Sultanate is now witnessing huge changes in its water
and electricity sectors, creating new opportunities for
investment and infrastructure in the process
By Oliver Cornock
The two main challenges facing the Middle East as a
region concern resources. Most debated, discussed and
dissected is economic dependency on oil and how the Gulf
will diversify for the days when crude supplies run low.
The second, perhaps even more fundamental, concerns
water and power supply. Just as towering cities such as
Doha and Abu Dhabi owe their existence to the huge
revenues generated by energy, the growing populations of
the Gulf cannot be sustained without adequate water and
electricity. Furthermore, the solutions must themselves
Oman is a good example of how this second regional
challenge of provision is being met head on. The
Sultanate is now witnessing huge changes in its water
and electricity sectors, creating new opportunities for
investment and infrastructure in the process.
This is largely due to demand driving the need for
increased access to – and supply of – water, as well as
power generation. Over the next five years to 2017,
domestic-sector demand for desalinated water in Oman is
set to rise from 163m cu metres to 278m cu metres – a 70
per cent rise – according to estimates from the Oman
Power and Water Procurement Company (OPWP). In addition,
the OPWP expects electricity demand to grow from 16.9
TWh to 30.3 TWh in 2017. One of the reasons for this is
Oman’s rising population, which World Bank statistics
show has grown by around one million in the past 20
In fact, the Sultanate now represents the
fastest-growing power and water sectors in the Middle
East, with demand for utilities set to grow at an
average yearly rate of 9 per cent until 2017, according
to the OPWP’s December 2010 report.
To cater for this, a range of major developments are in
the pipeline. In mid-February, it was announced that the
Sultanate will make sector investments to the tune of
$2.9bn, spread across 13 new power, water and energy
projects, to begin construction in 2012. Although
specific details were not available at the time of
writing, it was reported that the focus of these
projects will be on increasing desalinated water supply
and improving network efficiency.
The government is looking to the private sector to take
on the majority of its utilities projects. In late
October 2011, for example, engineering and contracting
company Galfar was awarded a water pipeline project
worth $36.4mn by the Public Authority for Electricity
and Water (PAEW). On completion – estimated to be a year
and a half away – the pipeline will transport water from
Wadi Adai to Amerat.
Although Oman benefits from slightly higher rainfall in
comparison to other GCC states, it is still a desert
country, and drinking water is never in abundance.
However, early March 2012 saw the awarding of a contract
to develop an important new water desalination facility
move one step closer, with the short-listing of seven
international firms for the bid.
The plant, to be built in Ghubrah in the Muscat
governorate, will cost around $400mn and will process
some 42 million gallons of desalinated water per day
when completed in 2014, according to estimates. Two
other private sector-led “independent water projects”
are planned for Qurayat and Al Suwaiq.
These projects will be high-efficiency reverse osmosis
desalination plants, which will draw electricity from
the main grid, as opposed to being co-located with power
generation capacity. In line with the OPWP’s
environmental strategy and seven-year planning process,
old facilities are to be decommissioned by 2017.
Furthermore, the treatment of wastewater for reuse is a
central part of Oman’s irrigation strategy, called the
“Muscat Wastewater Master Plan”, which is aimed at
reducing pressure on groundwater resources within the
Muscat governorate. By reusing treated wastewater for
agriculture and landscaping, the Sultanate will help
reduce the water deficit, which has been estimated at
more than 300m cu metres of water each year.
Two projects, with a combined value of over $1bn, were
launched in 2008; in A’Seeb and in Al Ansab. These are
being overseen by Omani wastewater service company Haya
Water. A’Seeb has now entered its second phase of
development, and will reach full operating capacity by
2017, although the facility is already partially
Al Ansab, on the other hand, opened in early 2011, and
is the world’s largest submerged membrane bio-reactor
system with a capacity to handle up to 74,000 cu metres.
Taken together, these two projects will serve 80 per
cent of the Muscat population by 2014 and about 90 per
cent by 2017, delivered across the Muscat area by more
than 280km of pipeline that will replace the inefficient
septic tank system currently used by most properties in
the governorate. By end-2011 it was estimated that 20
per cent of properties within the Muscat governorate had
been connected to the new system.
Despite some criticism that Oman has been slow to
develop alternative means of power generation,
renewables are increasingly being looked to as the
future source of Oman’s energy provision. According to
the first renewable energy country attractiveness
indices of 2012, published by professional service firm
Ernst and Young, Oman’s solar resources rank among the
highest in the world, and have the potential to supply a
sizeable share of Oman’s current energy demand. Indeed,
the government aims to produce 10 per cent of its energy
needs from renewable energy resources by 2020.
This potential looks set to offer huge opportunities for
not only private-sector – but also international –
involvement. In January it was announced that German
private investment firm Middle East Best Select (MEBS),
and Terra Nex Financial Engineering of Switzerland, are
looking to fund a project valued at over $2bn to build a
400-megawatt solar panel facility in Oman, which could
be utilised by power stations. A further $600mn of
project investment is being provided by direct equity
capital, as well as loans from European financiers,
mostly from Germany. MEBS and Terra Nex are looking to
secure a quantity of the generated power for export.
Going forward, the issue of developing an expanded and
sustainable water and power sector is likely to gain
increasing prominence on the Omani agenda. In May, the
PAEW will host the Second Annual Oman Power and Water
Summit in Muscat, where high-profile infrastructure and
investment opportunities will be presented, as well as
the latest sector innovations and strategies.
Specifically, this will represent a key opportunity for
foreign companies to share knowledge and become involved
in upcoming projects in Omani utilities.
By taking a proactive approach and finding solutions to
an environmental challenge, the Sultanate is ensuring
its long-term economic progress. Such action now will
not only guarantee environmental stability, but is also
set to be highly lucrative for Oman in the future.
May - 2013
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