Major milestone: State-owned Nama Holding acquires 25-year-old Manah power plant following expiry of Power Purchase Agreement
MUSCAT: Ownership of Manah Power – the first privately procured Independent Power Project (IPP) in Oman and the wider Middle East region at the time – transferred to the Omani government on May 1, 2020, marking a key milestone in the history of this pioneering venture.
It follows the expiry of a Power Purchase Agreement (PPA) between United Power Company (UPC), a publicly traded joint stock entity, and state-owned Oman Power and Water Procurement Company (OPWP), the sole offtaker of all electricity and related water output under the sector law in the Sultanate. The Build-Own-Operate-Transfer (BOOT) model under which Manah IPP was developed in the nineties stipulated an eventual transfer of assets to the government – a feature that was conspicuously absent from subsequent IPP procurements.
On Sunday, Muscat-based UPC announced that OPWP – part of Nama Group (formerly The Electricity Holding Company) — had exercised its prerogative on behalf of the Omani government to acquire the 264-megawatt (MW) gas-powered facility in line with the terms of the PPA.
It follows an earlier effort, albeit unsuccessful, by the state-owned procurer to negotiate an ‘Ancillary Services Agreement’ designed to maintain the status quo beyond the contractual transfer date of May 1, 2020.
“After a detailed discussion, OPWP has now decided to pursue their right under the PPA for the transfer of the plant and staff to its nominee, Nama Holding Company, on 1 May 2020. We have initiated all necessary work to process the transfer as per the aspiration of the Government of Oman,” said Murtadha bin Ahmed Sultan, Chairman of the Board of Directors, United Power Company, in a filing to the Capital Market Authority (CMA).
Located in Wilayat of Manah in Al Dakhiliyah Governorate, the gas-fired facility was the first privately developed and owned power plant when it was brought into operation in stages starting in 1996. The project provided a useful template for the procurement of new privately developed and financed power and water schemes that underscore the success of the Omani government’s pioneering efforts to unbundle, restructure and privatize this critical sector.
Unlike subsequent IPPs that were developed under the Build-Own-Operate (BOO) model, Manah was conceived and implemented under the BOOT model at a time when Oman was blazing a new trail in privately procured power projects in the region.
“Manah is a unique case, because the asset transfers to the Government at the expiration of the current PPA in April 2020. OPWP is considering several options to allow operations to continue under a new PPA, including a possible sale of the asset in a competitive tender,” the power procurer had announced in 2017. “After transfer to the Government, Manah is expected to continue in service under a new PPA, although ownership options are still under consideration.”