Ghubrah IWP — Oman’s first ‘Special Nature’ water project

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Ghubrah IWP — Oman’s first ‘Special Nature’ water project

Muscat City Desalination Company's new independent water project (IWP), under construction at Al Ghubrah in the capital city, has been named the Sultanate's first ‘Desalination Facility of Special Nature' in line with a recently enacted amendment to the Sector Law. The ‘Special Nature' tag allows for water desalination projects that may fall outside the scope of the Sector Law, to be procured by Oman Power and Water Procurement Company (OPWP), the country's sole procurer of new capacity as well as the sole off-taker of all electricity and water output. "Under the changes to the Sector law, (the Ghubrah IWP) is the first to be classified as a project of ‘Special Nature' and will be fully regulated as a licensed entity by the Authority of Electricity Regulation (AER), Oman," OPWP said in its newly released Annual Report.

The Law for the Regulation and Privatisation of the Electricity and Related Water Sector promulgated by Royal Decree 78/04 was amended pursuant to Royal Decree 47/2013 to bring within its ambit certain water desalination projects that are neither combined with nor co-located with power generation capacity. The amendment authorises the Chairman of the Public Authority for Electricity and Water (PAEW) to decide whether new water desalination facilities shall be designated a ‘Special Nature' project, and thereby bring it within the scope of the Sector Law. Such projects hitherto fell outside the purview of the Sector Law. Once designated a ‘Special Nature' project, OPWP is then mandated to procure the desalination project via a competitive process outlined in the Sector law. The state-owned procurer is also required to enter into a contract with the project developer to offtake the plant's desalinated water output under a long-term Water Purchase Agreement.

Further, as with all projects that are procured under the Sector Law, ‘Special Nature' ventures shall be regulated by the Authority for Electricity Regulation, Oman. Importantly, the ‘Special Nature' provision is expected to be invoked whenever there is a requirement for new water desalination capacity that does not strictly fall within the ambit of the Sector Law. This includes capacity that has fallen out of contract or whose contract has been terminated. Existing desalination plants that are neither connected nor co-located with power generation capacity on the same site will also be brought under the purview of the Sector Law upon their designation as projects of ‘Special Nature' by the PAEW. In such cases, the Chairman of the PAEW is required to notify these projects of their revised status, thus giving them a year's notice to rectify their status and obtain a specific licence for Special Nature projects from the regulator.

The Ghubrah IWP, which is Oman's second largest independent water project after the Sultanate's maiden IWP at Sur, is due to come into operation before the end of this year. Valued at around $300 million, the Ghubrah project is being developed by Muscat City Desalination Company, a partnership of Malakoff International Limited, Sumitomo Corporation of Japan and Cadagua SA of Spain. When operational, the IWP will have a capacity to produce 42 million imperial gallons of desalinated water per day and will play a pivotal role in augmenting potable water supply to the capital city and other areas served by the interconnected water grid. The IWP is under construction adjacent to the current water and power plant (IWPP) located at Al Ghubrah Power and Desalination Plant.

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