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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Subsidy channeled to power sector as distribution and supply services merged in two companies

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Muscat: The periodic review of general policies of the power sector conducted by the Ministry of Energy and Minerals in cooperation with the authorities concerned yielded fruit.


The Public Services Regulatory Authority played a role in drawing out regulations for expanding the timeframe (from 5 to 10 years) of the residential units’ electricity sector subsidy programme.


This involves increasing the annual rate by not more than 2 baisas, while at the same time fixing the tariff endorsed for the residential segment’s electricity consumption in 2022 to be stabilised at the same rate as at December 2021.


It was also agreed to unify electricity consumption sector for all accounts of the residential category so that the value of power consumption tariff in 2022 could fall in two classes:


The first class/category pertains to the original account’s tariff (for two or less accounts), and this comprises three segments.


Consumption in the first segment ranges from zero to 4,000 kilowatt/hour at a rate of 14 baisas a kw/h; the second from 4,001 to 6,000 kw at a rate of 17 baisas for each kw/h and the third begins from more than 6,000 kw onwards at a rate of 30 baisas for each kw/h.


The additional account’s tariff (for more than two accounts) comprises three segments: the first for consumption from zero to 4,000 kw at a rate of 20 baisas for each kw/h; the second for 4,001 to 6,000 kw consumption at a rate of 25 baisas for each kw/h and the third for consumption of more than 6,000 kw at a rate of 30 baisas for each kw/h.


The electricity tariff for the residential category will be calculated as of 1 January 2022. The system of national subsidy granted to entitled categories continues to be applied as prescribed. A subscriber from the exempted categories has a right to select one account for which “additional subsidy” will apply.


The consumption of the first category ranges from zero to 4,000 kw at a rate of 10 baisas for each kw/h; the second 4,001-6,000 kw at a rate of 13 baisas for each kw/h and the third from 6,000 kw onwards at a rate of 20 baisas for each kw/h.


As for the agricultural sector, the Cost Reflective Tariff has been cancelled (the non-subsidized tariff) for all subscribers. Instead a new tariff will be applied as follows:


The first category ranges from zero to 3,000 kw/h at a rate of 12 baisas for each kw/h; the second from 3,001 to 6,000 kw at a rate of 16 baisas a kw/h and the third from 6,000 kw onwards at a rate of 24 baisas a kw/h.


The Cost Reflective Tariff has been reviewed in 2022 in support for economic recovery efforts and in consolidation of the national economy’s performance.


The general policies of the electricity sector seek to implement a programme for rechanneling the power subsidy to the deserving segments, which is part of the Medium Term Fiscal Balance Plan (2020-2024).


Also, to augment the operational and financial efficiency of the power sector and to benefit from the expertise of employees, it has been decided to merge activities of electricity distribution and electricity supply in two companies: one for electricity distribution (to provide distribution in all governorates of the Sultanate, except the governorate of Dhofar) and a company to supply electricity (to provide electricity supply services to all governorates of the Sultanate, except the governorate of Dhofar). Dhofar Company for Merged Services remains unchanged (to provide distribution and supply services within the governorate of Dhofar).


The overall objective is to augment operational efficiency, minimize costs, expedite the rate of power connectivity in rural areas via the basic grid. This contributes to the reduction of carbon emissions, minimizes dependence on diesel stations and makes ideal use of the expertise of the companies, while at the same time opening scopes for competition in the sector of supply and power connection services in different parts of the Sultanate.


The arrangements also made it possible to implement the programme of smart, online meter readers, which upgrades the level of the service and the efficiency of electricity distribution. It will also keep pace with global developments, utilize technology in developing subscriber services and realize the setting up of smart, sustainable cities. Smart meters have been installed for major consumers.


The initiatives led to the start of operational tasks for the first instant market for electricity in the Middle East termed “Oman Instant Electricity Market” (oem.om), which tallies with the global power procurement system. This helps create a competitive environment for cost cutting and competition and encourages the use of renewable energy as part of the goals of Oman Vision 2040.


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