1. Oman’s Electricity Sector: A Hidden Gem for Investments
Qais bin Saud Al-Zakwani
Executive Director & Member
Oman Economic Forum – 23 March 2016

2. The story thus far…… August 2004
Royal Decree 78/2004 for Regulation and Privatisation of the Electricity Sector promulgated
Authority established
September 2007
Public Authority for Electricity and Water established - assumes policy making responsibilities for the electricity sector, and full responsibilities for the water sector
1996
Privatisation of the first IPP in Oman - Manah
1999
Council of Ministers approves electricity restructuring policies
1 May 2005
Implementation of new market structure
Authority grants Licenses and Exemptions

3. Electricity Sector Market Framework
Direction of payments
Direction of Transmission
Electricity Subsidy (Article (19))
Single point of injection
Calculated by the Authority
Paid by Ministry of Finance to Supply Licencees
Authority for Electricity Regulation
Water Departments
UPC
Al Rusail
Wadi Jizzi
Al Kamil
ACWA Barka
Al Ghubrah
SMN Barka
Sohar
Al Sawadi
Al Batinah
Sur
Others
Main Inter-connected System
OPWP
MEDC
C U S T O M E R S
Majan
OETC
Mazoon
Rural Areas
Generation & Desalination
Distribution & Supply
DGC
Dhofar System
OPWP
DPC
Sembcorp Salalah
DPC/OETC
Others
All intra sector transactions are: (i) regulated & (ii) fully cost reflective

4. Impact of Restructuring & Regulation%
+ 55.2%

5. Success Factors of IPP/IWPP Competitions
Authority ensures competition is done fairly and transparently, and limits market power abuse through market share and economic interest restrictions
Result: number of interested bidders remains high in all competitions for new capacity
Competitive Procurement
Established track record of timely and complete subsidy payments, even during the 2009 financial crisis
100% private generation sector (except two decaying plants)
Government guarantee no longer needed
Secure Funding
Financial and administrative independence – reports directly to the Council of Ministers
Conflicts of interest not tolerated – lengthy investigations in the past
Strong Regulatory Regime
Investor rights protected in Salalah Concession Agreement
Advanced discussions with the Government to privatise MEDC
Respect for Private Sector

6. Renewable Energy Opportunities
Small Scale
Rural Electrification: Regulatory policy issued by Authority in 2013:
Requirement to Include Renewable Energy Component in Article (87) Electrification Funding Applications from RAEC
Requirement to Evaluate Projects Using ‘Economic’ Fuel Cost Assumptions
Solar Rooftops: The Authority is currently revising the existing regulatory framework to:
Allow Distribution companies to act as agents for OPWP, the current single buyer of electricity, to buy rooftop PV-generated electricity from consumers
Establish minimum technical standards for rooftop PV
Establish net metering mechanism to compensate for electricity generated by rooftop PV panels

7. Renewable Energy Opportunities
Large Scale
Policies expecting imminent approval :
Economic Gas Pricing: For immediate implementation of RE projects that are found economically and technically feasible when compared with the economic price of gas
National Energy Strategy to 2040: Ensure a minimum quota for renewables to be implemented when planning for future capacity needs for the Sultanate
Status: preparations for large-scale grid-connected RE projects by reviewing assessment methodologies and technical requirements, and active discussions with potential developers. Sites have been identified with monitoring equipment gathering data since 2010
Decision to adopt similar procurement mechanism as existing IPP/IWPP framework
Why?

8. If it’s working well, why change things?
International Investors’ Interest Increasing
No. of Interested Bidders
If it’s working well, why change things?

9. Qais bin Saud Al-Zakwani
Thank you
Qais bin Saud Al-Zakwani
Executive Director & Member
Tel: (968)