Integration of power sector into Ministry of Oil and Gas ongoing

TRANSITION: Ministry of Oil and Gas is focal point for policy guidance on electricity related matters and sole agency to represent the sector in Cabinet

The incorporation of Oman’s power sector into the Ministry of Oil and Gas, as mandated by Royal Decree 40/2018, is principally guided by two key premises: (i) coordination of all policy guidance with regard to the electricity sector with the Ministry of Oil and Gas, and (ii) recognising the Ministry’s enhanced role as the sole agency to represent the power sector in the deliberations of the Council of Ministers.

In essence, the merger process has no impact on power sector operations on the ground, according to the Authority for Electricity Regulation (AER) Oman.

The Authority’s Executive Director, Qais al Zakwani, said the transition was basically occurring on the policy side of things from the erstwhile Public Authority for Electricity and Water (Diam) to the Ministry of Oil and Gas, which is now responsible for the energy sector in its entirety.

Speaking at a seminar hosted by the Oman-french Friendship Association (OFA) on Thursday, Al Zakwani said the Royal Decree effectively positions the Ministry of Oil and Gas as the single point of policy guidance on matters related to electricity generation and related energy resources, as well as the sole channel for representing the sector in the Cabinet.

With the integration of the power sector into the Ministry of Oil and Gas, issues related to, for example, tariff proposals, subsidy reductions, energy efficiency, and so on, are no handled in a fragmented fashion, as was the case when multiple ministries and government agencies had a stake in the sector.

Royal Decree 40/2018, issued last December, assigns responsibility for policy making on energy related issues to the Ministry of Oil and Gas. Consequently, all powers and prerogatives previously vested with the Public Authority for Electricity and Water (PAEW) with regard to oversight of the electricity sector, have now transferred to the Ministry of Oil and Gas. Waterrelated policymaking, however, remains in the hands of the since-renamed Public Authority for Water.

The integration of the electricity and energy portfolios, long espoused by experts in recent years, was among several recommendations made by Tanfeedh (The National Programme for Enhancing Economic Diversification) during an Energy Lab held early last year. The Lab urged the government to “improve and streamline governance structures, regulations and policies for both Gas and Electricity by 2019”.

The multiplicity of government ministries and agencies that had a stake in energy-related activities in the Sultanate did not bode well for speedy and effective policy and decision-making on energy initiatives of strategic national importance, the Energy Lab reported.

That mandate was, until recently, shared in fragmented fashion across among a number of ministries and bodies, notably the Ministry of Finance, Financial Affairs and Energy Resources Council, Ministry of Oil and Gas, and the Public Authority for Electricity and Water.

The Energy Lab stressed the need for the standardization of policies related to the energy sector under one umbrella, coupled with efforts and create an effective governance structure to facilitate the development of uniformed policies and improve gas and electricity sectors altogether.

The integration of the power sector into the Ministry of Oil and Gas will be formalised once the Royal Decree is published in the Official Gazette.