muscat chose not to enter into direct negotiations with the LG consortium and has instead handed the scheme to Oman Power & Water Procurement (OPWP), which will issue an open tender for the project.
The deadline for bids to develop the plant could be late 2008 or early 2009.
It is unclear what environ-mental measures will be put it place to minimise the impact of the plant.
However, as it is the first such plant in the Gulf, Muscat will have to develop regulations to deal with pollution.
According to its current seven-year plan, OPWP estimates that if Oman were to rely solely on gas for power generation, it would require 1.7-1.9 trillion cubic feet of gas between 2008 and 2014.
However, difficulties with regional gas supplies mean that the country is likely to face gas shortages in the future, particularly if it goes ahead with plans to divert some gas to more profitable industrial purposes.
Separately, OPWP has launched a search for a consultant to carry out a study into fuel selection for future IWPPs, which would include coal.
The state-owned utility recently ruled out the possibility of using coal to fire its next IWPP, which will be located at Barka or Salalah. With the plant due to begin operating in 2011, OPWP said this would not give it enough time to pursue the coal option.
OPWP could not be reached for comment on its latest coal plans.
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