Oman Gas pipeline construction could delay start up

The Dhofar Power Consortium is expecting to sign a final concession agreement for a planned power plant in Salalah in the south of Oman in July.

The consortium, headed by PSEG Global of the US, was hoping to clinch the deal by end-April. It is blaming the delay on the timing of the Salalah gas pipeline project, finally awarded to Dodsal of India in March. Financing bids are still under evaluation (MEED 12:5:00; 17:3:00). 'Earliest gas availability is officially put at June 2002, but might be as late as September,' says a PSEG source. 'We need three months from that point, meaning plant completion might be as late as December 2002.'

The concession is for a 30-year period with a total estimated capital cost of $225 million. Financing will be split 80-20 between debt and equity. France's Banque Paribas has already underwritten the $180-million debt portion and will arrange a syndication through USand European banks as soon as the concession is signed. PSEG proposes that it will hold 80 per cent of the equity portion initially and the Omani founders the remainder. Half of PSEG's stake would be divested to the public within a four-year period. Working capital, amounting to about $20 million, will be arranged through Omani banks.

Construction of the 200-MW gas turbine power plant is expected to begin by the end of the first quarter of 2001. The consortium will also take over two existing gas turbine units of 30-MW and 17-MW apiece, the existing transmission and distribution network, and build new 132-kV and 33-kV facilities.

The consortium is waiting for the government to approve its choice of contractor for the construction contract and expects to award the package by end-May. Electrowatt Oman is acting as owners' engineer.

PSEG owns 45 per cent of the Dhofar Power Company, established by the consortium to execute the project. It substantially increased its stake when it purchased the entire stake of Royal Dutch/Shell Group in December (MEED 24:12:99).