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Omani gas-fired power plants launch IPOs

GDF Suez-led venture eyes $163m from sale of 35% of power plants.

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The power plants supply a combined 27% of Oman's electricity demand
The power plants supply a combined 27% of Oman's electricity demand

The operators of Oman’s two largest gas-fired power plants have launched initial public offerings (IPOs) on the Muscat Securities Market (MSM).

GDF Suez-led Al Suwadi Power Co, which owns the Barka 3 plant and Al Batinah Power Company, which operates the Sohar 2 plant, will each sell 35% of their equity to investors, according to a statement.

The IPOs opened on Sunday and are due to close on June 9 with the shares expected to be listed from June 23.

The operators aim to raise around $78.5m from the sale of shares in Al Batinah and $84.5m from the floatation of Al Suwadi, the statement says.

A decision to float the companies was finalised in 2010 following the signing of Project Founders Agreements with government owned Electricity Holding Company (EHC).

Under the agreement a public offering had to take place one year after the plants were commissioned which happened on schedule in April 2013.

Jurgen De Vyt, CEO of Al Batinah Power, and Przemek Lupa, CEO of Al Suwadi Power, stressed that both companies offer stable long-term earnings visibility to investors thanks to holding long-term off-take and gas supply agreements with the Oman Government.

“Both Al Batinah Power and Al Suwadi Power benefit from stable and predictable cash flows,” they said in a joint statement.

“This is on account of their revenues being contracted on an availability basis with OPWP (Oman Power and Water Procurement), which is owned by the Government of Oman, pursuant to a 15 year Power Purchase Agreement (PPA) that expires in March 2028.

“Each company also benefits from a gas supply agreement with the Government of Oman over the same period.”

They added: “Owing to the well-tested and proven back-to-back contractual framework, neither company is exposed to changes in gas prices and to fluctuations in power demand for power until 2028, thereby offering returns that are unaffected by market downturns.”

Both power firms are owned by a consortium made up of GDF Suez (46%), Suhail Bahwan Group (22%), Sojitz Corporation (11%), Shikoku Power Co (11%) and Oman’s Public Authority for Social Insurance (10%).

The partners will reduce their holdings pro rata with GDF Suez, the leading independent power and water producer in the GCC, dropping to around 30% of the share capital of both companies after the IPOs.

Both combined cycle gas turbine power plants were developed at a cost of $1.7bn and have the capacity to produce 744 MW. Together they meet around 27% of Oman’s current power demand.

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