The Government of Oman has announced successful closure of a deal to construct phase I of the Barka power and desalination project with AES Barka, a local subsidiary of the US based AES Corp in a joint venture with Multitech LLC.
Barka Phase I involves design, financing, construction ownership and operation of a 427 MW combined cycle power plant and 3800 cubic metre/h water desalination plant at Barka. The station will be fired with natural gas.
The scheme is the third independent power project in Oman and second since the government launched it electricity and water privatization programme in June 1999. The request for proposals was issued on 25 April 2000, and three bids were received by 4 September. AES was appointed preferred bidder on 17 October.
Under the terms of the build-own-operate deal, AES will be granted a 25 year licence to generate at the plant. The initial power and water purchase agreement is for 15 years, as is the natural gas supply agreement. However the plant is expected to be able to continue to operate commercially beyond the first 15 years.
The project company is also obliged to offer at least 35 per cent of the shares in the project to the public of Oman on the Muscat Securities Market within four years of incorporation. Under a further commitment, the operators must train and employ Omani nationals so that at the end of the fifteenth year of operation, 75 per cent of the employees are Omani citizens.
Oman is planning to corporatise its Ministry of Electricity and Water and to establish an electricity market with separation of generation, transmission and distribution and supply, supervised by an independent regulator. Existing government-owned assets will be progressively privatised from 2001 onwards.
