AND THEN SOME

Oman 2016 | ENVIRONMENT & UTILITIES | FOCUS: SUPPLY SHORTFALL

Higher demand for electricity and water has put pressure on the Sultanate's utilities sector. New plants will solve part of the problem, but higher efficiency and careful management of subsidies require immediate attention.

Due to its location and largely arid landscape, Oman faces an increasingly high demand for water. In the meantime, the growth of industry and a population increase has led to an increase in electricity demand. New capacity is being built, but focus is also being placed on cutting out waste and utilizing renewables.

There are three issues in particular that need to be faced in order to support the development of the power and waters sectors in particular; efficiency, capacity, and subsidies. These issues are interlinked, and a holistic solution to increasing demands of both power and water will have to be provided.

First of all, it is absolutely necessary for both the authorities involved and the citizens of Oman to realize that, although increasing capacity and output is arguably necessary, it is critical that greater efficiency is implemented to increase cost effectiveness and reduce waste. It is clear that high subsidies, while providing financial cushioning for the people of Oman, has not led to an efficiency-aware culture throughout the country.
The CEO of Oman Power and Water Procurement Company (OPWP), Ahmed Bin Saleh Al Jahdhami, met with TBY to discuss these issues, and highlighted that his company's key responsibility was to promote better customer attitudes and discourage waste despite high subsidies.

“Subsidies do not encourage the right behaviour in terms of energy efficiency and conservation of resources, and if we do not manage this aspect well then the problems will increase. This is additional to the financial impact of wasted resources.”

Both elements of this are equally important. In a country with limited water resources, wastage of water is particularly dangerous. Similarly, a high demand for electricity, due primarily to inefficient air conditioner usage, as well as a growing industrial sector means that electricity waste is also highly damaging.
From a financial perspective, one only needs to look at Muscat at 2am in the morning to realize how much money the average household wastes on electricity. While prices are low, people will continue to waste electricity, but a gradual decrease in subsidies could enforce a culture of efficiency and thus save valuable financial resources.

Higher efficiency cannot entirely account for the country's ever increasing demand, and so there still needs to greater capacity in both sectors, a necessity that has been embraced in Oman. New Independent Power Plants (IPPs) have allowed the country to fulfill its electricity demand, while Independent Water Plants (IWPs) have grown the necessary water capacity. A new 400MW IPP is being established in Raysut alongside Dhofar Power Plant, in a joint venture between Acwa Power from Saudi Arabia and Mitsui from Japan. New IWPs are also being developed in Shinas, Samail, and possibly Duqm, according to Mr. Al Jahdhami, a demonstration of the efforts being made to provide the whole country with water.

Another important factor of the power sector in particular is the environment. Many power plants, such as the new IPP in Raysut, need to be gas powered. This is a critical issue because they not only use gas that could instead benefit industrial production, but they also contribute to national pollution. Furthermore, with high subsidies, the average amount of household and corporate electricity use and waste has been much higher, fuelling greater demand for electricity, and thus gas. The private sector is eager, therefore, to implement renewable solutions to reduce this, but pressure is on the government to facilitate. OPWP, for example, has introduced the idea of a large-scale 200MW power plant as a starting point, although the government is yet to ratify the plan. Additionally, Ahmed Al Subhi, CEO of Acwa Power Barka, pointed out that Acwa has 580MW of solar powered electricity in Morocco, evidence that its implementation in Oman is highly feasible.

When demand is high, decisions are often geared simply toward increasing capacity; in the case of Oman, the power and water sectors are more affected by a culture that takes these luxuries for granted due to long standing government generosity. With more focus on renewables and a gradual decrease in electricity and water subsidies, the major projects in the power and water sectors will not only fulfill Oman's ever-growing demand, but also push the country toward having more sustainable, and therefore investor-friendly, power and water sectors.