The consortium led by Japan’s Mitsui has been awarded the contract to develop the 400MW Salalah 2 independent power project (IPP) in Oman’s southern Dhofar governorate.

Mitsui, in partnership with Saudi Arabia’s Acwa Power and the local Dhofar International Development and Investment Holding Company, has been awarded the contract by the Oman Power & Water Procurement Company (OPWP) and will sign a 15-year power purchase agreement (PPA) with the offtaker. China’s Sepco 3will be the consortium’s EPC contractor to build the plant.

The combined-cycle Salalah 2 plant will run on natural gas and is scheduled for commissioning in 2018. The contract will also involve the Mitsui-led consortium acquiring the existing 273MW Dhofar power plant, which it will also operate under a 15-year PPA.

MEED reported in early March that the Mitsui consortium was frontrunner to win the developer contract, and was the only group still in negotiations with the client. The winning consortium was one of three groups that submitted bids for the contract in October.

The IPP follows the commissioning of the Salalah independent water and power project (IWPP), which began commercial operation in May 2012. The gas-fired power plant has a total generation capacity of 445MW, while its seawater desalination component has a total production capacity of 15 million gallons a day (g/d). Sembcorp Salalah Power & Water Company will provide power to OPWP for 15 years.

The projects are part of efforts to meet the increasing demand for power in the Salalah system, which currently has about 77,000 electricity customers.

Peak demand in Salalah in 2013 reached 420MW, an increase of 8 per cent on the 389MW peak in 2012. The full commissioning of the Salalah 2 IWPP boosted the system’s contracted capacity to 718MW, from 372MW in 2011.

Population growth, infrastructure development and industrial and tourism growth are expected to increase the peak demand growth for electricity in the Salalah system at an average rate of 10 per cent a year until 2020, from 420MW in 2013 to 553MW in 2020. Most of the demand, about 9 per cent, will come from non-industrial sectors.