meed-logo

line1 line2 line3
SIGN IN / REGISTER

Oman expands grid connectivity

10 December 2023

Oman’s power and water sector has awarded an annual average of approximately $1.5bn-worth of contracts over the past 11 years – a relatively low value compared to the total awarded every year by some of its GCC neighbours.

However, 2023 can still be considered a good year for the sultanate, as contracts worth an estimated $1.2bn have been awarded.

This is an improvement on the performance of the previous two years, which saw very limited project activity within the sector, with contract awards valued at just $104m in 2021 and $244m in 2022.

Having adopted a policy to not procure further gas-fired thermal power plants, Oman awarded the contracts to develop its second and third utility-scale solar photovoltaic (PV) plants in early 2023.

The Manah 1 and 2 solar PV independent power projects (IPPs) each have a capacity of 500MW. Wadi Noor Solar Company, comprising France’s EDF Renewables and South Korea’s Korea Western Power Company (Kowepo), will deliver and maintain the Manah 1 solar IPP project for 20 years.

Another team, comprising Singapore’s Sembcorp Industries and China-headquartered Jinko Power Technology, will develop the Manah 2 IPP scheme. The country’s first utility-scale solar project, Ibri 2, became operational in 2021. 

Oman’s Ministry of Regional Municipalities & Water Resources also awarded a $108m contract for the construction of a flood protection dam in Wadi Ajay Gorge in Muscat in early 2023. The rest of the awarded contracts comprise water and power transmission pipeline projects across the sultanate.

Demand growth

Nama Power & Water Procurement Company (PWP), formerly Oman Power & Water Procurement Company (OPWP),  expects peak electricity demand for the main interconnected system (MIS), the sultanate’s main electricity grid, to grow by an average of 3.54 per cent annually from 2022 to 2029, reaching 8,350MW at the end of the forecast period.

Most of this growth is expected to occur in the near term, as the economy recovers from the effects of the Covid-19 pandemic, according to PWP’s most recent Seven-Year Statement, which covers the years 2023-29. It is also higher compared to the 2.5 per cent average annual peak demand growth rate seen between 2015 and 2022.

PWP’s low-case forecast scenario shows an average annual peak demand growth of 1.3 per cent, with the base growing from 6,628MW to just over 7,200MW. A high-case scenario, on the other hand, indicates an annual demand growth of 5.2 per cent, which can drive the demand to reach 9,430MW.

Annual peak demand growth in the smaller Dhofar grid is expected to average 5 per cent between 2022 and 2029.

The first phase of Oman’s North-South Interconnection project, known as Rabt, became operational in November. The 400-kilovolt (kV), 670-kilometre (km) project required an investment of about $966m.

The first phase of Oman’s North-South Interconnection project, known as Rabt, became operational in November

The project enables the MIS, serving the northern half of the Oman grid, to connect with Nihada in Al-Dhahirah Governorate and Duqm Special Economic Zone (SEZ) in Al-Wusta Governorate.

Al-Wusta offers an optimal location for solar and wind projects, which the country aims to develop as part of its green energy ambitions.

Also part of Rabt's first phase, the isolated networks of Petroleum Development Oman and the Rural Areas Electricity Company (Tanweer) in Duqm SEZ, have been interconnected.

A second phase is being planned for Rabt. To be launched later this year, it will comprise a 500km, 400kV transmission line from Duqm to Dhofar.

Water requirements

Peak water demand in the MIS is expected to increase by an average of 2 per cent annually between 2022 and 2029, while peak water demand in Dhofar is expected to grow by an average of 7 per cent a year.

To meet the expected demand rise in the MIS, several independent water projects are being developed or planned. These include the Barka 5 scheme, which has a capacity of 100,000 cubic metres a day (cm/d) and is expected to come online in 2024. Ghubrah 3, which has three times as much capacity, is expected to be operational two years later.

A third project, a replacement capacity for the Barka zone of about 102,000 cm/d, is also expected to be added in 2024.

Future projects

In addition to the second phase of Rabt, Oman is in the early procurement phase of several solar and wind projects, in line with meeting demand growth and replacing expiring contracted capacity.

The power and water purchase agreement for the gas-fired Barka 2 independent water and power facility, for instance, expires in 2024, while the contract for the Barka 3 IPP expires in 2028.

