The following is a brief presentation of sectors included in the privatization program excluding companies and establishments with government shareholding and the steps taken by the government for implementation in accordance with the Sixth Five Years Plan, as on 12 th December 2004.

Privatization of electricity and water sector:
 

Considering the importance of electricity and water sector which is the largest and the most important sector affecting the policies of privatization, the government has set up a strategy for privatizing this sector. The strategy's aim is to restructure the electricity and water sector in Oman through separating the processes of generation, transmission and distribution in addition to the establishment of an effective organization framework of an independent status in taking decisions , supervision and control of the sector.
 

The strategy of privatization of this sector was approved by the Council of Ministers on 21.12.1999.
 

The following are some characteristics of the strategy of restructuring and privatization of electricity and the related water sector:

1. Separation between the facilities of generation, transmission and distribution.

2.Separation between the activities of electricity and water desalination and assigning them to government companies as follows:

• Three companies for electricity generation and water desalination (Rusail, Ghobra, Wadieljizi). Three companies for distribution and supply. One company for power transmission and control stations.

• A company to purchase electricity and water and will be owned by the government for some time – Oman Power and Water Procurement Company (PWP).

  This company will be specialized in making estimates of demand for water and electricity, planning for the volume of supply needed, saving the power generated and entering into contracts with the producers of electricity and water.

• A government company engaged in all the activities of generation, transmission and distribution to areas which are not connected with the national electricity network.

• A government holding company to supervise the above -mentioned companies.

3.Establishing an independent authority to regulate the electricity and water sector.

4. Royal Decree no. 78/2004 was issued on 20.7.2004 to regulate and privatize the electricity and the related water serctor in the manner that conform to the nature of such investment and to organize the relationship between the parties concerned of this sector.The attached figure shows the new structure of this sector in Oman and which is being implemented in the light of the new sector's law.

PWP has initiated procedures to carry out the implementation of the second phase of Barka'a power and Water desalination Plant through an Independent Water and Power Project (IWPP). In this respect, PWP has appointed a consortium of financial, legal and technical advisors led by AMB Amro Bank to provide advisory services through a tender dated 5.9.2004.

Strategy for privatization of exiting assets :

•  The aim of privatization strategy, in the first stages, is to sell the major part of the existing assets to a strategic investor(65%).TheGovernment's share will later be offered to be subscribed by citizens through Muscat Securities Market.

•  Strategic investors will be allowed to own two or three companies for power generation, provided that the share of each investor shall not exceed the share decided by the regulatory authority as per the licenses granted to them. No company shall be allowed to own both the generation companies and the transmission and distribution companies.

New enterprises in the electricity sector(1996-2001):

There are new projects in this sector which were privatized through a BOOT and/or BOO modes, including:

1. Manah Power Project:

In the year 1996, the Manah project was implemented as the first experiment of privatization in the electricity sector in Oman and was developed as BOOT project (i.e. Build, Operate, Own and Transfer of ownership to the government) A private sector company , United Power Company, was awarded the concession for 20 years. Its production capacity was 90 megawatt and increased to 280 megawatt in 2000 after an expansion project was initiated in 1999.

2.Salalah Electricity Sytem:

The successful implementation of the expansion of Manah Power project was a drive for privatization of other enterprises in this sector. On 17.3.2001. a concession was granted to the private sector to invest in Salalah Electricity System (Governorate of Dhofar). The project involved the establishment of a gas turbine station producing 240 megawatt of power, development, operation and maintenance of the existing station and the installation of power transmission and distribution cables.

 

Salalah Power project is considered as the first one to be assigned to the private sector in the Middle East. The project includes power generation, transmission ,distribution and collection. The project uses the model of Build, Operate and Own and Transfer of ownership to the government ( BOOT ) after 20 years following the date of commercial operation. The project's agreements involve the offering of 35% of the shares of Dhofar Power Company for subscription through Muscat Securities Market within a period of 4 years from the date of establishment of the company. The project started commercial operation in May 2003.

3. Al Kamil Power Project

On 17 th July 2000, agreements for the Al Kamil electricity project were signed between the government and Al Kamil Power company. The project's tender was awarded to International Power Company on the basis of (BOO).
 

