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Viewing report
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Oman Water Report Q4 2011
Business Monitor International, Oct 2011, Pages: 33
BMI View: In a positive development for international developers eyeing Oman’s water sector, it is clear that regulatory reform is still receiving the authorities’ attention. In September 2011, the Oman Power & Water Procurement Company (OPWP) announced that the Power Sector Law would be amended to facilitate the procurement of Oman’s largest Independent Water Project (IWP) at Al Ghubrah in Muscat Governorate. OPWP says the change in the law is necessary to provide a regulatory framework for the Ghubrah IWP, which will cost an estimated US$400mn to develop. This is because existing legislation does not cover water desalination projects that are not combined with electricity generation. The reform should allow for more water-only desalination projects to be launched in Oman.
Key themes to highlight for Oman’s water sector:
- With an anticipated water consumption rate set to average around 13% per annum according to state-owned utility OPWP, the Sultanate needs to ensure the new desalination projects such as Ghubrah will meet anticipated deadlines – but also, critically, that the water produced is distributed effectively across the country. BMI envisage an increase of more than 5,000mn gallons in distributed water between 2011 and 2015, with the bulk of the increase focused on Muscat governorate, and other regions (excluding Dhofar whose increase is likely to be a more modest 500mn gallons) growing by 2,000mn gallons..
- In September 2011, OPWP launched the process for selecting a developer for the Ghubrah IWP which will have a 42mn gallon a day (g/d) capacity – or around 191,000 cubic metres per day (m3/d). Two months earlier, in July, OPWP signed an agreement with a consortium comprising Marubeni Corporation, Chubu Electric, Qatar Electricity & Water and Bahwan Engineering Group of Oman, for construction and operation of the Sur Independent Power Project (IPP) – with no water component.
- Oman’s needs to enhance its approach to IWPPs. Since March 2010, the proposed IWPP at Duqm has been mothballed and much is now expected of a planned independent water and power project (IWPP) at Sur. However, the government has until now adopted a state-backed upgrade of its wastewater sector, rather than following other GCC states that have given equity stakes and management contracts to foreign companies. This may change in future years, but for the moment the traditional model will be used to improve wastewater capacity.
The business climate in Oman remains accommodating for foreign investors and project developers and Oman has an open, transparent and investor-friendly business environment. In Q311, it awarded a contract to the UK’s Halcrow to act as independent overseer of the private-led management of Oman’s water sector – after awarding a similar contract to Veolia’s in the previous year.
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