annual report€¦ · i also thank our ceo, eng. omar al wahaibi and ceos of the subsidiary...

NH-ANNUAL REPORT - 2017 1

ANNUAL REPORT

NH-ANNUAL REPORT - 2017 3

HIS MAJESTY SULTAN QABOOS BIN SAID

NH-ANNUAL REPORT - 2017NH-ANNUAL REPORT - 2017 54


NAMA GROUP IS A LEADINGREFERENCE FOR UTILITYSERVICE EXCELLENCE IN THE REGION BY 2022


TABLE OF CONTENT

SUBJECT SECTION Page

Nama Group About Nama Group 12

Board Members 14

Leadership Team 15

Chairman’s Report 16

Our Governance Governance Report 20

Strategy Execution Our Strategy 28

Health, Safety and Environment (HSE) 30

Customer Services 34

Human Resource Development 36

Financial and Operational Performance 38

Group Companies Performance 53

Sustainability 64

Report and Consolidated Financial Statements 70

Glossary of Terms 128


NAMA GROUPMission Leading and enabling the Group to deliver safe, reliable and sustainable electricity and water services to enhance value for Oman.

Vision Nama Group is a leading reference for utility services excellence in the region by 2022.

Values• Integrity• Professionalism • Respect


Ministry of FinancePublic Authority for Electricity and Water

Authority for Electricity RegulationNama Group

Power PlantGenerates Electricity

TransformerSteps up

voltage fortransmission

Neighborhoodtransformersteps down

voltage

Distribution lines carry electricity to house

Transmission linescarry electricitylong distances

Oman Electricity

Transmission Company

Oman Power and WaterProcurement Company

Wadi Jizzi Power Co

Ghobra Power &Desalination. Co

Private Sector Generation

Desalination

Generation Distribution SupplyRAECO

Muscat ElectricityMazoonElectricity

MajanElectricity

Dhofar Power

Residential

Industrial

Commercial

Agriculture

Government

Tourism

CRT (Cost Reflected Tariff)

74.31%

0.04%

20.62%

0.76%

3.31%

0.06%

0.90%

Customers

ABOUT NAMA GROUP (NG)

Nama Group was created as a result of restructuring of the Electricity Sector and its related water services in 2004 and commenced commercial operations on 1 May 2005.

Nama Group operations are spread across the generation, procurement, transmission, distribution and supply of electricity and its related water services in the Sultanate. The Group consist of:

HOLDING COMPANY:• Nama Holding (NH)

GENERATION COMPANIES:• Wadj Al Jizzi Power Company SAOC (WJPCO)• Al Ghubrah Power and Desalination Company SAOC (GDPC)

TRANSMISSION COMPANIES:• Oman Electricity Transmission Company SAOC (OETC)

DISTRIBUTION/SUPPLY COMPANIES (DISCOS):• Muscat Electricity Distribution Company SAOC (MEDC)• Mazoon Electricity Company SAOC (MZEC)• Majan Electricity Company SAOC (MJEC)• Dhofar Power Company SAOC (DPC)• Rural Electricity Power Company SAOC (RAECO)

PROCUREMENT OF POWER AND WATER:• Oman Power and Water Procurement Company SAOC (OPWP)

TRAINING AND DEVELOPMENT:• Nama Institute for Competency Development (NICD)

NAMA HOLDING:Nama Holding is a joint stock company that is registered in the Sultanate of Oman. The Company commenced commercial operations on the 16th of September 2003 and holds the Government shares in the Group’s subsidiary companies. The main roles of Nama Holding along with holding the Government shares in the subsidiaries, are to:

1) Support and implement the Government’s privatisation policies for the electricity and related water sector.

2) Implement the policy of the Government in respect of the financing of companies wholly -owned by the Government in the electricity and related water sector and to safeguard and maintain the interest of the Government in these companies.

The electricity sector consists of three major organizations; The Public Authority for Electricity and Water (PAEW), The Authority for Electricity Regulation (AER), and Nama Group of Companies. PAEW is responsible for electricity policy overview, while AER is in charge of regulating the electricity sector.

Ministry of Finance is the shareholder of Nama Holding, which is leading Nama Group. Nama Group monopolizes distribution & Supply, transmission and procurment of electricity. In the generation field, there are two generation companies under Nama Group while other companies are Independent Power Projects (IPPs) that are contracted by OPWP.


