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Algal bloom in Gulf of Oman costs ACWA Power Barka $364,000

Water production at the company's RO-1 and RO-2 Expansion plants has been impacted since the third week of July due to the force majeure situation

Water production at ACWA Power Barka's Oman plants has been impacted by an algal bloom [representational image].
Water production at ACWA Power Barka's Oman plants has been impacted by an algal bloom [representational image].

ACWA Power Barka said water production at its RO-1 and RO-2 Expansion Plants has been impacted by an algal bloom “prevailing in the Gulf of Oman”.

The estimated financial impact of this “persisting” condition – which has affected ACWA Power Barka’s operations since the third week of July – amounts to $363,550 (OMR140,000).

Due to the bloom, the level of pollutants in the sweater “elevated outside the technical limits as defined in the water purchase agreements” (WPAs) of both plants.

“The company and the operator are monitoring these levels closely, and have increased chemical dosing to the maximum in order to keep the two plants in partial operation until the seawater quality falls within the acceptable limits, and full production is restored,” ACWA Power Barka said in a statement to the Muscat bourse.

READ: Consortium led by Saudi's ACWA Power wins Oman water contract

Both plants’ WPAs define the event as a 'Seawater Quality Failure', and once this is established, it will be recognised as a force majeure event.

As described by the WPAs, the company will “get relief from liability for any consequent failure to perform its obligations” due to the force majeure.

Additionally, Oman Power and Water Procurement Company (OPWP), the off-taker, “will not pay for the water capacity which the company could not make available during this […] period”.

The term of both expansion plants’ WPAs will be extended beyond 31 December, 2021, to match the period during which capacity was unavailable. Therefore, the water capacity charge that was not paid by OPWP – as listed above – will be recovered after 2021.  

ACWA Power Barka develops, finances, constructs, operates, maintains, insures, and owns a power generating station, a water desalination plant, associated gas interconnection facilities, and other relevant infrastructure in Oman, according to Bloomberg.

The company is said to operate a 457MW power station, and 20 MIGD multi-stage flash distillation plant, as well as a 12.5 MIGD seawater reverse osmosis plant.

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Construction Week - Issue 751
Oct 13, 2019