Unprecedented 1.9% decline in Oman’s power demand last year

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originally published: 30 May 2021 | origin: https://www.omanobserver.om/article/1101592/business/unprecedented-19-decline-in-omans-power-demand-last-year

Electricity consumption dipped a modest, but unprecedented, 1.9 percent to 33,156 gigawatt-hours (GWh) in 2020, reversing for the first time since the sector was restructured in 2005 a year-on-year trend in power demand growth averaging around 4-6 percent annually.

The slump, as with most other aspects of national economic and social life over the past year, was attributed to widespread disruption unleashed by the economic downturn compounded by the coronavirus pandemic.

According to figures released by Nama Group, the holding company of government-owned power assets and related service providers, subsidy disbursed by the government to the sector also declined slightly to RO 614.98 million in 2020, down from RO 624.69 million a year earlier.

Subsidy typically accounts for roughly half of the economic cost of power generation, distribution and supply to Oman’s estimated 1.3 million customers.

Less than one percent of this total — comprising large government, industrial and commercial customers with a consumption of over 150 megawatt-hours per annum — pay subsidy-free cost-reflective tariffs. Besides electricity generation, transmission, distribution and supply costs, the overall economic cost of supplying power also includes depreciation cost, operation and maintenance costs, interest on borrowings, general and administrative expenses, and tax.

Significantly, the subsidy per unit of electricity supplied by Nama Group subsidiaries last year also grew moderately to RO 18.550 per unit last year, up from RO 18.480 in 2019.

However, starting from 2021, the overall subsidy component is expected to gradually decline in line with a phased strategy by the government to eliminate subsidy altogether over the next five years.

Economically vulnerable residential customers however will be eligible for some assistance in lieu when the subsidy is fully withdrawn.

In another highlight of 2020, Nama Group reported a 2.82 percent improvement in the utilization of natural gas towards electricity generation.

The improved efficiency in fuel utilization was attributed to the operationalization of two newly developed Independent Power Projects Sohar-3 and Ibri-1 during the previous year.

However, electricity losses recorded a slight spike to 9.80 percent in 2020, up from 9.67 percent in 2019.

Nama Group, comprising as many as 12 subsidiaries, posted a 4.77 percent increase in Group revenue, which climbed to RO 1.31 billion in 2020. Profit After Tax rose 12.29 per cent to RO 67.82 million in 2020. The Group’s total assets reached RO 6.75 billion at the end of last year.

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