Muscat: The planned privatisation of the state-owned Muscat Electricity Distribution Company (MEDC) is being reconsidered, officials at the parent Nama Group said.
The Initial Public Offering (IPO) of MEDC was expected to be announced by end of this month; however, owing to challenging economic conditions, it has been stalled and Nama Holding is working on future plans that may include bringing on a strategic partner aboard.
“Due to the regional economic conditions, the privatisation steering committee will be revising the privatisation mode and model to achieve a long-term and market proof de-investment strategy,” Omar Al Wahaibi, chief executive officer of Nama Holding Group, said during the annual press conference of company.
“We are studying to get a strategic or technical partner with us instead of an IPO, but we will announce at a later stage what our decision is. It may be a strategic partner or some other method of privatisation, but there is nothing definitive now. The main reason for this is the current economic condition and the appetite for an IPO at present.”
Earlier, announcements were made on the Omani government’s disinvestment of 49 per cent stake in MEDC by the first half of this year and variables, such as size of issue and offer price were being discussed.
The objectives of MEDC’s privatisation is to promote individual and institutional participation to aid the holding company further play an active role in developing the backbone infrastructure for further economic development. The government’s privatisation of MEDC was expected to also enhance and develop the capital market in Oman, in addition to increasing local investments of domestic investors.
Strong financial results
Nama group announced their annual results at a press conference on Tuesday that showed strong growth in the electricity distribution sector.
Revenues increased by 2 per cent to OMR1.121 billion on the back of rising demand, despite challenging economic conditions.
The number of customers reached 1,074,608 in 2016, which is an increase of 7 per cent compared with 2015. The units sold to customers rose 5 per cent to 30,254 Gwh. Nama Group has also invested OMR448 million in electricity distribution and transmission networks, compared with OMR394 million in 2015.
“The investment also includes provisions to develop services to consumers using technology. We are using technology like automated meters that reduce cost for distributors and bill consumers more accurately. We will expand on these meters this year. Prepaid meters are also going to be rolled out around the country. Bills are now being delivered via emails. All of these are investments that are likely to help consumers in a more systematic way in a cost efficient manner,” he added.