United Power awaits decision of regulatory authorities on future of the company

Muscat: United Power, the first independent power company in Oman set up under the build, own, operate and transfer (BOOT) scheme, is awaiting the outcome of a study undertaken by the regulatory authorities, which will determine whether it can continue operations beyond 2020.
The company will continue to run both, phase one and two units, till 2020 at which time the plant assets will be handed over to the government, according to the management discussions and analysis report of the United Power Company. The company has a power generation capacity of 260-270 megawatt at Manah.
“As per the power purchase agreement’s conditions, the company has to hand over the plant to the government in April 2020 for a value of OMR1,”ZoherKarachiwala, chief executive officer of the United Power Company, told the Times of Oman. Now, the Oman Power and Water Procurement Company has to take a decision about the future of the Manah power plant. The authorities may float a tender for building another plant there. However, considering the international practice, a plant like the one in Manahcan run for many more years.
Meanwhile, the company’s transmission and distribution network was transferred to the Oman Electricity Transmission Company (OETC) and the Mazoon Electricity Company (MEC)on December 1, 2016. While transmission assets were transferred to the OETC,the MEC received distribution assets.
Karachiwala said when the company was established, it set up not only a power generation plant, but also transmission lines (and sub-stations) leading to five designated locations. The life time of the transmission lines was 20 years, which expired in 2016. Also, the sector law stipulates that a power company cannot generate as well as distribute power.
The company’s total capital investment was OMR34 million for building two power plants and related facilities. It has already paid back all its equity capital, except OMR2 million, to the existing shareholders. Also, the company has been paying dividends every year. United Power has to retain OMR2 million paid up capital since all SAOG companies need a minimum capital of OMR2 million.
The OMR2 million equity capital will be paid back to the shareholders after the company hands over its power generation assets to the government in April 2020.
United Power achieved a net profit of OMR942,000 for 2016, against OMR1.07 million posted for the previous year. The company’s revenue stood lower at OMR10.03 million in 2016, against OMR10.93 million for 2015.
However, the basic earnings per share were higher at 471 baisas by end-2016, against 286 baisas for the same period of the previous year.