Al Jashmi and Tang signing the agreement

Al Jashmi and Tang signing the agreement

JV formed for Oman economic zone

01 June 2013

SEMBCORP Industries’ newly-incorporated wholly-owned subsidiary, Sembcorp Utilities (Oman), has signed a joint venture agreement with Takamul Investment Company, a subsidiary of Oman Oil Company, to develop centralised utilities facilities for the Duqm Special Economic Zone (SEZ).

The SEZ is being developed as a new major industrial and commercial hub to eventually become one of the largest of its kind in the world.

Under the agreement, Takamul and Sembcorp’s 65-35 joint venture entity, Centralised Utilities Company (CUC), will serve as a one-stop provider of a range of centralised utilities such as power, steam, water, sewerage treatment and on-site logistics on a captive basis to multiple industrial customers in the Duqm SEZ in southern Oman.

CUC’s customers will include anchor customer Oman Oil Company, which is developing a 230,000 barrels per day refinery targeted to begin operations in 2018 as well as a petrochemical complex on the site. CUC will have an initial share capital of RO1 million (approximately $3.2 million), of which Sembcorp’s 35 per cent stake will be funded through internal resources.

This concept of a centralised utilities model will be the first in Oman and the project builds on Sembcorp’s considerable expertise and operating experience in the field. The company is a pioneer in centralised utilities.

Under this unique model, multiple customers are offered an integrated supply of energy, water and on-site logistics produced by centralised facilities. By outsourcing critical utilities to Sembcorp, companies can focus on their core business and save on investment and operating costs. They can also be assured of reliable solutions which meet stringent environmental standards.

From its beginnings in Singapore, this model has been successfully replicated in key industrial sites internationally. Including Duqm, Sembcorp’s centralised utilities model has now been implemented in 10 sites across Singapore, the UK, China and the Middle East. The company also lends its expertise to develop local resources in markets where it operates through skills and knowledge transfer programmes.

Sembcorp’s presence in Duqm will mark its second project in Oman. Sembcorp recently celebrated the official opening of its first operation in Oman, the Salalah Independent Water and Power Plant. The largest and most efficient plant of its kind in the Dhofar governorate, the plant plays a major role in meeting the region’s growing power and water needs. Sembcorp also owns, operates and maintains the Fujairah 1 Independent Water and Power Plant – one of the world’s largest operating hybrid desalination plants – in the UAE since 2006.

The signing of the joint venture agreement took place in Muscat between Nasser bin Khamis Al Jashmi, chairman of Oman Oil Company, and Tang Kin Fei, Sembcorp’s group president and CEO. The ceremony was witnessed by Singapore’s Minister for Foreign Affairs and Minister for Law, K Shanmugam.

Tang said, “We are very honoured to be selected by Takamul as their centralised utilities partner for this important new SEZ at Duqm. As the pioneer in one-stop outsourced energy, water and on-site logistics for multiple companies in energy-intensive industrial hubs, Sembcorp is in a good position to support the growth of the Duqm SEZ. We look forward to working closely with Takamul in making CUC a success. We also look forward to growing Sembcorp’s business in Oman as well as the Middle East, a target region for future growth for our group.”

Al Jashmi commented, “This is a significant step in a very positive direction. The CUC will contribute to His Majesty’s vision of developing Duqm as a major national and international hub supporting the economic development of Oman. We are happy that Takamul and Sembcorp have joined forces and together we are confident of a very successful outcome.”

“Sembcorp was selected through a very extensive evaluation process of a number of utilities providers, because of their considerable expertise and operating experience in this field,” Nabil Al Ghassani, CEO of Takamul, added.

With a land area of 1,777 sq km and an 80 km coastline, the Duqm SEZ will rank as the largest SEZ in the Middle East and North Africa region and one of the largest in the world. It will be administered, regulated and developed by the Duqm Special Economic Zone Authority, a financially and administratively independent government entity. It will encompass a sea port, a city centre, an industrial zone, a tourism zone, a logistics centre and an education and training zone, all supported by a multimodal transport system connecting the SEZ to nearby regions. Development of the SEZ is expected to take place in three phases from now until 2025.

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