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     Disclosure of incidents at Barka II Power and Desalination Plant

    Mar 15, 2018 08:48 AM

    SMN Power Holding SAOG

    Disclosure of incidents at Barka II Power and Desalination Plant

    Muscat, Oman, 14 March 2018

    In compliance with the Rules and Guidelines of Disclosure, SMN Power Holding SAOG would like to disclose the following events impacting the operations of its SMN Barka Power Generation and Water Desalination Plant (Barka II).

    1)    Impact of Algae Bloom on operations:

    Since February 2018, the water production of Barka II has been affected by the presence of phytoplankton in seawater, also called the red tide.

    In the short term, Barka II can only monitor the pollution levels closely and increase chemical dosing to the maximum in order to restart the plant once levels are acceptable.


    In the long term, the Company will study the option to invest in technical solutions to partly mitigate such re-occurrence in the future.

    This is a case of Force Majeure as per the PWPA agreement meaning OPWP will not pay the part of water capacity fees equal to the loss of production during the Force Majeure but no additional penalty will apply. However, in 2024, the PWPA will be extended for an amount of time equivalent to the loss of production and hence any losses occurred on this account will be recovered over the long term. 

    The financial loss to date amounts to OMR 330k. As the issue is still ongoing, the Company will update on any further material impact.

    2)    Technical issue on Gas Turbine 1:

    The GT1 combustion system was damaged on 7th March 2018 during the annual performance test carried out at Barka II when the unit completed the test on gas and shifted to fuel oil.

    The fact finding revealed that the gas distribution spider was damaged and repair parts have been ordered. Based on the planned repair schedule, the unit should be back in service on 25th March 2018 resulting in a forced outage of 18 days with an estimated financial impact of OMR 425k.

    Management would like, however, to inform the Shareholders that the two above issues will not impair the capacity of SMN Power Holding SAOG to pay the proposed year 2017 final dividend of 19 bzs per share which will be recommended for approval during the Annual General Meeting to be held on 22nd March 2018.