Muscat: The Sultanate of Oman has formally launched an electricity spot market, the first in the Middle East, to increase the efficiency of power procurement as part of the goals of Oman Vision 2040, ONA said on Wednesday. The spot market will enable licensed generators for the first time to offer their surplus capacity at the most competitive rate.
It has also extended the timeframe of a planned redirecting of electricity subsidies for residential consumers to 10 years from 5 years, and capped power tariffs for the same category throughout 2022 at December 2021 levels with an increase of no more than 2 baisas annually.
The Oman Investment Authority merged Muscat Electricity Distribution Company, Mazoon Electricity Company, Majan Electricity Company, and Rural Areas Electricity Company (Tanweer) in a bid to restructure the distribution and supply companies in the electricity sector. The merger will not involve Dhofar Integrated Services Company.
It was also agreed to unify 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 January 1, 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-subsidised 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).
The overall objective of the merger of three companies is to augment operational efficiency, minimize costs, and 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 smart meter readers, which upgrades the level of the service and the efficiency of electricity distribution.
POINTS
1.Muscat Electricity Distribution Company, Mazoon Electricity Company, Majan Electricity Company, and Rural Areas Electricity Company (Tanweer) merged
2. Cost Reflective Tariff has been cancelled for agriculture sector. Instead a new tariff will be applied.
3. The spot market will enable licensed generators for the first time to offer their surplus capacity at the most competitive rate.
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