PPP Legal Framework
Oman’s Public-Private Partnership (PPP) legislative framework was established by Royal Decree 52/2019 (the PPP Law) — providing a comprehensive legal basis for private sector investment in public infrastructure and services. The law:
- Defines eligible PPP sectors and project types
- Establishes procurement procedures for PPP projects
- Governs concession agreement structures and terms
- Provides dispute resolution mechanisms
- Creates the PPP unit within the Ministry of Finance to coordinate PPP development
The PPP Law covers: power and water, transportation infrastructure, social infrastructure (hospitals, schools), waste management, and other government services.
Independent Power Producers
Oman’s electricity sector has the longest-established PPP track record in the country — the Independent Power Producer (IPP) model has operated since the early 2000s.
IPP model: Private developers finance, build, own, and operate power generation plants, selling electricity under long-term Power Purchase Agreements (PPAs) to Oman Power and Water Procurement Company (OPWP). OPWP procures electricity on behalf of the distribution companies, providing a creditworthy off-taker for the 20-25 year concession period.
Major IPPs:
- Barka Power (gas-fired) — operational
- Al Kamil Power — operational
- Ibri Solar (500 MW, EDF/Marubeni) — Oman’s first large utility solar IPP, operational
- Manah Solar I and II (500 MW each, ACWA Power) — under construction
The solar IPP programme represents the renewable energy transition expressed through the proven PPP model — attracting international energy company capital and expertise without government balance sheet risk.
Desalination PPPs
Oman’s water supply is heavily dependent on desalination. The desalination sector similarly operates through an Independent Water Producer (IWP) model:
IWP model: Private developers finance and operate desalination plants, selling water under long-term Water Purchase Agreements (WPAs) to the Oman Water Procurement Company.
Major IWPs:
- Ghubrah desalination — reverse osmosis
- Barka and Sohar desalination plants
- Qurayyat Desalination (reverse osmosis, ACWA Power)
The IWP model has successfully attracted GCC and international water companies — ACWA Power (Saudi Arabia), Veolia (France), and others — providing capital and operational expertise.
Privatisation Programme
Vision 2040’s private sector development priority explicitly commits to privatisation of state assets — reducing government ownership of commercial entities and deepening capital markets. Key mechanisms:
Partial IPOs: Listing minority stakes in SOEs on the Muscat Stock Exchange, maintaining government majority while creating public investors and improving corporate governance. The OQEP IPO (2024) is the flagship example.
Full privatisation: In some sectors, government may exit commercial activities entirely — though full privatisation of strategic entities (utilities, telecoms) is politically sensitive and unlikely in the near term.
Management contracts: Transferring operational management of state facilities to private operators while retaining government ownership — a lower-risk step toward privatisation.
OQEP as Privatisation Model
The OQ Exploration and Production (OQEP) IPO in 2024 established a template for future privatisations:
- Minority stake offered (25%) while government retained majority (75%)
- High-quality corporate governance and disclosure established pre-IPO
- Strong investor demand (oversubscribed) validated the model
- IPO proceeds (OMR 975 million) provided government with capital for reinvestment
- Listed entity subject to ongoing MSX disclosure requirements improving transparency
Future Pipeline
The privatisation pipeline under Vision 2040 potentially includes:
- ASYAD Group entities: Port operations, logistics companies — partial IPOs possible
- Oman LNG: Minority stake flotation on MSX
- Omantel: Already listed; potential for further stake reduction by OIA
- Bank Muscat: Already listed; potential for OIA stake reduction
- Municipal utility services: Water and electricity distribution companies — PPP contracts or privatisation
The pace of privatisation is governed by: market conditions, investor appetite, government fiscal needs, and political considerations around state asset ownership. The OQEP success is expected to accelerate the programme.