Muscat: Oman Power and Water Procurement Company (OPWP) has appointed an international consultant — NERA — for formulating a future strategic plan for independent power plants (IPPs) and independent water and power plants (IWPPs) in the country, after the expiry of power purchase agreement (PPA) with the government, said a top-level official of an IPP.
"The consultant is looking at various options on a long-term basis….. how to deal with the project as and when the PPA ends. It has to be a common policy and the authorities can not have different terms for various companies," Zoher Karachiwala, Chief Executive Officer of United Power Company told Times of Oman.
He said that the consultant will also look into various other aspects like the commercial and technical feasibility of continuing an old plant or building a new plant within the same area. The consultant has already started discussing with IPPs and IWPPs. The consultant, who was appointed sometime in September last year, is expected to take nine months to complete the strategic study.
Karachiwala said the consultancy agency will also look into the pros and cons of running a small plant like UPC or having only mega plants with a generation capacity in the range of 3,000MW-5,000MW or having power plants in special locations.
The power purchase agreement of United Power Company — the first independent power project in the Sultanate — will expire in 2020. Originally, the agreement was signed for a 20 year period ending 2016. But this has been extended to 2020, after commissioning the second phase. Al Kamil Power's 15-year-long power purchase agreement will expire before UPC's pact.
Barring UPC, all IPPs have 15-year PPA with Oman government. Also, UPC has a built, own, operate and transfer (BOOT) agreement with the government, while other IPPs/IWPPs operate on a built, operate and own (BOO) pact.
To meet the BOOT requirement, UPC has been returning a portion (around five per cent) of its paid up for quite some time. Almost 75 per cent of the capital has already been returned to the company's shareholders over the years. "By 2014, our paid up capital will be reduced to OMR5 million," noted Karachiwala.
The capital will be further reduced from OMR5 million to OMR2 million between 2014 and 2020, as the minimum capital for a joint stock company is OMR2 million.
Barring UPC and Al Kamil, all other IPPs are combined cycle gas-fired power plants. Single cycle power project uses gas to make power and the residue goes as waste, while in combined cycle unit, waste is converted into power. Combined cycle is a gas turbine generator with an exhaust-heated steam turbine generator to increase overall power plant efficiency.
While building a single cycle power plant is less costly and easy to manage, it is not environmentally friendly. Now, there will not be any single cycle project in Oman.
Oman has six IPPs or IWPPs in operation, while two other units are nearing completion. Three more power plants — one each in Musandam, Quriyat and Salalah — are in planning stage.