KPMG Lower Gulf, a subsidiary of the Netherlands-based consultancy company, has been selected to provide financial advisory services to Nama PWP for the Ibri 3 solar IPP, which will have a capacity of 500MW. Ibri 3, along with the planned 100MW Jalaan Bani Bul Ali wind power project, will cater to the MIS.

Another key scheme being planned to connect to the MIS is Oman’s first waste-to-energy plant in Barkah. When complete, the facility is expected to treat 4,500 tonnes of municipal waste a day, produce 130MW-150MW of energy, and reduce the carbon footprint of Oman's landfills by 1.3 million tonnes annually.

For the Duqm grid, a 100MW wind IPP is being planned, in addition to a potential concentrated solar power plant. These plants are expected to become operational in 2026 and 2028, respectively. A 100MW wind project is also being planned for Dhofar, although there has been no fixed target for when it is expected to become operational.

In May, it was also announced that Oman Electricity Transmission Company is planning a second link to the GCC grid. The planned 400kV power transmission link is scheduled to start operations in the first quarter of 2026.

Hydrogen hubs

There are major plans to develop green hydrogen hubs in Duqm and Dhofar, in line with Oman's ambition to produce up to 1.25 million tonnes a year of green hydrogen by 2030.

The proposed projects will integrate renewable energy plants that will supply power to the electrolyser plants, which split water into hydrogen and oxygen, as well as the other units of the facilities.    

The government has so far awarded land concessions to international consortiums looking to develop integrated green hydrogen and ammonia facilities in the country.

The programme will have a potentially significant impact in terms of Oman’s future gross renewable energy capacity growth, with some of the earliest announced projects requiring several gigawatts of wind and solar power.

However, since most of the planned projects include captive renewable energy power plants, they will not necessarily affect the Omani utility companies' future capacity procurement plans. 

On the other hand, water demand may be affected as the electrolysis plants require pure water to be split into hydrogen and oxygen.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11354723/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Read the May 2026 MEED Business Review

    30 April 2026

    Download / Subscribe / 14-day trial access

    The regional war – and resulting disruption to oil and gas shipping – has triggered a major global energy security shock that is likely to recalibrate long-term decisions on how energy is produced and consumed.

    The effective closure of the Strait of Hormuz is exposing the vulnerability of Middle East supply chains and pushing import-dependent countries to strengthen energy security by expanding domestic fossil fuels, speeding up nuclear projects, and investing in renewables and storage.

    At the same time, higher prices are encouraging producers unencumbered by reliance on the Strait to boost output.

    Like the oil shocks of the 1970s, the conflict is likely to have lasting effects, reshaping energy policies and partnerships and accelerating diversification away from existing arrangements. Read more here. 

    The conflict is also undermining the business case for Middle East liquefied natural gas (LNG) projects, as prices rise, demand drops and confidence in the reliability of the region’s suppliers is eroded. 

    May’s market focus is on the UAE, where disruption from the Iran war has challenged every assumption behind the country’s non-oil model.

    This edition also includes our industry report on Gulf capital markets, as well as analysis on the region’s initial public offering market.

    In the latest issue, we explore why regional banks are feeling the strain despite strong buffers; consider why force majeure offers no shield against construction breaches; examine the Public Investment Fund’s 2026-30 strategy and talk to Estelle Brachlianoff, CEO of water infrastructure operator Veolia.   

    We hope our valued subscribers enjoy the May 2026 issue of MEED Business Review. 

     

    Must-read sections in the May 2026 issue of MEED Business Review include:

    > AGENDA: War in the Middle East recalibrates global energy markets

    > REGIONAL LNG: War undermines business case for Middle East LNG

    INDUSTRY REPORT:
    Gulf capital markets
    > Damage avoidance frames debt issuance
    > Regional IPO market dries up amid war