MUBARIK SULAIMAN AL MANDHARIMEMBER

MOHAMED MASAUD AL KHARUSIMEMBER

SALEH NASSER AL RUMHIDEPUTY CHAIRMAN

H.E FAISAL KHAMIS AL HASHARMEMBER

H.E HASSAN MOHAMMED AL LAWATICHAIRMAN

BOARD MEMBERS LEADERSHIP TEAM

OMAR AL WAHAIBIChief Executive Officer

MANSOOR AL HINAIVice President-Distribution

and Supply

HUSSAIN AL BALUSHIGroup Chief Financial Officer

IBRAHIM AL SULEIMANY Executive Manager-Group

Human Resources

AHMED AL RAHBIExecutive Manager

IT Shared Service Center

LATE - ALI AL ABRI Advisor to CEO External Affairs

GHADA AL YOUSEF Executive Manager-Group Com- munication and Sustainability

FREDERICK REEDERGroup Chief Internal Auditor

KEITH STALLARDExecutive Manager

Water Sector Restructuring

SUHAILA AL FARSISenior Manager-Group Govern-

ance and Risk Management


CHAIRMAN’S REPORT

DEAR SHAREHOLDERS,The performance of the Nama Group over the past years has demonstrated the Group’s ability to respond to economic growth and the expectations of our Customers to the expected level of service. In 2017, the employees of the Group worked very hard to contribute to the economic development of the Sultanate and to provide the best services to the participants with the support of technical developments without prejudice to the principles of Health and Safety. We have worked to enhance efficiency within the Group companies by working to implement our strategies.

As part of our vision to make Nama Group a leading preference for Utility services excellence, in the region by 2022, Nama Holding is enhancing our excellence and improving our services by empowering our employees and developing Omani Competencies that are more responsive to technological development.

Nama Holding continues its vision of the future through plans and pioneer projects, benefiting from modern technologies in the fields of Transmission and Distribution of Electricity, and starting to use 10% clean energy by 2025 as part of the Government’s strategy to start using alternative energy and diversification Sources of Power Generation.

OPERATIONAL PERFORMANCEIn keeping with the growth in population of the Sultanate of Oman, the Electricity and the related Water Sector witnessed robust growth in 2017, in terms of investment in infrastructure, reaching out to more customers and new geographic areas, and increasing production and supply of electricity and water.

In 2017, the customer base increased by 6.8% to 1,147,401 subscribers compared to 2016

and the electricity supplied increased by 7% to 32,277 GWh. The Group companies invested RO 469.7 million in network expansion in 2017 compared to RO 448.9 million in 2016. As a foundation of our growth strategy, the Omanization percentage among the Group reached 92% by the end of 2017.

FINANCIAL PERFORMANCEThe gross operating revenue of the Group increased by 0.18% from RO 1.121 billion in 2016 to RO 1.123 billion in 2017.The net profit after tax decreased by 59% to RO 36.176 million in 2017, compared to RO 89.009 million in 2016. This is largely owing to the increase in tax rate and onetime adjustment of deferred tax asset and due to increasing financing costs for capital expenditure and working capital requirements.

The Electricity subsidy for the year 2017 is at RO 0.456 billion a 8.3% decrease compared to 2016. Subsidy per customer dropped by 14% from RO 463 in 2016 to RO 398 in 2017 and subsidy per unit dropped from RO 16.44 per MWh in 2016 to RO 14.09 per MWh in 2017. The reduction of subsidy per customer was largely attributable to introduction of Cost Reflective Tariff for certain categories of the customers. The 2017 Group total assets increased by 17.4% - from RO 3.595 billion in 2016 to RO 4.220 billion in 2017.

In 2017, Nama Group raised funds of US$ 5.5billion, through the Group Funding Advisory Agreement (Lamar Project), to fund the various capital expansion plans of the Group Companies as well as to finance the working capital needs.

IMPLEMENTING GROUP STRATEGIESIn 2017, Nama Holding continued to implement Group strategies across various disciplines. In Customer Service area, the distribution and supply companies


renewable energy projects been developed between RAECO and MASDAR. In August 2017, Masdar signed an Engineering, Procurement & Construction (EPC) contract with a global consortium comprising GE and Spain’s TSK to build the Dhofar Wind Power Project. Currently, the mobilization work is in progress and it is expected to be completed in mid of March 2018. The project is expected to be commissioned in Q3 2019.

ACKNOWLEDGEMENTOn behalf of the Board members, I would like to express our sincere gratitude to His Majesty Sultan Qaboos bin Said for his support to the Electricity and related Water Sector and for his visionary leadership, which has paved the way for the ongoing development of Oman. I would like to take this opportunity to thank our shareholders and stakeholders who have contributed to the success of the Nama Group.

