Oman, March 19, 2001 PSEG Global announced today that Officials of the Omani government signed several major agreements with Dhofar Power Company S.A.O.C. (DPCO) and its subsidiary, Dhofar Generation Company S.A.O.C. (DGCO) on Saturday, March 17, representing milestones along the road to the privatization of the electric system of Salalah.
A consortium led by PSEG Global of the U.S. and including several major Omani investment groups owns DPCO.
His Excellency Sheikh Mohammed Bin Ali Al Qatabi, The Minister for Electricity & Water, representing the Government of Sultanate of Oman, signed the Concession Agreement, Asset Sale Agreement, Generation Usufruct (Lease) Agreement and T&D Usufruct (Lease) Agreement.
His Excellency Dr. Mohammed Bin Ahmed Bin Saif Al Rumhi, The Minister for Oil & Gas, signed the Natural Gas Supply Agreement with DPCO and DGCO to provide natural gas for the new generating station for 20 years.
Ministry of Finance undertaking was signed by His Excellency Ahmed Bin Abdulnabi Macki, The Minister for National Economy.
A Master Novation Agreement was signed by Their Excellencies The Minister for Electricity and The Minister for National Economy with DPCO and DGCO.
His Excellency Ahmed Bin Abdulnabi Macki, The Minister for National Economy, ratified all of the Agreements.
B.Vanchi, Vice President of PSEG Global and Deputy Chairman of DPCO, signed the agreements on behalf of DPCO in the presence of Michael J. Thomson, President of PSEG Global. Mr. Ahmed Bin Ali Al Shanfari, Director of DPCO, signed on behalf of DGCO.
The signing of the agreements was witnessed by their Excellencies, Abdullah Bin Ali Bin Dawood, Under Secretary for the Ministry of Electricity & Water (MEW), Rajiha Abdul Amir Ali, Under Secretary for Development Ministry of National Economy, Dr. Sheikh Abdul Malik Al Hinai, Under Secretary for Economic Affairs Ministry of National Economy, John B. Craig, the U.S. Ambassador to the Sultanate of Oman, Engineer Abdul Hafidh Salim Rajah Al-Aujaili, Chairman DPCO and several senior government officials representing the ministries of National Economy, Electricity, Finance, Legal and Oil & Gas.
“The project is a unique pioneering effort � in both Oman and elsewhere in the world to privatize a vertically integrated operating utility coupled with a mandate to add new generating capacity,” said Michael J. Thomson. “In addition, DPCO will improve the existing transmission and distribution system and will service a large consumer base in excess of 36,000 customers spread throughout Salalah in the Dhofar region.”
The 20-year concession will begin when the new generating plant commences commercial operation, scheduled to take place in March 2003. Under the concession, DPCO along with its fully owned subsidiary, DGCO, will make an initial investment of US $270million. A new world class natural gas-fired electric generating facility of nearly 200 MW will be added by March 2003 and connected to the existing network by a 132KV transmission and interconnection system. The existing Salalah T&D system will be enhanced to 132KV and extended to Thumrayt and other areas around Mirbat. At commercial operation, the ownership of the existing network and gas turbine generators will be transferred to the company. The company will also commence serving the existing system customers (approximately 36,000) of the MEW, offering these customers a higher quality power supply benchmarked to international standards. DPCO and DGCO will hire and train select personnel from the existing workforce. The company has committed to employing Omani nationals to fill 45% of its workforce requirement as of commercial operation date and, thereafter, gradually increasing to 75% by the end of the concession period.
“Our mission is to set up a world class electric utility and provide to every consumer in the concession area quality power and service on par with best utilities in the developed countries,” added B. Vanchi of PSEG Global. “The concession aims to set very high standards of safety in operation, introduce international standards of utility management and achieve a high degree of customer satisfaction through customer service and supply standards.”
The project will be built by Larsen & Toubro of India, as Engineering & Procurement Contractor, with General Electric of the U.S. supplying the power island. Sargent & Lundy of the U.S. will design the project with the intention of preserving the environment of the Salalah Region.
The response from international banks to fund project debt in excess of US $210 million has been very encouraging. The project is expected to achieve financial closure and start construction by third quarter of year 2001 and achieve commercial operation by March 2003. BNP Paribas is serving as the primary financial advisor to the PSEG Global consortium.
The Dhofar Power Company is 81% owned by PSEG Global through its investment subsidiary Salalah Power Holdings. During the concession period PSEG Global will provide management and technical expertise to the project and introduce new standards in utility operation and management. PSEG Global will divest 35% of the ownership in the company to the public within four years. The remaining 19% of DPCO is held by Omani Founder Group, which includes Muscat Overseas Company LLC, Dhofar International Development & Investment Company, Malatan Trading & Contracting LLC, Oman & Emirates Investment Holding Company, ROP Pensions Fund LLC, Shanfari Trading, Assarain Enterprises, Silver Circle Establishment and Hamdan Trading.
PSEG Global develops, acquires, owns and operates electric generation and distribution facilities and engages in power production and distribution, including wholesale and retail sales of electricity in selected U.S. and international markets. PSEG Global is a direct subsidiary of PSEG Energy Holdings and an indirect subsidiary of Public Service Enterprise Group (PSEG) (NYSE:PEG). PSEG is a near century-old diversified energy company with assets in excess of US $19 billion and annual revenues in excess of US $6.5 billion. PSEG (through PSEG Global and another subsidiary PSEG Power) owns and operates in excess of 18,000 MWs of electric generation worldwide, including nuclear, thermal and hydroelectric facilities. PSEG also serves nearly 6.0 million consumers in the United States and internationally through its transmission and distribution systems. To learn more about PSEG or PSEG Global visit www.pseg.com.