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SATURDAY | FEBRUARY 18, 2017 | JUMADA AL ULA 21, 1438 AH
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ASIAN SHARES RISE AS US RATES EASE P16 ALLIANZ WARNS YEAR AHEAD UNCERTAIN AFTER STRONG 2016 P16 ESSENTRA FY PROFIT FALLS 26PC ON INTEGRATION WOES16
Oman awards first-ever contract
extension to private power plant
FRESH LEASE OF LIFE: Al Kamil Power receives 4-year contract extension
CONRAD PRABHU
MUSCAT, FEB. 17
Oman Power and Water Procurement Company
(OPWP), the nation’s principal procurement of new
electricity generation and water desalination capacity,
has inked a deal that formally allows Al Kamil Power
— one of Oman’s earliest Independent Power Projects
(IPP) — to remain in operation for a further four years
beyond its existing contract which expires this year.
Under the terms of an extended Power Purchase
Agreement (PPA) signed late last week, Al Kamil Power
Company SAOG, which operates a 280 megawatt (MW)
gas-powered plant in South Al Sharqiyah Governorate,
will continue to be in service up to December 31, 2021.
It follows the successful completion of negotiations
with OPWP, a subsidiary of the wholly governmentowned
Nama Group, leading to a contract extension
with revised terms and conditions, the company said
in a filing to the Capital Market Authority (CMA) on
Thursday.
Significantly, the extended PPA is the first of a
number of similar pacts planned by OPWP that will
allow for some of Oman’s oldest privately owned power
plants to stay in operation well beyond the expiry of
their current contracts. This, alongside options to
procure new capacity, is key to the procurer’s strategy to
ensure adequate capacity to meet galloping electricity
demand growth
“Extensions are being negotiated only on a
guaranteed capacity basis at economic commercial
terms, and all plants have completed independent
technical evaluations to confirm the capacity on offer,”
The extended PPA is the first
of a number of similar pacts
planned by OPWP that will
allow for some of Oman’s
oldest privately owned power
plants to stay in operation
well beyond the expiry of
their current contracts
the procurer said in its 7-Year Outlook Statement for
the 2016-2022 timeframe.
Also expected to receive a contract extension
is Barka-1 Independent Power Project, which is
co-located with a water desalination plant. With
the existing Power & Water Purchase Agreement
(PWPA) due to expire next year, OPWP has already
initiated negotiations with the plant owner, ACWA
Power Barka, for a contract extension up to December
31, 2021.
An extended contract will see Barka-1 offering 388
MW of capacity during normal operation in Combined
Cycle Generation Turbine (CCGT) mode without
water production from the multi-stage flash (MSF)
component of its desalination capacity. However, if
water capacity has to be operationalised in the event of
a contingency, then Barka-1 will offer up to 435MW of
generation capacity, according to OPWP.
However, for Manah Power — the Sultanate’s first
Independent Power Project — ownership of the plant
transfers to the government upon the expiry of the
current Power Purchase Agreement in December 2020.
OPWP says it is weighing a number of options for
the continued operation of the 264 MW capacity plant,
including a competitive tender for the sale of the asset,
backed by a multi-year Power Purchase Agreement.
While the Al Kamil Power contract extension is
the first for privately owned plants, older state-owned
generation assets in Al Ghubra (Muscat Governorate)
and Wadi Jizzi (Buraimi Governorate) have already
received new leases of life — for part of their capacity
at least.
Contracts for several gas turbine units of Al Ghubra,
offering up to 405 MW of capacity, have been extended
up to September 30, 2018, when the plant will be fully
retired. Similar extensions have also been granted to
a number of gas turbine units at Wadi Jizzi, enabling
326 MW of capacity to be available until September 30,
2018, when the plant is also planned for retirement.
Importantly, future contract extensions for Al
Kamil, Barka-1 and other plants nearing the end
of their contract, are possible under a new capacity
procurement strategy that OPWP plans to unveil later
this year. The strategy, which is aimed at liberalizing
the electricity sector and opening it up for competition
for the first time, will enable existing power plants with
expiring contracts to compete directly with new project
bidders for long-term contracts.
“The first capacity procurement to use this new
methodology is expected to be for contract terms
beginning in 2022,” said OPWP.
Samsung chief Lee
arrested as S Korean
graft probe deepens
SEOUL: Samsung Group Chief Jay Y Lee was arrested on Friday
over his alleged role in a corruption scandal rocking the highest
levels of power in South Korea, dealing a fresh blow to the
technology giant and standard-bearer for Asia’s fourth-largest
economy.
The special prosecutor’s office accuses Lee of bribing a
close friend of President Park Geun-Hye to gain government
favours related to leadership succession at the conglomerate. It
said on Friday it will indict him on charges including bribery,
embezzlement, hiding assets overseas and perjury.