I also thank our CEO, Eng. Omar Al Wahaibi and CEOs of the subsidiary companies, the management team of the Group and all staff of Nama Group for their dedication and commitment to the continued growth and development.

HASSAN MOHAMMED AL LAWATICHAIRMAN

ECONOMIC GROWTH

introduced several efficiency-enhancing measures, e.g., introducing competition in the meter reading operations and in collection activities, deploying automated remote meter reading technologies. The Group continued to invest in implementing Nama Integrated Management System (NIMS), which is a centralized integrated solution aimed at ensuring efficient and seamless data flow between different business units and organization.

SUSTAINABILITYIn 2017 we made progress in our strategy of sustainability. We allocated RO 0.500 million for projects, programmes, campaigns, donations and sponsorship that reflect Social, Economic, and Environmental pillars of Nama Group’s sustainability policy. We believe that we left a positive legacy for communities we offer our service to in 2017 and we will continue our progress in sustainability field during 2018.

NAMA SHARED SERVICES COMPANY (NSSC)Nama Group has established the Nama Shared Service Company to provide optimized shared services to Nama Group subsidiaries, in accordance to the law for the Regulation and Privatization of the Electricity and related Water Sector, promulgated by Royal Decree No. 78/2004. NSSC’s main objective is to support the subsidiaries to achieve their goals and businesses in Information Technology and to enhance the overall efficiency in delivering our service.

PRIVATIZATION OF THE ELECTRICITY SECTOR Nama Group has recently appointed a consortium of advisors to assist in executing Oman Government’s mandate to facilitate the privatization of a number of its subsidiaries. “Ministerial Decision” (no. 1377/2017),

dated 19th December 2017, has named the subsidiaries of Nama Holding that are selected for potential privatization, which are Muscat Electricity Distribution Company SAOC, Majan Electricity Company SAOC, Mazoon Electricity Company SAOC, Dhofar Power Company SAOC, Oman Electricity Transmission Company SAOC.

WATER SECTOR RESTRUCTURINGNama Holding continues to work closely with the Public Authority for Electricity and Water, to achieve the Government’s initiative to restructure the Water Sector. Nama Holding is assisting through offering expert views and management of the project of restructuring.

MAJOR PROJECT DEVELOPMENT

IPP Solar:Nama Group representing by OPWP undertook a feasibility study for exploring possibility of setting up a PV Solar Power Project in Oman, which is part of energy policy that we worked closely with our stakeholders to build it. The feasibility report carried out by OPWP concluded that it is techno-economically feasible to set up Solar Power Projects in Oman. Pursuant to this, OPWP has initiated the procurement process for a 500MW Solar Independent Power Project at IBRI, Oman on Build, Own and Operate basis, on similar lines as per Oman’s well established I(W)PP program. The Request for Qualification (RfQ) for the Project have been released to the market on December 28, 2017. The Award for the Project is expected by December 2018 and the Scheduled Commercial Operation date is anticipated to be June 2021. This will be the first of a series of Solar IPP which is expected to be launched by OPWP in the years to come.

Dhofar Wind Project:Dhofar Wind Project is one of the Major


GOVERNANCE REPORT

Nama Holding adheres to a stringent Corporate Governance practices and standards to ensure consolidation of

business objectives across all levels of the Group plus enhancing shareholder value. The

company applies various processes, procedures and systems to guarantee that all those working under its extensive umbrella act responsibly, and with great accountability, transparency and integrity to maintain the highest degree of confidence and reliability amongst all the Group’s stakeholders.

NH’s Corporate Governance Policy has been built on the philosophy and principles outlined in an international form and the code of Corporate Governance was issued by the Ministry of Commerce and Industry for SAOG companies, and it is being formally developed to be put in place and shared with NH’s subsidiaries. NH’s Board of Directors values the significance of Corporate Governance which is highly considered as the Group’s business core to achieve sustainable development and prosperity.