    > INTERVIEW: Desalination holds steady amid tensions, says Veolia CEO

    > LEGAL: Force majeure will not cure pre-existing construction industry breaches  

    > BANKS: GCC banks to feel the strain despite strong buffers

    > PIF STRATEGY: Public Investment Fund approves 2026-30 strategy

    > UAE MARKET FOCUS: 
    > COMMENT: Conflict tests UAE diversification
    > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
    > BANKING: UAE banks ready to weather the storm
    > ATTACKS: UAE counts energy infrastructure costs
    > UPSTREAM: Adnoc builds long-term oil and gas production potential
    > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
    > POWER: Large-scale IPPs drive UAE power market
    > WATER: UAE water investment broadens beyond desalination
    > CONSTRUCTION: War casts shadow over UAE construction boom
    > TRANSPORT: UAE rail momentum grows as trade routes face strain
    > DATABANK: UAE GDP projection corrects on conflict

    > MEED COMMENTS: 
    >     War takes a rising toll on Kuwait’s oil sector
    > Libya budget approval could lead to surge in oil and gas projects
    > Masdar’s move abroad will not be the last
    > Saudi Landbridge finds its moment in Gulf turmoil

    > GULF PROJECTS INDEX: Gulf index plateaus despite ceasefire

    > MARCH 2026 CONTRACTS: Middle East contract awards

    > ECONOMIC DATA: Data drives regional projects

    > OPINION: The road to hell is paved with gold

    > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623768/main.gif
    MEED Editorial
  • Algeria extends bid deadline for stalled power plant

    30 April 2026

    Algeria’s state-owned electricity and gas utility Sonelgaz has extended a deadline for contractors to submit expressions of interest for the construction of the 1.2GW Djelfa combined-cycle power plant.

    The project is being procured through Sonelgaz’s power generation subsidiary, Societe Algerienne de l’Electricite et du Gaz – Production de l’Electricite (SPE).

    In March, MEED reported that the utility was seeking contractors to complete works at the existing Djelfa plant, including the remaining construction, the supply of missing equipment and the assessment of installed equipment.

    The original bid submission deadline for prequalification was 7 April. The new deadline is 5 May.

    The tender is open to both local and international companies, and will be conducted in three phases: prequalification, preliminary technical assessment, and final technical and financial submission.

    The retender follows earlier plans to complete the project through a Chinese consortium comprising China Energy Engineering Group Company, Northwest Electric Power Design Institute and Anhui Electric Power Construction Company.

    This proposal was made after Spanish contractor Duro Felguera halted work on the project in June 2024. 

    According to MEED Projects, construction works had progressed to 72% at the time of the suspension.

    It is understood that an agreement in principle was then reached to transfer the remaining works to the Chinese group after the Spanish firm entered a pre-bankruptcy phase in December 2024.

    A company statement at the time said: “The Chinese group is committed to completing the plant construction, with commissioning scheduled to start in the ninth month following the final agreement.”

    However, in October 2025, it was revealed that the attempt to transfer the project to a consortium of Chinese companies had failed, leaving the Spanish firm with an official demand to pay €413m in compensation to Sonelgaz.

    This was revealed via a lengthy report containing a restructuring plan sent by Duro Felguera to creditors in Spain and the Madrid Financial Markets Authority.

    Gas-fired power plants

    Located in Djelfa province, the project remains a key part of Algeria’s power generation expansion plans.

    Sonelgaz has been seeking contractors to build a separate 1.2GW combined-cycle gas-fired power plant in Aldrar since last April.

    The most recent deadline extension was 29 April.

    According to recent reports, Algeria has also begun construction of a power generation plant in El-Aouinet, with a total installed capacity of 1,406MW.

    The combined-cycle gas turbine plant is being developed in partnership with China National Electric Engineering Company.

    Gas-fired combined-cycle plants continue to account for the majority of Algeria’s electricity generation capacity. Data from MEED Projects indicates that more than 5,000MW of oil- and gas-fired power capacity is currently in the execution phase.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623787/main.jpg
    Mark Dowdall
  • Dewa announces new record for power reliability

    30 April 2026

    Dubai Electricity & Water Authority (Dewa) has announced that it set a new world record for the lowest electricity customer minutes lost (CML), at 0.82 minutes a year in 2025.

    The figure is equivalent to about 49 seconds of annual outage per customer. It improves on the utility’s previous record of 0.94 minutes in 2024, a reduction of around 13%.

    Dewa said it has reduced CML in Dubai from 6.88 minutes a year in 2012 to 0.82 minutes in 2025, significantly lower than the average of about 15 minutes recorded by leading electricity utilities in the European Union.