The 48-year-old Lee, scion of the country’s richest family, was
taken into custody at the Seoul Detention Centre early on Friday
after waiting there overnight for the decision. He was being held
in a single cell with a TV and desk, a jail official said.
Lee is a suspect in an influence-peddling scandal that led
parliament to impeach Park in December, a decision that if
upheld by the Constitutional Court would make her the country’s
first democratically elected leader forced from office.
Samsung and Lee have denied wrongdoing in the case.
Prosecutors have up to 10 days to indict Lee, Samsung’s thirdgeneration
leader, although they can seek an extension. After
indictment, a court would be required to make its first ruling
within three months. Prosecutors plan to question Lee again on
Saturday.
No decision had been made on whether Lee’s arrest would be
contested or whether bail would be sought, a spokeswoman for
Samsung Group said.
Samsung Group Chief, Jay Y Lee, is surrounded by media upon
his arrival to the Seoul Central District Court in Seoul. — Reuters
“We will do our best to ensure that the truth is revealed in
future court proceedings,” the Samsung Group said in a brief
statement after Lee’s arrest. The same court had rejected a request
last month to arrest Lee, but prosecutors this week brought
additional accusations against him. “We acknowledge the cause
and necessity of the arrest,” a judge said in his ruling.
The judge rejected the prosecution’s request to also arrest
Samsung Electronics president Park Sang-Jin.
Shares in Samsung Electronics ended on Friday down 0.42 per
cent in a flat wider market. Ratings agencies did not expect any
impact on the flagship firm’s credit ratings, and said Lee’s arrest
would accelerate improvements in management transparency
and corporate governance. — Reuters
US housing starts drop; permits rise to one-year high
WASHINGTON: US homebuilding
fell in January as the construction
of multi-family housing projects
dropped, but upward revisions to
the prior month’s data and a jump in
permits to a one-year high suggested
the housing recovery remained on
track.
Other data on Thursday showed
only a modest increase in the number
of Americans filing new applications
for unemployment benefits last week,
a sign that the labour market was
continuing to tighten.
Housing starts fell 2.6 per cent
to a seasonally adjusted annual rate
of 1.25 million units last month,
the Commerce Department said.
December’s starts were revised up to
a rate of 1.28 million units from the
previously reported 1.23 million pace.
Homebuilding was up 10.5 per cent
compared to January 2016. Permits
for future construction jumped 4.6
per cent in January to a rate of 1.29
million units, the highest level since
November 2015. Building permits in
the South, where most homebuilding
occurs, hit their highest level since July
2007.
With overall permits now
outpacing starts, homebuilding is
likely to rebound in the coming
months. Economists polled by Reuters
had forecast ground breaking activity
slipping to a rate of 1.22 million units
last month and building permits rising
to a 1.23 million pace.
Prices of US Treasuries slid and
US stock index futures trimmed losses
after the data. The dollar pared losses
against a basket of currencies.
The housing recovery is being
driven by a strong labour market,
which is boosting employment
opportunities for young people and
supporting household formation.
In a separate report, the Labour
Department said initial claims for state
unemployment benefits rose 5,000 to
A house under construction has a sold sign out front in the Candelas development
in the northwest Denver suburb of Arvada, Colorado. — Reuters
a seasonally adjusted 239,000 for the
week ended February 11.
Claims have been below 300,000,
a threshold associated with a strong
job market, for 102 consecutive weeks.
That is the longest stretch since 1970,
when the labour market was much
smaller. The labour market is at or
close to full employment, with the
unemployment rate at 4.8 per cent.
Economists had forecast firsttime
applications for jobless benefits
rising to 245,000 in the latest week.
While the labour market is expected
* Housing starts fall
2.6 per cent in Jan
* Building permits
increase 4.6 per cent
* Weekly jobless
claims rise by 5,000
to continue to underpin the housing
market, higher mortgage rates could
slow demand for housing. A survey
on Wednesday showed homebuilders’
confidence slipped in February but
remained at levels consistent with a
growing housing market. Builders
anticipated a slowdown in buyer
traffic and continued to grapple with
shortages of developed lots and skilled
labour.
January’s starts were above the
fourth-quarter average, suggesting
housing will again contribute to gross
domestic product in the first three
months of this year.
Homebuilding last month surged
55.4 per cent in the Northeast region
of the country. It jumped 20.0 per cent
in the South to the highest level since
August 2007. Starts fell 41.3 per cent
in the West, likely due to the impact of
unusually wet weather.
Last month, single-family
homebuilding, which accounts for the
largest share of the residential housing
market, climbed 1.9 per cent to a pace
of 823,000 units.
Starts for the volatile multi-family
housing segment tumbled 10.2 per
cent to a rate of 423,000 units.
Single-family permits slipped 2.7
per cent last month after increasing for
five consecutive months. Single-family
starts in the South rose to their highest
level since August 2007.
Building permits for multi-family
units soared 19.8 per cent. — Reuters