Oman Water and Energy Conference Yaqoob Al Kiyumi Chief Operating Officer 19 May 2015
OPWP’s Role – Areas/Systems MIS Created as part of the of the electricity sector restructuring Government owned with statutory functions and duties Regulated by licence from AER “Single Buyer” of power and desalinated water OPWP’s rating: S&P - Stable ‘A -’ Moody’s - A1 Turnover (revenue)- forecasted for 2015 690 million OMR Muscat Ad Duqm Salalah Salalah System
Current Market Structure and Regulatory Framework Al Suwaidi Power Company SAOC Al Batinah Power Company SAOC Direction of payments Water Departments pay PWP for bulk purchases of desalinated water charged at a cost reflective Bulk Supply Tariff (BST); Water BST includes the PWP’s costs of water procurement activities SMN Barka Power Company SAOG Water Departments Subsidy Al Rusail Power Company SAOC Oman Power & Water Procurement Company SAOC Wadi Jizzi Power Company SAOC Muscat Electricity Distribution Company SAOC Discos pay PWP for bulk purchases of electricity charged at a cost reflective Bulk Supply Tariff (BST); Electricity BST includes PWP’s costs of electricity procurement activities United Power Company SAOG PWP pays Production Facilities for Capacity and Output in accordance with terms of PPA/PWPA Ancillary Services Al Kamil Power Company SAOG Majan Electricity Company SAOC Al Ghubrah Power & Desalination Company SAOC Mazoon Electricity Company SAOC Oman Electricity Transmission Company SAOC ACWA Barka SAOG Sohar Power Company SAOC Production Facilities & Others pay OETC for Connection to Transmission System Dhofar Power Company SAOC Discos pay OETC for Connection to OETC’s Transmission System (Distribution business) Use of OETC’s Transmission System (Supply business) Phoenix SAOC Customers Muscat Desal. SAOC Dhofar Generation Co SEMBCORP SAOC Sharqiyah Desalination Future Projects All intra sector transactions: (i) regulated & (ii) cost reflective (no direct subsidy)
Current status (ownership structure)
Capacity Growth Trend (Private Sector Involvement) This graph shows the trend of private sector involvement in generation activities Key to note is the level of private sector investment that freed Government fiunds for othjer projects, and The level of foreign investment in the electricity sector in Oman
Electricity Demand MIS: Demand growth at about 9% per year Dhofar: Demand growth at about 10% per year MIS demand growth is reduced somewhat from the previous forecast Reduction reflects primarily a reassessment of industrial demand requirements Actual 2014 2015 2016 2017 2018 2019 2020 2021 Ave.% Growth Expected Demand Annual Energy (TWh) 25.0 27.8 30.6 33.4 36.9 40.1 43.5 47.1 9% Peak Demand (MW) 5,122 5,653 6,225 6,797 7,464 8,076 8,775 9,530 High Case Demand 29.7 36.4 40.4 44.0 48.1 51.8 11% 5,952 6,679 7,308 8,041 8,724 9,537 10,329
MIS Electricity Supply Plan 2016: shortage is expected due to constraints on Sur IPP, likely to be addressed by GCCIA import, temporary generation, or demand management; Contract extensions: Ghubrah and Wadi Jizzi to be extended only through 2018 summer Al Kamil to be extended through 2020, then eligible to compete for new PPA in 2021 Barka I still to be resolved; expected to be extended to 2020, similarly to Al Kamil 2021: new capacity required that may include both new entrants and contract extensions, as well as spot market participants Procurement process may begin in 2017
Water Supply Plan: Interconnected Zone 2015: In shortage, available capacity less than peak demand 2016: capacity meets demand, but below target (reserve margin) 2017-2019: capacity meets target in both scenarios, even without Barka 1 extension 2021: new capacity required, subject to demand and whether Barka 1 is extended Ghubrah retired in 2018; Barka 1 MSF expected to retire; Capacity sufficient to allow Sohar 1 to shift to reduced operation after COD of new Sohar IWP
Water Supply Plan: Sharqiyah Zone 2015-2016: In shortage, available capacity less than peak demand PAEW is responsible for meeting the supply gap 2017: With Sur IWP extension, capacity meets demand but not reserve target 2018: In shortage during peak months 2019: New Sharqiyah IWP at 12 MIGD meets capacity needs through 2021
Efficiency Improvement Reduces Gas Needs MIS Fuel Requirements Gas Forecast Efficiency Improvement Reduces Gas Needs Electricity demand growing at 9%, whereas gas consumption increasing at just 4% 2005-2014: 24% reduction in per-unit gas consumption 2014-21: Further 27% reduction projected, due to: Shift from MSF to RO desalination Higher efficiency CCGTs Retirement of old units Improvements in economic dispatch
Dhofar Power System Supply Plan Salalah 2 IPP was recently awarded this year and construction will begin soon A 50 MW wind farm is expected by 2018. It will reduce the energy requirements from gas-fired power plants No further generation requirements expected until 2022 or later.
Dhofar Water Supply Plan Water demand forecast unchanged 2015-2018: Demand exceeds capacity of Salalah IWPP, but groundwater supply is sufficient to meet both demand and reserve target Salalah IWP to start procurement in 2015 for 2019 start, at about 18-22 MIGD
Main Procurement Activities in 2015 Ibri & Sohar3 IPP Sohar IWP Barka IWP Sharqiyah IWP Salalah IWP Capacity 2850-3150 MW 55 MIGD 61.8 MIGD 12.1 MIGD 18-22 MIGD RFQ Q2 2014 Q1 2015 Q4 2015 RFP Q1 2016 Bids Due Q3 2015 Q2 2016 Award Anticipated Q4 2016 COD EP: Q2 2018 (Ibri) SCOD: Q1 2019 (Sohar) Q2 2019 (Ibri) Q2 2018 Q1 2019 Potential additional procurement starts in 2015: Duqm IWP (12 MIGD) Khasab City IWP (3 MIGD)
Feedback / Further Information Questions and comments welcomed Further information available at: www.omanpwp.com
Thank You
Contracted Generation Capacity Plant Owner Type Status Contract Start Contract Expiry Power Capacity (net MW) Water (MIGD) Al Ghubrah Power and Desalination Co. PWPA Operational 2005 2018 475 40 Rusail Power Co. PPA 2022 687 Wadi Al-Jizzi Power Co. 2020 245 United Power Co. 1996 273 Al Kamil Power Co. 2002 2017 297 ACWA Power Barka 2003 450 30* Sohar Power Co. 2007 590 26 SMN Barka Power Co. 2009 2024 710 33 SembCorp Salalah Power and Water Company 2012 2027 445 15 Al Batinah Power Co. 2013 2028 744 Al Suwadi Power Co. Phoenix Power Co. Under Construction 2014 2029 2000 MCT Desal. Co. 42 *10 MIGD Under construction Total by 2014 7660 186
CRITICAL FOCUS AREAS IN PROCUREMENT Increasing awareness and pushing for highest priority for Health Safety and Environment Securing commitment from developers for independent monitoring and reports on the HSE during the construction period Enforcement of Omanization Providing more opportunities for Omanis to participate in critically important sector Promotion and development of Omani content Promote and enforce, where applicable, utilisation of local content and development within the large capital expenditure projects Omani content ranging anywhere between 18% to 30% of the EPC Cost Economic purchase obligations Transparent and competitive bidding process Promote efficient and proven technology and solutions to best utilize natural gas available Evaluation of proposals undertaken on the basis of economic price of gas