Key Project Agreements

The Power & Water Purchase Agreement

The Power & Water Purchase Agreement (PWPA) sets out the terms of generation and supply of power and water to the Salalah Grid and the Water Transmission System respectively for 15 years ending on April 3, 2027. The PWPA was signed with the sole procurer of power and water in the Sultanate, Oman Power & Water Company SAOC, a wholly-owned subsidiary of the Government of Oman. Under the terms of the PWPA, the Sembcorp Salalah has the right and obligation to generate electricity and water under a take-or-pay commercial arrangement. The company was granted a generation licence by the Authority for Electricity Regulation, a state regulatory body established under the Sector Law. Ownership of the Independent Water and Power Plant will remain with Sembcorp Salalah after the PWPA ends in 2027.

The Natural Gas Sales Agreement

The Natural Gas Sales Agreement (NGSA) with the Ministry of Oil and Gas (MOG) provides for the purchase of natural gas from MOG for the period of 15 years at a pre-determined price. The NGSA is co-terminus with the Power & Water Purchase Agreement (PWPA) and sets out the terms of the purchase of this gas from MOG under a take-and-pay arrangement. In accordance with the NGSA, natural gas will be supplied up to the agreed gas delivery point of the plant. The fuel charge element of the Power & Water Purchase Agreement (PWPA) allows a full pass-through of the gas cost to the extent that electricity is generated within the plant efficiency as contracted. In accordance with the NGSA, Sembcorp Salalah is obligated to pay for the gas metered by the Gas Settlement Meters.

The Usufruct Agreement

The Usufruct Agreement with the Ministry of Housing grants usufruct rights over the project site for 25 years. The company pays an annual consideration of OMR 1,000. This agreement may be renewed for another term of 25 years subject to an increase of the annual consideration to the Omani Rial equivalent of US$500,000.

The Operation & Maintenance Agreement

The Operation & Maintenance Agreement (OMA) is entered with Sembcorp Salalah O&M Services Company LLC, a company incorporated in the Sultanate of Oman, for the operations and maintenance of the Salalah Independent Water and Power Plant. The agreement is valid for a period of 15 years from Scheduled Commercial Operation Date for an agreed pre-determined Operator Fee. The OMA also includes management of the Contractual Service Agreement entered into between Sembcorp Salalah and General Electric for the maintenance of the gas turbines.

The Electrical Connection Agreement

The Electrical Connection Agreement (ECA) is entered with Dhofar Power Company, a Government subsidiary for a 25-year initial term. It sets out the contractual and operating framework between the Grid Operator and the Grid System user (like Sembcorp Salalah). The ECA has an initial term of 25 years and continues in force thereafter until termination by either contracted party.

The Water Connection Agreement

The Water Connection Agreement (WCA) is entered with the Government represented by the Office of the Minister of State and Governor of Dhofar. It sets out the agreed terms & conditions on the connection of the System User (like Sembcorp Salalah) to the Water Transmission System. The WCA has an initial term of 25 years and continues in force thereafter until termination by either contracted party.

 

Useful links

Authority for Electricity Regulation
Dhofar Power Company
Ministry of Oil and Gas
Ministry of Housing
Oman Power & Water Company SAOC
Office of the Minister of State and Governor of Dhofar