    The smart grid is a central component of Dewa’s strategy to improve reliability and efficiency. The programme is being implemented with total investments of AED7bn up to 2035.

    One of the key initiatives of the programme is the Automatic Smart Grid Restoration System, which enables remote, round-the-clock control and monitoring.

    Dewa currently has tenders out for several power and water infrastructure projects in the emirate. These include at least four Glass Reinforced Epoxy (GRE) water transmission pipeline projects.

    According to regional projects tracker MEED Projects, Dewa awarded $1.1bn-worth of new power and water contracts in 2025. Contract awards had previously reached $2.6bn in 2024, and $4bn in 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623721/main.jpg
    Mark Dowdall
  • Riyadh tenders PMC deal for major sports arena

    30 April 2026

     

    Saudi Arabia’s Sports Boulevard Foundation has tendered a contract inviting firms to bid for project management consultancy (PMC) services for the Global Sports Tower in the Athletics District of the Sports Boulevard development in Riyadh.

    The tender was issued on 8 April, with a bid submission deadline of 10 May.

    The 130-metre-tall Global Sports Tower will cover an area of 84,000 square metres and will include more than 30 sports facilities. The tower will feature the world’s tallest indoor climbing wall at 98 metres and a 250-metre running track.

    Earlier this week, MEED reported that the Sports Boulevard Foundation is preparing to award the main construction contract for the Global Sports Tower. MEED understands that bid evaluation has reached an advanced stage and the contract is likely to be awarded by the end of May.

    MEED reported in May last year that design work on the tower had been completed. Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud approved the designs in 2024.

    The Sports Boulevard development runs across Riyadh from east to west and, once complete, is set to be the world’s longest park spanning more than 135 kilometres.

    The development will be spread across several districts, including Wadi Hanifah, Arts, Urban Wadi, Entertainment, Athletics and Eco, as well as Sands Sports Park.

    The large-scale project aims to transform central Riyadh – currently dominated by major highways – into a recreational corridor.

    Sports Boulevard, which will feature 4.4 million sq m of public realm and landmark buildings, will also be home to the Centre for Cinematic Arts and a 2,000-seat amphitheatre.

    The development will provide more than 2.3 million sq m of mixed-use commercial, residential, and retail assets, along with sports facilities around the park, known as Linear Park.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622287/main.jpeg
    Yasir Iqbal
  • Contractors submit Saudi Arabia phosphate rail track bids

    30 April 2026

     

    Saudi Arabian Railways (SAR) received bids from contractors on 27 April for a multibillion-riyal tender to double the tracks on the existing phosphate transport railway network connecting the Waad Al-Shamal mines to Ras Al-Khair in the kingdom’s Eastern Province.

    The tender – covering the second section of the track-doubling works and spanning more than 150 kilometres (km) – was issued on 9 February.

    This follows SAR receiving bids on 1 February for the project’s first phase, which spans about 100km from the AZ1/Nariyah Yard to Ras Al-Khair.

    The scope includes track doubling, alignment modifications, new utility bridges, culvert widening and hydrological structures, as well as the conversion of the AZ1 siding into a mainline track. It also includes support for signalling and telecommunications systems.

    The tender notice was issued in late November.

    Switzerland-based engineering firm ARX is the project consultant.

    MEED understands that these two packages are the first of four that SAR is expected to tender for the phosphate railway line. Other packages anticipated to be tendered shortly include the depot and systems packages.

    In 2023, MEED reported that SAR was planning two projects to increase its freight capacity, including an estimated SR4.2bn ($1.1bn) project to install a second track along the North Train Freight Line and construct three new freight yards.

    Formerly known as the North-South Railway, the North Train is a 1,550km-long freight line running from the phosphate and bauxite mines in the far north of the kingdom to the Al-Baithah junction. There, it diverges into a line southward to Riyadh and a second line running east to downstream fertiliser production and alumina refining facilities at Ras Al-Khair on the Gulf coast.

    Adding a second track and the freight yards will significantly increase the network’s cargo-carrying capacity and facilitate increased industrial production. Project implementation is expected to take four years.

    State-owned SAR is also considering increasing the localisation of railway materials and equipment, including the construction of a cement sleeper manufacturing facility.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622526/main.jpg
    Yasir Iqbal