Foreign firms eye Oman power plant plans

Foreign and local companies including General Electric Co, Mitsubishi Corp and AES Corp are interested in bidding for two power plant projects in Oman due to be tendered in December as the Gulf Arab state looks to boost generation capacity.

In a statement this week, Oman's tender board also said it had set a Dec. 7 deadline to bid for the plants, which will provide power for projects ranging from petrochemicals to airports.

Urbanisation and years of growth have put Oman's existing grid under strain and prompted moves by authorities to recruit private sector investment alongside its own.

Bank Muscat, the projects advisor for the state-run Public Authority for Electricity and Water, said in a report to be distributed to prospective bidders that the government would sign a 15-year power purchase agreement with investors.

The build, operate and finance contracts would cover the Barka phase three and Sohar phase two power plant, where the government is planning new projects worth $12 billion in the industrial zone.

Other firms to have shown interest include Suez Tractebel, part of France's Suez Energy International, Hyundai Heavy Industries, Galfar Engineering and Siemens AG.

The government plans to announce the preferred bidders by February 2010 with both plants scheduled to be operational by May 15 2012, the report added.

Gulf Arab oil exporters have amassed enormous surpluses from an oil price rally that started in 2002 and enabled them to invest in infrastructure at home, including power, healthcare and transportation.

Non-OPEC oil producer Oman is investing heavily in electricity projects to meet demand which is growing by about 15 percent annually. Consumption up to June 2009 reached 3,600 megawatts, 16 percent more than the same period in 2008. (Reuters)

So far the private sector operates power plants with a total capacity of 2,500 megawatts. The total cost of building these plants cost the private sector some 700 million rials ($1.8bn). (Reuters)