Friday, March 29, 2024 | Ramadan 18, 1445 H
clear sky
weather
OMAN
25°C / 25°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oman’s second oldest private power firm to liquidate

1827199
1827199
minus
plus

Final chapter: Publicly traded Al Kamil Power to call EGM in Q1 2022 to approve liquidation at the end of 20 years of operations


Al Kamil Power Company SAOG (AKPC), majority-owned by French-based, global energy giant Engie, has announced plans to wind up its business at the end of 20 years of operations as the Sultanate of Oman’s second oldest, privately owned power generation company.


Established in 2000, publicly-listed Al Kamil Power — which owns and operates a 285 MW gas-fired electricity generation plant at Al Kamil in South Al Sharqiyah Governorate — said on Wednesday it was moving to liquidate the company.


It cited in this regard its failure to secure an extension of its Power Purchase Agreement (PPA) with the Omani government, which expires at the end of this year, coupled with the unlikelihood that it could compete economically in the Electricity Spot Market that is expected to launch before the end of this year.


Announcing the liquidation plan in a filing to the Capital Market Authority (CMA), Abdulla al Rawahi, CEO, Al Kamil Power Company, said: “As was stated in previous disclosures, the company will not be granted a PPA extension beyond the current PPA which expires by the end of 2021, and the Electricity Spot Market will not be economically feasible for the company.


“Therefore, pursuant to the provisions of the Commercial Companies Law, the Board of Directors will call for an Extraordinary General Meeting during the first quarter of 2022 to pass a resolution relating to the liquidation of the company.”


Commencing operations in 2002, Al Kamil Power heralded a new wave of private-led investments in power generation that gained new momentum when the sector was unbundled and restructured in 2005.


The country’s, and indeed the Middle East’s, first privately developed power project was established by United Power Company (UPC) at Manah in Al Dakhiliyah Governorate in 1995.


Following the expiry of its PPA last year, UPC handed over the project assets to state-owned Ghubrah Power and Desalination Company (GPDCo), a subsidiary of Nama Group.


This handover was in line with the build-own-operate-transfer (BOOT) model on which the PPA was based back in 1996.


In contrast, Al Kamil Power will continue to own the plant assets at Al Kamil even after the expiry of its PPA with the government. Its first PPA, spanning a 15-year period, concluded in April 2017. This was later extended to December 31, 2021.


Last month, the company revealed that its hopes of participating in the upcoming Electricity Spot Market – an initiative of Oman Power and Water Procurement Company (OPWP) to open up the sector to wholesale trading in electricity – were dashed when a study found that the returns would not be economical.


“The study concluded that the level of revenues that the company can expect to generate from the Spot Market will be negligible and will not be economically feasible for the company.


Accordingly, the company will be in a position to continue carrying out business only if the PPA is extended,” the CEO stated in a filing last month.


In light of these setbacks, Al Kamil Power reported an impairment loss on its Property, Plant and Equipment (PPE) of RO 17.396 million for the nine months ended September 30, 2021.


The company posted a net loss of RO 14.72 million during the period, compared to a net profit of RO 1.752 million during the same period in 2020.


SHARE ARTICLE
arrow up
home icon