Can you elaborate on the milestones reached since Rural Areas Electricity Company (RAECO) was established?
RAECO was established by the government to replace the activities carried out by the Electricity Ministry in 2005. It was decided that a more business-minded companies would be created, and RAECO is one of those companies. The objective of this company is to provide electricity to areas that are not connected to the main grid and also have a vertical integration license. The company now has 42 power plants, and all of them work with fossil fuels. The company is growing by around 23% every year, doubling its capacity every four years. We started with 180 MW and now we have reached more than 650 MW; we have 336 MW currently under construction, and that is due to demand increases and also the developments that are going on in different areas where we are. The company supplies electricity to all customers in three main governorates: Musandam, Wusta, which is part of Duqm, and Dhofar. We also have authorization to supply customers on the islands that belong to the country, as well as all the oil fields, where there are customers available. We have two sources of generation, one provided by ourselves to build power plants, and the second is to purchase power from Petroleum Development Oman (PDO). We have more than 18 connection points.
Driven by the rapid growth of the economy, the country's annual demand for power is expected to rise by as much as 11.4 % to over 9,000 MW by 2019. How does your company respond to changes in the market?
Over the last three years, the company also started to think about renewable energy as a solution to the high cost of the fossil fuels that we are using. Oman is one of the best locations for renewable energy; every day we generate more than 600 GW of power from the sun, and all the areas where this company operates are suitable to solar plants and some areas we also have studies on are good sites for wind plants. We have already signed a joint venture agreement for investment in a 60 MW wind energy farm that will be constructed by a UAE-based company, on the south side of the country; it will be connected to the main grid in the rural areas there, and we are expecting that plant to be ready by the end of 2016. We have also signed an independent power producer (IPP) agreement with a US company to produce power using a solar plant in the south of the country. There are 24 more projects currently in the study phase at this time, while Stage II is to build power plants or to connect existing power plants with a renewable energy plant in different locations where we are operating.
How much do you expect renewable energies to account for in the future?
As per the regulations, we received from the regulatory authority, we have to reach at least 25% of all our capacity with renewables, meaning more than 160 MW. The Sultanate of Oman is determined to stay clean and preserve the natural environment. We know that any industrial activity could notably affect the environment, and we are trying to reduce our impact. That is why one of the objectives is to use renewable energy to reduce the emissions from our plants.
What are the main challenges that you are facing when developing your operations?
The country has high growth and this requires a lot of investment. A lot of infrastructure needs to be built in areas all around the country, and growing alongside that is a challenge. There is also a lack of contractors capable of carrying out some of the work, but we are trying our best to promote development in that area through working as associates or partners with those contractors.