This project involves the establishment, operation and acquisition of a central power station at Al Kamil in the eastern region. The Al Kamil Power Plant uses natural gas to produce approximately 270 megawatt of electricity power. The government will buy electricity power from the project's company for a period of 15 years from the year 2003 being the date of commercial operation of the project. On 27 th Nov. 2004 , 35% of the company's shares were offered to the public for subscription.

4.Barka Power and Desalination Station Project:

On 26.11.2000, agreements for the first stage of this project were signed between the government and AES Barka'a Company. The private sector will finance, establish, operate and acquire this project on (BOO) basis. The project includes a central station for power generation and water desalination using natural gas to produce, daily around 427 megawatt of electricity and 20 million gallon of water. 35% of the company' shares were offered for public subscription.

5.Sohar Power and Desalination Station Project:

This project was executed on a (BOO) basis i.e. the establishment, acquisition and operation. It was established by Sohar Power Company S.A.O.C which is formed of investors including Swiss Tractipal 50%, National Trading Company 10%, Sojex-Oman 10%, Ministry of Defense Pension Fund 10%, W J Towell 10% and Zubair Enterprises 10%. The total production capacity is 585 megawatt of electricity and 33million gallons of desalinated water. The project's agreement provides for the sale of 35% of the shares through public subscription within 4 years from the date establishment of the company.

6.Water Desalination Plant at Sur

The Ministry of National Economy has been assigned the responsibility to initiate the procedures necessary for offering the desalination Project, decided to be established in Sur Wilayat, as an Independent Water Project to be developed by the private sector and on the same basis adopted for the power and desalination projects executed in Oman.

 

On 25 th December 2004, a consortium of Financial Advisors consisting of Bank Muscat and SBICAPS of India were awarded the advisory project for the IWP at Sur through a a tender announced on 06.09.04. for the Independent Water Project at Sur. . The selection of the Independent Water Producer, through an International Competitive bidding process is expected to be completed by August 2005. 

7.The Second Phase of Barka Power and Desalination Plant: 

The Ministry of National Economy was ssigned to initiate the procedures for studying the execution of the second phases of Barka Power & Water Desalination Plant.Study will include the production capacity of electricity and water and the amounts needed to finance the electricity and water networks.

 

This will also include the costs distribution of water to the intrior wilayats On 5.9.2004 consultancy and legal services' tender was announced to international tenderers.Analysation of tenders is in progress.

Privatization projects in other sectors:

Oman Communications Company :

•  On 18.7.1999, Royal Decree no 46/99 was issued to transform the General Telecommunications Organization into a closed joint stock company owned by the government in a transitional stage to eventual privatization.

•  Measures are now being taken to privatize approximately 9% of the shares to be subscribed by the pension funds and 21% to be offered for subscription through Muscat Securities Market for the Omani populace.

•  The Law regulating the communications sector was issued by Royal Decree no.30/2002. Telecommunications Regulatory Authority was instituted in August 2002 and was assigned the responsibility to issue licenses to operating firms and ensure competition in this sector. Executive Regulations to this Law iare being prepared. 

Sea Ports: 

a) Salalah : 

•  The government has assigned the management of Salalah Port to Salalah Port Services Company in 1997. This company has partners from the private sector and a strategic partner ( Mearsk International).

•  A commercial company was established by the government to execute the Free Zone project which will benefit from the advanced services of Salalah port and Salalah Airport. This project is expected to attract several companies and industries, considering the short distance between Oman and the Asian markets in addition to established infrastructure and the privileges offered by the government to the Free Zone companies.

B)Sohar :

•  On 23.7.2000, A closed joint stock company was established with shares of the government and the Municipality of Roterdam of the Netherlands to manage Sohar Port and the adjacent industrial estate. Works on this project are now in progress.

•  This port will support industries such as aluminum smelter, fertilizers, petrochemical industries, Sohar refinery and several medium size industries using natural gas. The management of the industrial estate will be under supervision the Port's operating company in order to facilitate the processes of marketing and cooperation in the Industrial Area development.

B)Sultan Qaboos Port :

Sultan Qaboos Port is managed by the Ports Services Company which was established by Royal Decree no.46/76 to replace Oman Shore Services Company. An agreement was signed between the Company and the then, Ministry of Transportation and Communications. Accordingly, the company was assigned the responsibility to manage and operate this port for 30 years since the year 1976 and up to 2006. 35% of the Company's share capital is owned by the government and 64.5% owned by the private sector.