Sohar Power




Disclosure related to technical issues at Sohar power and desalination plant

Sohar Power Company would like to disclose the following information related to two technical incidents that occurred during the first semester of 2015 and will have an impact on the company financials for this year.

Sea water flood incident

On 3rd May 2015, a sea water pipe belonging to the Orpic refinery in Sohar bursted. This resulted in flooding of the sea water intake area in the industrial port of Sohar and affecting installations and operations of neighbouring companies including SPC. This incident caused an unexpected shutdown at Sohar power and desalination plant on 5th May, interrupting the supply of water to PAEW reservoir as well as the supply of power to the network.

Sohar Power Company and its operator STOMO immediately mobilized their resources and deployed their best efforts and support to deal with this critical situation, in order to bring the plant back in operations as early as possible. This was achieved on 9th May after relentless efforts, tremendous work on site, with the support of OPWP. However, the full impact of the incident was still being investigated and the plant had not yet returned to normal operating mode.

On 19th May, whilst the water desalination plant was delivering 100% of its demonstrated capacity, the plant faced another unexpected shutdown, most likely as a consequence of the earlier sea water flooding incident. The restart process of the plant was immediately launched. The plant is progressively brought back to its full production capacity and resumed water delivery to PAEW reservoir.

A detailed assessment of the damages caused by the flood is still on-going and repair activities are in progress.

The financial impact of above events is estimated to exceed R.O 0.4 million. As this incident was caused by an external party facility which had a knock on effect on SPC facilities, the company will raise a claim to Orpic as the cause of this incident in order to obtain compensation for the corresponding damages and losses.

Operational issues at Sohar power and desalination plant

On 2nd April 2015, Sohar Power Company disclosed some operational issues at Sohar power and water desalination plant. The company reports that repair activities have been launched and now expects to recover its full capacity by 20 June 2015.

The financial impact related to these operational issues is expected to vary between R.O 0.7 million and R.O 1.4 million, depending on the outcome of actions undertaken by the company to mitigate such impact.

SPC will continue to exert maximum efforts to restore and maintain its full water and power production capacity to meet its obligations and at the same time work to minimize the negative financial impact caused from the above unfortunate incidents.