Highlights of the Electricity Sector Privatisation Law
The companies will be distributed as follows:
# Three companies for power production and water desalination. They will undertake the transformation of desalination plants at Al Ghubra, Rusayl and Wadi al Jizzi into closed joint stock companies owned by the government. The companies will be privatised at a later stage to work along with private sector-owned companies such as Manah, Barka, Al Kamil, Salalah and Sohar companies.
# One power transfer company whose job will be the transfer of power from production to distribution companies via a high-voltage network.
# Three distribution companies to supply power to three concession areas in northern Oman and collect revenues from those areas.
# A company to buy power and water to act as the main buyer of all the power and related desalinated water. It will also make projections on demand on electricity and desalinated water and make contracts with electricity and water producers.
# A rural electricity company to be responsible for serving consumers in areas outside the main grid like islands and remote villages. This company joins all three activities of power production, transfer and distribution.
* A holding company to undertake the holding of government stakes in the new companies. Accordingly, the practical responsibilities relevant to the electricity and water sector will shift from the Ministry of Housing, Electricity and Water to these companies as per the transfer procedure to be executed by the Ministry of National Economy and in implementation of the law which grants six months for the transfer of assets and related obligations. The six-month period is extendable by another three months.
* Also, a Muscat-based authority was established for the organisation of the electricity and related water sector. This "organisation authority" will work to improve the services rendered to consumers and supervise the companies operating in this sector. The privatisation stage will be carried out in accordance with a timeframe to be set by the government. The government shares will be floated in certain companies for local and foreign investors to allow the private sector to participate in sustainable development.
The electricity holding company will implement the government policies approved by the Council of Ministers regarding the privatisation of the electricity and water sector. The Organisation Authority has to help in the smooth operation of the privatisation programme. As per this law, a specific set of rules will apply to the electricity and water sector in question.
The electricity sector privatisation law guarantees the following:
1. That the government will remain responsible for a number of policies, including tariffs payable by the consumers, the timing of implementation of the privatisation programme, power linkage to neighbouring countries and any electricity-market-related changes.
2. Protection of the rights and interests of electricity consumers; the law obliges the companies concerned to consider the needs of ill and old-aged electricity consumers and to consider the status of consumers facing difficulties in paying electricity bills before disconnection of the service to them.
3. Pursuing the government's Omanisation policy.
4. Properly implementing asset transfer procedures when transferring related assets of the Ministry of Housing, Electricity and Water to the new companies, along with employees, contracts signed by the ministry with other parties and land rights.
5. Preserving the interests of local and foreign investors and stressing the Sultanate's stature as an investment centre.
6. Making sure that future development of the electricity sector will go in line with the laws prevailing in the Sultanate and the laws to be issued by the government.
Oman Observer 3rd August 2004
