Oman Power & Water Procurement Company (OPWP) is still in discussions with the bidders for the Salalah 2 independent power project (IPP), in the southern Dhofar region of the sultanate.

The client received bids from three groups in October for the project. The contract is now not expected to be awarded until early March at the earliest.  

The groups that submitted bids are:

• Mitsui (Japan) / Acwa Power (Saudi Arabia) / Sepco 3 (China)
• EDF (France) / Daelim Industrial (South Korea)
• Kepco (South Korea) / Sojitz (Japan) / GS Engineering (South Korea)

OPWP had prequalified four groups for the tender, but, Japan’s Marubeni Corporation dropped out of the bidding process.

The Salalah 2 IPP will have a capacity of between 300MW and 400MW, and is scheduled for commissioning in 2018.

In July 2012, the UK’s PwC was appointed as financial adviser on the project, with the UK’s DLA Piper as legal adviser and Germany’s Fichtner as technical adviser.

As part of the Salalah 2 IPP, Dhofar Generating Company, currently part of Dhofar Power Company, will be privatised and sold to the winning bidder. Electricity generated from the plant will be purchased by OPWP on a 15-year power purchase agreement (PPA).

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.