SMN Power Holding’s profitability and ability to generate cash flows are independent of market fluctuation, commodity prices and market demand throughout the PWPA term

The business model of both project companies held by SMN Power Holding, i.e. SMN Barka Power Company and Al Rusail Power Company is based on a strong contractual framework, with solid and reliable partners. Back-to-back contracts significantly reduce the risks over a long-term period. The supply of the output to the off-taker OPWP, the gas supply from MOG, the operation and maintenance of the plants by the operator STOMO and the financing of the project, are all guaranteed over a long-term period of 15 years for SMN Barka and 17 years for Al Rusail. Over this period (ending in March 2022 for Al Rusail and March 2024 for SMN Barka), the project companies are remunerated for their capacity and availability. Their profitability and ability to generate cash flows are independent of market fluctuation, commodity prices and market demand throughout the PWPA term.

The plants are operated and maintained under the terms of the O&M agreement with STOMO. Interest rates volatility and impact on the financing expenses are mitigated through adequate hedging policies, in line with the requirements defined by the lenders in the facility agreements.

Operations

During the year, Al-Rusail Power Plant exported a total of 2,181 GWh electrical energy while SMN Barka’s power generation reached a total of 2,762 GWh and its water production amounted to 21,822 thousand cubic metres. In 2018, SMN Barka’s reliability was 95.9 per cent for power and 93.4 per cent for water (99.4 per cent and 98.8 per cent in 2017). The power reliability in Barka II was impacted by the gas turbine burner failure in March 2018. The unit was brought back to service on 26 March 2018.

The total revenues in 2018 amounted to RO100.7mn, representing an increase of RO7.3mn compared to 2017. SMN Power Holding & Affiliates generated a consolidated net profit RO7.8mn for the year 2018 compared to a net profit of RO6.7mn in 2017.