Shearman & Sterling has advised Bank Muscat S.A.O.G. on the development and financing of the Musandam Independent Power Plant Project (IPP)—a dual fuel fired power plant in the Musandam Governorate of Oman. The IPP is being developed by Musandam Power Company, a new entity established by a consortium led by Oman Oil Company (OOC) and South Korea’s LG International Corporation.
The project involves the construction of a 120 MW power plant in Northern Oman and will provide electricity for the Governorate of Musandam. Designed to run primarily with natural gas, the plant will also accept diesel fuel due to its remote location from the gas fields. In that respect, the Musandam project stands out as a ground-breaking transaction because it will provide a reliable power supply across the Musandam peninsula, which is geographically remote from the rest of Oman. The plant is scheduled to be fully operational by the last quarter of 2016.
The Musandam plant will operate under a power purchase agreement (PPA) with Oman Power & Water Procurement Company (OPWP) for the supply of electricity to Rural Area Electricity Company (Raeco), which owns and operates Musandam’s generation and distribution system.
The Shearman & Sterling team included partner Iain Elder (Abu Dhabi-Project Development & Finance), counsel Dan Feldman (Abu Dhabi-Project Development & Finance) and Brendan Hundt (Saudi Arabia-Project Development & Finance). Associates Ibrahim Bakhurji, Samuel Ogunlaja (both Abu Dhabi-Project Development & Finance) and Nicolas De Clercq (London-Project Development & Finance) and trainee Michèle Smith (London-Project Development & Finance) supported on the transaction.