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
wastewater companies as part of its commitment to liberalise the sector.
The government is placing greater emphasis on water conservation. A new
‘Switch To Save’ campaign
was launched in May in which, over
the three summer peak-demand months, consumers will be
encouraged to take
showers rather than baths, rationalise dishwasher usage and take other
household
measures to conserve resources.
Another recent threat to the
water system has come from environmental degradation. The encroachment
of
toxic algae on Oman’s coast has on isolated occasions forced the
suspension of desalination plants’
sweater intake systems. This
remains a potent threat.
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, and
Omani and Gulf Co-operation Council (GCC)
investors, which 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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