MUSCAT: The MSX30 Index ended the week higher by 1.95 per cent. All sub-indices ended lower except the Financial Index that closed up by 1.92 per cent on weekly basis.
During the week, some power companies announced that they have received notification from Oman Power & Water Procurement Company (OPWP) that their Power Purchase Agreements (PPAs) will not be extended.
Further, the Spot Market for electricity will go live before this year-end. The companies that made the announcement were: SMN Power, Sohar Power and Al Kamil Power.
Additionally, Al Kamil Power also announced results of its feasibility study for participating in the Spot Market whereby it is not feasible for the company to participate in the said market. The company will be adjusting its property, plant and equipment assets for disclosure as at end-Sept accordingly.
Within the power sector, Dhofar Generating Company also updated on its Cash Sweep Activation that became applicable from October 28, 2021 onwards.
The Cash Sweep Mechanism requires that 95 per cent of the free cash flows, after accounting for the operating costs and debt service payments, shall be paid to the lenders towards prepayment of the balloon repayment of the loan. The company cited various reasons including the country’s credit rating and other issues prevalent in the local power sector for the international banks’ refusal to provide the required Backstop DSRA LC to disapply the Cash Sweep Mechanism.
The company said that the project lenders have also rejected the LC from local banks as these banks don’t meet the required credit rating under the financing arrangements. As a result, the company was not able to arrange an acceptable Backstop DSRA LC on or before the extended Cash Sweep Start Date.
Hence, the Cash Sweep Mechanism will kick-in from October 28, 2021 which will impact the ability of the Company to make future dividend distributions until the balloon amount is fully prepaid. The stock did not react to the news while its price has been falling since start of the year and is down about 54 per cent on year-to-date (YTD) basis.
Saudi EXIM Bank announced the signing of a deal with Omani banks to boost cooperation with three major banks to boost financing ties and exchange expertise.
The MoUs were signed with the National Bank of Oman, Bank Muscat and Sohar International Bank. The banks also discussed cooperation in extending credit financing and securing financing guarantees for Saudi exporters’ Omani clients. The banks agreed to develop training programmes in financial trade, risk analysis and loan management.
During the week, Galfar Engineering & Contracting SAOG announced that it has received an award of a project for RO 9mn from the Ministry of Transport, Communications and Information Technology for the rehabilitation of cyclone-damaged Al Batinah Highway.
A key project was launched last week as part of the China-Oman Industrial Complex in the Special Economic Zone (SEZ) in Duqm.
Duqm Hongtong Piping LLC, set up with an initial investment of $6 million, will begin production of Reinforced Polyethylene Pipes (RPP) with an eye on domestic, regional and international markets. The plant has a capacity to produce around 1,200 kilometres of non-metallic pipes suitable primarily for the oil and gas industry and specifically for the transport of hydrocarbon fluids through piped networks.
An ambitious initiative championed by India to create a single globally connected grid supplying electricity from renewable energy resources, envisions an undersea link with Sultanate of Oman – a move that could potentially enable the large-scale production and export of low-cost green power from the Sultanate to consumers across the transnational grid.
The proposed One Sun One World One Grid (OSOWOG) project, first unveiled in 2018, will be implemented by the International Solar Alliance (ISA), a key forum established in 2015 against the backdrop of the UN Climate Change Conference in Paris.
The Sultanate of Oman is among scores of countries globally that have approved ratified the framework agreement behind the ISA’s mandate.
(Courtesy: U-Capital)
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