THE SPARK PROVIDES

Oman 2014 | ENERGY & UTILITIES | INTERVIEW

TBY talks to Ahmed Al Subhi, CEO of ACWA Power Barka, on the demand for water, expanding production, and the government's privatization program.

Ahmed Al Subhi
BIOGRAPHY
Ahmed Al Subhi has been the CEO of ACWA Power Barka since February 2013, after gaining 25 years’ experience in the power and desalination sector. Prior to joining ACWA Power, he worked with The Wave in Muscat as the Senior Project Manager, and was a key member of the initial AES team responsible for constructing ACWA Power Barka. Ahmed obtained his Master’s Degree in Business Administration from the University of Strathclyde, Glasgow, and his Bachelor of Engineering in Electrical Engineering from Liverpool John Moors University, UK.

What is the history of ACWA Power Barka's operations in Oman?

Our plant's capacity is 427 MW and it produces 20 million gallons of potable water per day. Our contract is for 15 years, and the term will end in April 2018. The power generated and water produced by ACWA Power Barka is delivered to the government network for further distribution across the nation as required. ACWA Power is very ambitious and signed an extension of the existing water plant with the government in 2013. Due to the shortage of water in Oman, we offered our assistance to build a reverse osmosis desalination plant with a capacity of 10 million gallons per day, which is under construction and will be completed in 4Q2013. This project is innovative because we are using the synergies of our existing plant, which includes the provision of power to this new plant. With the construction of this new extension to the plant, the company will have implemented a hybrid solution of both multi-stage flash and reverse osmosis desalination technology, which is the first of its kind in the world. No one has ever constructed hybrid plants on such a large scale, so we have added value to the company and the nation. The capacity of the new expansion project is 10 million gallons, bringing our total capacity to 30 million gallons per day. This is expected to complement the growth in demand in Oman for water, which has risen drastically since 2012 at between 12% and 16%.

What is the reason for the dramatic rise in demand for water?

The rapid growth of the economy and the budget, which rose by 8% in 2013, has driven demand in Oman. This activity has also sparked the development of new projects in domestic housing, commercial loads, and some industrial loads as well. These are the two main reasons behind the rapid growth in demand for water and electricity.

Is there room to expand production?

We are contractually bound and cannot change our production levels; however, we have the ability to produce more. During 2012, we produced 15 MW of extra energy using the excess power from our gas turbines. In the future, we will be utilizing this excess power for the expansion project, which will assist the government in meeting water demand. The water expansion is a very important development project. We have saved a large amount of money by utilizing the reject water from our existing desalination units, meaning we have avoided building a huge intake system to take water from the sea to the plant. In fact, we have saved almost 30% more than any other desalination plant and we offered the government a very attractive tariff, which is also adding value. We are very ambitious; we want to expand ACWA Power and the company will be participating in future government projects.

“ Many companies are getting power from gas stations, which is much cheaper than solar energy. "

Could you tell us more about your relationship with the rest of ACWA Power?

ACWA Power owns 58% of our business. As the major shareholders, most of our staff here are from ACWA, and our main focus is on its activities. I am both the ACWA Business Development Manager and the Country Manager for ACWA Power; our ultimate goal is to provide added value to our shareholders and our parent company by coming up with such innovative ideas to assist the government to meet both vital commodities rapid demand and add value to our business.

Will you introduce Oman to the renewable energy technology ACWA has developed?

Yes, of course. Our medium-term aim at ACWA Power is to produce 15% of the total power generated from renewables. Oman requires these kinds of initiatives, which will push other companies to install alternative energy units and enhance the competition between all developers aiming to bring the tariff price near to gas-fired plants. As this is not yet a mature industry, many companies are getting power from gas stations, which is much cheaper than solar energy. Solar energy costs about $30 to $40 per MW per hour. In that sense, we have been very competitive and have offered the Moroccan government $0.19 per kWh, which is very competitive. Gas and power in Oman are subsidized. We have explained to the government that if they lift the subsidy and calculate the entire cost of power produced, the savings would be huge with solar. Renewables are the way forward, and I am a strong believer in their use; I think it is a good technology and the increased expertise in recent years has brought costs down. However, there needs to be more competition in the country, each with supply targets that need to be met. The government certainly needs to come up with a strategy to target the use of this clean and sustainable energy.

What will network interconnection among the GCC do for Oman's energy security?

Interaction between the Gulf countries will create and strengthen the security of electricity, and we have experienced this already. For example, we suffered power shortages in 2012 when Oman imported power from the GCC grid. Interconnection is the ultimate solution to prevent internal disturbance in power and inhibit the collapse of the entire grid, while providing adequate system stability. During peak hours in the summer, if one of the power plants trips and there is a lack of spinning reserve, it is necessary to secure imports. Therefore, more cooperation would dramatically improve the security of the grid. The idea is to solidify electricity transfer by interconnecting the GCC network with the European network through Turkey, and then we can import and export power. There are some technical difficulties to overcome with regard to this strategy, but nevertheless, it would be an ideal situation. Interconnected power will definitely boost the security of the system.

How would you assess the success of the government's privatization program in the past decade?

Oman officially started privatization in 2005, when the transfer scheme was carried out. We have seen a major change in the power industry in terms of deregulation, and the entire sector has become more regulated. The administration has created more platforms for competition in terms of generating power and brought more regulation that encourages foreign investment. Another significant achievement was the reduction of major government expenditures. The situation is ideal because privatization helped the government meet the country's demand and supported the country's economy by reducing expenditures. Now, Oman is more efficient and benefits from more expertise in the country, particularly in terms of the foreign companies that follow their own standards, regulations, and targets, which is an added value. Overall, privatization has also benefited local investments, because as in ACWA Power Barka's case, we are required to provide the public with 35% of our shares. This benefits the nation, the people, small and medium investors, and even large investors. The government pension fund is one of our major investors.