Market Librelisation

Market Liberalisation

Article (29) of the Sector Law requires the Authority to include in each Annual Report its assessment of whether the electricity and related water sector is ready to implement any of the four Liberalisation measures identified in the law. Table 1 lists each of the four Liberalisation measures and presents the Authority’s assessment of whether the market is ready for their implementation.

	Liberalisation Measure	Authority’s assessment of market readiness:
1	Disposal of the Government’s interest in the Electricity Holding Company SAOC or the Oman Power and Water Procurement Company SOAC	The Authority does not consider the market ready for this liberalisation measure. It is not clear to the Authority that customers, investors or the government would benefit from the implementation of this measure at the present time. The Authority will reconsider this issue annually but does not propose to take steps to prepare the market for the implementation of this measure.
2	Permitting licensed Production Facilities to sell to persons other than Oman Power and Water Procurement Company SAOC	The Authority does not consider the market ready for this liberalisation measure. The Authority’s expectation is that some customers – particularly large consumers of electricity – would benefit from the implementation of this measure. However, its implementation would imply a significant change to the risk allocation of existing contracts (PPA and PWPA), and require consideration of the implications for the Generation Security Planning Standard. *In terms of preparatory measures, the Authority will consult with large consumers of electricity and the PWP to gauge interest in and assess the implications of this measure.*
3	Permitting persons other than Oman Power and Water Procurement Company SAOC and the Rural Areas Electricity Company SOAC to Import or Export electricity from or to another country	*The Authority does not consider the market ready for this liberalisation measure.* As no Import or Export has yet taken place, the Authority considers it premature to contemplate allowing persons other than the PWP or RAEC to Import or Export electricity. An International Interconnection between Oman and the UAE was commissioned in 2006. A further interconnection that is part of the GCC Interconnection project will be commissioned in 2007. The Authority will revisit this issue annually but does not propose to stipulate measures at this time to prepare the market for the implementation of this measure.
4	Creation of competition amongst Licensed Suppliers	*The Authority does not consider the market ready for this liberalisation measure.* The Authority has a statutory duty to promote competition and considers the introduction of Supply competition to be an important and achievable objective. Subject to implementing seperate distribution and supply price controls, and comprehensive regulatory according requirement. The Authority would hope to implement Supply competition within 5 years.