Abstract
Oman’s limited water resources have led the country to focus on the
development of desalinated water,
and it is the undoubted pioneer of
independent power and water projects (IWPPs) in the region, with five
major IWPPs on its books.
Agriculture accounts for 93% of water use in
Oman, however, there are no plans to divert water away
from a relatively
unproductive resource. Instead, the sultanate has focused on desalination of
seawater to
boost supplies to fast growing urban areas.
The government
is prepared to prioritise water projects within the national budget. Muscat
has proposed
US$2bn in investment in the water sector over the 2006-2010
period as part of its seventh development
plan and aims to privatise two
waste water companies as part of its commitment to liberalise the sector.
According to the state-owned Oman Power & Water Procurement Company' s (OPWP),
demand for
desalinated water will rise from 22.5bn gallons a year in 2008
to 53.5bn in 2015. According to OPWP,
Oman requires an extra 31mn gallons
per day of desalination capacity.
The business climate in Oman has been
favourable for foreign investors. Major developers of IWPPs
include Suez
Energy, International Power, AES, b and Omani and Gulf Co-operation Council
(GCC)
investors, who have all been drawn in by an open, transparent and
investor friendly business environment.
The government’s view is
that the market is not yet ready for a sale of the state’s interest in
the OPWP.
Neither does it anticipate moves to fully deregulate the sector
and remove OPWP’s monopoly on the sale
of water. Though some
customers would benefit from the implementation of this measure, the
government argues it would imply a significant change to the risk allocation
of existing contracts for
power and water purchase agreements.
OPWP
anticipates desalinated water demand to grow from around 102mn cubic metres
per day (m3/d) in
2008 to 234mn m3/d by 2015, which would represent an
annual demand increment of 13% a year. This
increase reflects the
sultanate’s policy of moving away from groundwater reliance, as well as
population
increases and industrial developments.
Total desalination
capacity in 2009 will stand at 623,000 m3/d, and this is unlikely to
increase
significantly for at least three years until the next IWPP comes
on line.
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