BEST INTERNATIONAL PRACTICES

Oman 2020 | SUSTAINABILITY | B2B

An increase in water and power demand in Oman is pushing the government and industry to reorganize the market and use technology to create greener ways to meet the increasing demand.

Ahmed Al Subhi
AHMED AL SUBHI
Managing Director
Acwa Power Oman
Antonio Olivas
ANTONIO OLIVAS
Managing Director
Aqualia – Oman

Where does the power generation sector in Oman currently stand in terms of demand and supply?
AHMED AL SUBHI Although Oman's power and water sector has great growth potential, current demand has drastically fallen in response to the slowdown in the economy. This has given the government the opportunity to develop an ambitious plan to replace conventional power with renewables. By 2030, Oman needs to secure 30% of its installed capacity from renewables as part of the government's diversity mix. The government will make the necessary changes depending on the need to secure competitive rates or reduce risk. The Omani government has launched the spot market, which is a step toward the merchant market, highlighting a transition strategy that will eventually liberalize the industry and reduce the subsidy burden on the government.

What strategy did you adopt to enter Oman, and what was the driver behind this decision?
ANTONIO OLIVAS In 2018, Aqualia and Majis Industrial Services entered into a strategic JV, Oman Sustainable Water Services (OSWS), to capture value across the entire water supply cycle, with each player owning 49% and 51% of the shares, respectively. As a global player with expertise in all aspects of the water supply cycle, we valued the deep local knowledge of the Majis team. The goal is to start from Sohar Port and expand organically in the Sultanate, tackling both industrial and residential sites. We are working to be one of the most customer-centric companies in Oman. To get there, we are committed to hiring exceptionally talented, bright, and driven people. Development is always linked to skills, and a young work force is the most powerful tool a country has. In this regard, our involvement with local talent is one of our main concerns.

What role will technology play in determining the path Oman will undertake in the medium term in both power and water?
AAS The biggest impact of technology will be felt in replacing the combined cycle natural gas plants. Solar plants using concentrated solar power (CSP) is a proven technology and a positive solution moving forward. Their scalability depends on how fast the government pushes for implementation, since their price has drastically changed over the last 10 years, from being 10 times the cost of conventional power to less than 2% today. Recent technological shifts have also forced many utilities to consider highly efficient coal-fired power plants. Their environmentally friendly design has made this option valuable, as cost has become competitive with diversified energy solutions. Meanwhile, desalination is also driven by technology. Most GCC governments, and Oman in particular, have decided to use reverse osmosis because it is cheaper compared to multi-stage-flash distillation (MSF). As such, the key to win tenders is bringing new technologies and adopting innovative models to desalination processes. At times, it is about using organic fiber membrane, or even combining different technologies, especially at the early stage, to reduce the energy and environmental footprint.

AO The players in the Omani water industry are well-defined and fully engaged, but there will be considerable pressure around water access in the coming years, with a huge potential to bring efficient solutions in operations and management. Market fragmentation allows the government to explore options that let it concentrate operations in a way that fixed costs are shared. At the same time, technology allows for those efficiencies to be created on different levels. The water management industry in Oman is under a restructuring process, and there are many different public entities like the Oman Power and Water Procurement Company (OPWP), Diam, and Haya Water that are playing and will play an important role in the future of Oman's water sector. Efficiency improvement in the water distribution system will impact water production and treatment, so construction plans of new reverse osmosis plants and treatment plants could vary. There must be total alignment to work together to accomplish the targets. There are many desalination plants projects ongoing in Oman. It is a challenging and competitive market because it requires technical and financial capabilities from private companies to guarantee water supply for Oman's increasing population. This increase in water demand must be covered by new projects and improvement in the other areas of management including distribution, treatment, and reutilization.