Oman in first private power plant contract extension

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Oman in first private power plant contract extension

Feb 18, 2017 9:48 AM

Oman Power and Water Procurement Company (OPWP) has signed a deal formally allowing Al Kamil Power one of the country s earliest Independent Power Projects (IPP) to remain in operation for another four...

Oman Power and Water Procurement Company (OPWP) has signed a deal formally allowing Al Kamil Power, one of the country's earliest Independent Power Projects (IPP), to remain in operation for another four years beyond its existing contract which expires in 2017, said a report.

As per the agreement, Al Kamil Power Company, which operates a 280 megawatt (MW) gas-powered plant in South Al Sharqiyah governorate, will continue to be in service up to December 31, 2021, reported Oman Daily Observer.

It follows the successful completion of negotiations with OPWP, a subsidiary of the wholly government-owned Nama Group, leading to a contract extension with revised terms and conditions, the report stated.

Significantly, the extended PPA is the first of a number of similar pacts planned by OPWP that will allow for some of Oman’s oldest privately-owned power plants to stay in operation well beyond the expiry of their current contracts.

This, alongside options to procure new capacity, is key to the procurer’s strategy to ensure adequate capacity to meet galloping electricity demand growth, said the report.

“Extensions are being negotiated only on a guaranteed capacity basis at economic commercial terms, and all plants have completed independent technical evaluations to confirm the capacity on offer,” the procurer said in its 7-Year Outlook Statement for the 2016-2022 timeframe.

Also expected to receive a contract extension is Barka-1 Independent Power Project, which is co-located with a water desalination plant, reported Oman Daily Observer.

With the existing Power & Water Purchase Agreement (PWPA) due to expire next year, OPWP has already initiated negotiations with the plant owner, Acwa Power Barka, for a contract extension up to December 31, 2021, it added.