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Oman Business News

Oman power subsidy jumps 23pc to RO 563m in 2018

The Omani government’s allocation of subsidy to the electricity sector soared 23 per cent to RO 536.29 million in 2018, Nama Group — the holding company of state-owned power sector subsidiaries — announced here yesterday.

Nama Group CEO Omar al Wahaibi attributed to uptick to a combination of factors, notably an increase in the number of electricity units sold during the year, as well as the strong growth in investment in power transmission and distribution infrastructure.

“Subsidy is a reflection of all of the investment we have in the system, and the more we invest in the system, the more it will be reflected in the subsidy. Given the fact that the customer pays a fixed tariff — and tariffs have not changed in a very long time — and as we keep investing in infrastructure — somebody has to be pay for all of this investment,” the CEO stated during a media briefing hosted by Nama Holding to announce the sector’s overall performance in 2018.

Government subsidy to the sector, in contrast, totalled around RO 456 million in 2017, which was itself lower by 8.3 per cent from the previous year’s tally of RO 497 million.

According to figures released by Nama Group, Mazoon Electricity accounted for the largest share of the subsidy (35.12 per cent), followed by Muscat Electricity (22.69 per cent), Rural Areas Electricity Company [Tanweer] (18.20 per cent), Majan Electricity (16.11 per cent) and Dhofar Power (7.88 per cent).

Significantly, government subsidy accounted for a hefty 43.66 per cent share of total revenues of RO 1.290 billion earned by Nama Group in 2018. Actual revenues earned from customers represented 42.95 per cent of the total. Desalinated water sold to the Public Authority for Water (PAW) contributed a 10.30 per cent share.

Aiding the uptick in revenues last year was a 3.98 per cent increase in the sales of electricity units, which climbed to 33,562 gigawatt-hours (GWH) in 2018, up from 32,277 GWH in 2017. A sizeable chunk (37.13 per cent) of these units was sold to customers who are subject to Cost Reflective Tariffs (CRT), which came into force from January 1, 2017. An estimated 10,000 government, commercial and industrial customers across the Sultanate, identified by electricity authorities as “large” power consumers, are currently subject CRT.

Total capital expenditure in the transmission and distribution networks owned and operated by Nama Group subsidiaries amounted to RO 378 million in 2018, as against an investment of RO 468.5 million made in 2017. Part of the funding came from the Lamar Financing Project — an initiative that has helped raise around RO 1.75 billion in funding for Nama Group projects over the 2015-2018 timeframe. During 2018, Tanweer announced the completion of an RO 154 million financing programme via Lamar.
  • Oman
  • Electricity Sector
  • Nama Group
  • Power Sector Subsidiaries
  • Investment
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