NAMA HOLDING’S PHILOSOPHYON GOVERNANCE

NAMA HOLDING’S PHILOSOPHYON GOVERNANCE

NH'S GOVERNANCE STRUCTURE

Boar

d of

Dire

ctor

sSh

areh

olde

rEx

ecut

ives

Ministry of Finance

Board of Directors

Audit Committee

Group Nomination

Remuneration & HR

Committee

FinanceGroup Human

Resources

Group Information Technology

Water Restructioring

Supply & Distribution

Group Communication &

Sustainability

Group Internal Audit

Group Governance &

Risk Managment

Group Chief Executive

Officer

ROLE OF THE BOARD OF DIRECTORS AND THE BOARD COMMITTEES• Board of Directors The NH Board is responsible for the operations of NH as a company and the Subsidiaries

as a supervisor. The day-to-day operations of NH shall be conducted by its Management, led by its CEO, with oversight of the NH Board. The responsibilities and the authorities of the NH Board towards NG include the following:

a) Nomination: Nominating to the shareholders for the appointment and, where necessary, removal of the Subsidiary Board members, as well as specifying their roles, responsibilities and authority.

b) Strategy: Setting strategic direction for Nama Group and approving the group strategy management framework.

c) Group image: Promoting and protecting Nama Group’s image internally and externally;d) Performance Management: Reviewing the performance of the subsidiaries and their

board of directors as applicable.e) CEOs of Subsidiaries: Appointing, re-assigning, succession planning and where necessary

termination of the contract of subsidiary CEOs in coordination with the subsidiary board if applicable.

f) Risk controls: Establishing for NG a framework of prudent and effective controls that enable risk to be assessed and managed effectively.

g) Group Policies: Defining and adopting group policies, manuals and frameworks so as to achieve the aims and objectives of Nama Group while maintaining principles of transparency, accountability and consistency.

h) Shared Services: Ensuring synergy among group companies by adopting shared services - where possible - to optimize and avoid duplication of cost.

i) Internal Auditing: The Audit committee of NH is also the audit committee for LLC subsidiaries.

j) LLC Governance: Approve the delegation of authority for LLC subsidiaries.


• Audit Committee The Audit Committee is expected to ensure that adequate processes are in place to

ensure compliance with regulatory requirements, enhance the effectiveness of internal and external auditors through interacting with them and insulating them from the undue influence of the management, and provide subject matter expertise to the Board on matters of governance and risk. Their objectives are to:

1. Monitor the integrity of the financial statements of the company and any formal announcements relating to the company’s financial performance, reviewing significant financial reporting judgments contained in them.

2. Review the Company’s internal financial controls, internal controls and risk management systems.

3. Monitor and review the effectiveness of the Company’s internal audit function.4. Review and monitor the external auditor’s independence and objectivity and the

effectiveness of the audit process, taking into consideration relevant Capital Market Authority regulation, Commercial Companies Law and Sector Law; and any other related law.

5. Adopt policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm.

• Group Human Resources Committee (GHRC) The GHRC is NH Board level committee which looks at matters related to the nomination

of candidates to the Subsidiary Boards and Management of both NH and its Subsidiaries, HR policies and other significant.

HR matters that need the attention of the members of the BoD. Their objectives are to:

1. To assist the NH Board and the Subsidiary Boards in fulfilling their oversight responsibilities for the independence of BoD members and the integrity of the remuneration strategy at NH and its Subsidiaries;

2. To support Subsidiary Boards in identifying appropriate candidates for nomination to the Subsidiary Board and to fill BoD vacancies as and when they arise; and

3. To assist the NH Board and the Subsidiary Boards in identifying appropriate candidates for nomination to positions within Management at NH and Subsidiary levels.

BOARD COMPOSITION NH being unlisted joint stock company is guided by the provisions of Commercial

Companies Law No. 4/1974 as amended from time to time and individual articles of associations. By virtue of this:

1. NH has 5 Board Members2. The Board composition is a mix of Independent and Non-Executive Independent Board

Members3. The Non-Executive Independent Members are not doing any work with the Company for

which they receive permanent monthly and annual remuneration.

QUALIFICATION AND ELECTION OF THE BOARD MEMBERS In electing Members of the Board of Directors, the terms and conditions issued by the

Minister of Commerce & Industry is being be followed taking into consideration the provisions of Article (95) of the Commercial Companies Law, and without prejudice to the contents of the Articles of Association. The Member of the Board of Directors fulfils the following requirements:

1. Not be less than 21 years old.2. Not be a member of a public joint stock or closed company whose principal place of

business is in the Sultanate of Oman and practicing similar activities.3. Not have been declared bankrupt or dissolved unless such case is ceased to exist as per

the provisions of the law.4. Not have been convicted in a felony or criminal act unless rehabilitated.5. Not be unable to settle his debts & obligations to various lenders.6. It is not permitted to combine the position of CEO/General Manager and the Chairman

of the Board of Directors.

