The planned partial privatisation of Muscat Electricity Distribution Company (MEDC), one of the largest power utilities in the Sultanate of Oman, is currently on hold pending a review of options envisaging the broader restructuring of the country’s distribution companies.
According to a top official of Nama Group, the umbrella organisation of Omani state-owned power and water procurement, generation, transmission, distribution and supply entities, the decision to pause the keenly-anticipated privatisation exercise came at the behest of the Authority for Public Services Regulation (APSR).
“Based on a recommendation from APSR, the project was placed on hold to study and explore options including a possible restructuring and merger of sector companies,” said Hamdan al Shaqsi, Chairman of the Board of Directors of Nama Group.
Following the landmark partial privatisation in 2020 of Oman Electricity Transmission Company (OETC), the owner and operator of the country’s vast grid network, MEDC – also part of Nama Group – was prepped for partial disinvestment.
Under Nama Group’s privatisation strategy, up to 70 per cent of its equity in MEDC was offered for investment, effectively granting administrative and operational control to the strategic investor. The balance 30 per cent was proposed to be eventually offered for public investment via an Initial Public Offering (IPO) to be floated on the Muscat Stock Exchange (MSX). Last August, the results of the evaluation of binding offers received from eligible international bidders were submitted to Oman Investment Authority (OIA), which represents the government’s interests in Nama Group.
However, following proposals for the restructuring and possible mergers of all of Nama Group’s electricity distribution and supply entities – an exercise designed to unlock further value from the electricity sector – APSR called for a timeout on MEDC’s privatisation.
“In December 2021, APSR issued a letter to Oman Investment Authority requesting the implementation of the electricity sector restructuring initiatives, as directed by the Ministry of Finance, with an aim to reduce operational cost of the electricity sector and optimise subsidies. The recommendations included reorganisation of the electricity distribution and supply activities into a Distribution Company and a Supply Company in all governorates of the Sultanate of Oman, except the Governorate of Dhofar,” Al Shaqsi added in the newly published 2021 Annual Report of Nama Group.
Serving over 426K customers, MEDC’s license area covers the capital region of the Sultanate of Oman.