The 120MW Musandam independent power project (IPP) is expected to reach financial close in the coming weeks following the award of the engineering, procurement and construction (EPC) contract last December.

The target for financial close is the end of January, athough it could slip into February, a source says.

Finland’s Wartsila was awarded the contract to design and build the plant and will also provide operation and maintenance services at the facility for a period of 15 years.

The plant will be located at Tibat Wilayat Bukha in the Musandam governorate.

The IPP is being developed by Musandam Power Company, a new entity established by a consortium led by Oman Oil Company (OOC) and including South Korea’s LG International Corporation to develop the power plant. The project power company will develop the facility under the supervision of Oman Power & Water Procurement Company (OPWP).

Short-term funding is already in place for the project sponsors. MEED reported in September that approximately $200m-worth of bank debt financing is expected to be raised to support the construction of the gas-fired plant.

The Musandam plant will operate under a power purchase agreement (PPA) with OPWP for supply of electricity to Rural Area Electricity Company (Raeco), which owns and operates Musandam’s generation and distribution system. 

Negotiations to finalise tariff rates are expected to take place in Muscat this month.