Sectoral milestone: When it commenced operations in 1996, Manah power project set up by United Power Company became the Middle East’s first privately funded and operated power plant
United Power Company (UPC), which set up the Sultanate’s first privately funded and developed at Manah in Al Dakhiliyah Governorate back in 1996, is preparing to delist from the Muscat Stock Exchange ahead of its formal liquidation.
It comes as the company – a pioneer in Oman’s electricity sector and indeed the wider Middle East region – approaches the end of its contractual obligations upon the expiry of its power generation license.
When it brought into operation a modest-sized 90 MW power plant in September 1996, UPC made history in the region as the first private company to finance, develop, operate and maintain an electricity generation facility as an Independent Power Project (IPP).
Output from the plant was supplied to the erstwhile Ministry of Electricity and Water under a 20-year Power Purchase Agreement (PPA).
Three years later, additional capacity of 180 MW was added to the site, with its output covered by a separate 20-year Supplemental Agreement to the PPA. This second phase was launched in May 2000.
But unlike Independent Power Projects (IPPs) developed under the modern Sector Law promulgated in 2005, which are covered by the Build-Own-Operate (BOO) model, the two phases of the Manah project were designed on the basis of the Build-Own-Operate-Transfer (BOOT) model.
Under the latter model, United Power Company was obliged to transfer the plant assets to the government upon the expiry of the 20-year contract.
Those obligations began to take effect starting from last year. Following a notification from the Oman Power and Water Procurement Company (OPWP) — the sole procurer of capacity and buyer of power and water output under the Sector Law — UPC formally transferred ownership of the Manah power assets on May 1, 2020.
Those assets passed into the hands of Al Ghubrah Power and Desalination Company (GPDCo), a state-owned subsidiary of Nama Group (formerly The Electricity Holding Company).
Earlier, in 2016, a few transmission assets linked to Phase 1 of the Manah project were transferred to Oman Electricity Transmission Company (OETC) and Mazoon Electricity Distribution, also subsidiaries of Nama Group.
Following the transfer of its generating assets, UPC was informed by the sector regulator, the Authority for Public Services Regulation (APSR), that its generation licence had been revoked as well.
With no more assets to its name, United Power’s Board of Directors last November sought approval from the Capital Market Authority (CMA) for the conversion of the listed company (SAOG) into a SAOC.
The Authority’s green-light will allow for UPC to reduce its current capital of RO 2 million to RO 500,000.
That move will eventually pave the way for the company’s liquidation — a process likely to take a couple of years.
Looking back on UPC’s historic role as a trendsetter in the region, Murtadha bin Ahmed bin Sultan, Chairman of the Board of Directors, said: “Till the date of the transfer on April 30, 2020, the Manah Power Plant was operating smoothly and efficiently since the commissioning of the Plant primarily due to ENGIE and STOMO/SOGEX who have contributed to Manah IPP since the inception of the project in the mid-90s and their different roles at different stages of the project.
We would also like to share that UPC and our operators had successfully achieved a unique record in the global electricity sector i.e. No lost time accident from the inception till the handover of the plant. This is a proud achievement of the Government of Oman,” he added in the Directors’ Report for fiscal 2020.