NH is led by a strong and experienced Board. The members bring diversity in expertise and perspective to the leadership of a complex, highly regulated, Electricity sector.


DETAILS OF ATTENDANCE FOR THE BOARD AND COMMITTEES MEETINGS DURING 2017

Member Names H.E. Hassan Mohammed Al Lawati

Mr. SalehNassirAl Rumhi

Mr. MubarikSulaiman AlMandhari

H.E. FaisalAl Hashar

Mr. Mohammed Masoud Al Kharusi

BOD Meetings Dates Chairman Vice Chairman Member Member Member

1st BOD Meeting 05 Jan. 17 Attended Attended Attended - Attended

2nd BOD Meeting 23 Feb. 17 Attended - Attended Attended Attended

3rd BOD Meeting 21 March 17 Attended - Attended Attended Attended

4th BOD Meeting 12 April 17 Attended - Attended Attended Attended

5th BOD Meeting 31 May 17 Attended - Attended Attended Attended

6th BOD Meeting 27 Aug. 17 Attended - Attended Attended Attended

7th BOD Meeting 08 Nov. 17 Attended - Attended Attended Attended

8th BOD Meeting 17 Dec. 17 Attended Attended Attended Attended

Total Number ofBOD Attended

8 1 8 7 8

Sitting Fees (OMR) 4,400 500 3,300 3,500 4,000

BOD Bonus (OMR) 10,000 123 5,000 5,000 5,000

Internal Audit Committee (IAC)

IAC Meetings Dates Member Member Chairman

1st IAC Meeting 23 Feb. 17 Attended Attended

2nd IAC Meeting 13 March 17 Attended Attended

3rd IAC Meeting 16&22 May 17 Attended Attended

4th IAC Meeting 25 Aug. 17 Attended Attended

5th IAC Meeting 17 Oct. 17 Attended Attended

6th IAC Meeting 11 Dec. 17 Attended Attended

Total Number ofIAC Attended

6 6

Sitting Fees (OMR) 1,500 2,400

Group Human Resource Committee (GHRC)

GHRC Meetings Dates Chairman Member Member

1st GNRHRC Meeting

14 Feb. 17 Attended Attended Attended

2nd GNRHRC Meeting

14 Mar. 17 Attended Attended Attended

3rd GNRHRC Meeting

14 May 17 Attended Attended Attended

4th GNRHRC Meeting

25 Oct.17 Attended Attended Attended

Total Number of GHRC Attended

4 4 4

Sitting Fees (OMR) 1,600 1,200 1,200

GENERAL MEETINGS OF SHAREHOLDERSAnnual General Meeting (AGM) refers to the general meeting of the Company which is held annually. Article 120 of the Commercial Company Law mandates Nama Holding to hold an AGM within three months of the end of each financial year. It is the policy of NH that the gap between subsequent AGM’s shall not be more than fifteen months.

COMMUNICATIONS WITH THE SHAREHOLDERS AND INVESTORSPursuant to Royal Decree 78/2004, the company maintains close liaison with the Ministry of Finance (MOF), the shareholder, on various policy issues. Annually, the company communicates its annual report to the shareholder MOF.

GOVERNANCE BETWEEN NH AND ITS SUBSIDIARIESNH was established by the Sector Law and, with the exception of DPC, has 99.99% ownership of the Subsidiaries. NH’s ownership of DPC is 98.90%. NH’s primary roles consist of:

1. As a majority shareholder in the Subsidiaries, representing the ownership of the Government of the Sultanate of Oman, supporting and implementing the Government’s privatization policy.

2. As a service provider to the Subsidiaries, providing central accounting and financial support services pursuant to NH’s responsibilities under the Sector Law.

3. As the holding company for the Group, developing and leading strategy for the Group.4. As part of its strategic role, NH is responsible for promoting and developing the highest

standards of corporate governance across the Group and this includes appointing each of the Subsidiary Boards in coordination with the MoF pursuant to the Sector Law and satisfying themselves that an appropriate governance structure is in place within NH and its Subsidiaries.

The Governance structure adopted by the NH Board and its subsidiaries is represented in the following chart:

DISTRIBUTION OF SHAREHOLDINGSince the company is fully owned by the Government of the Sultanate of Oman, represented by MOF, NH directly reports to the shareholder through the MOF.

STATUTORY AUDITORSStatutory auditors express an opinion on the fairness with which NH presents, in all material respects, its financial positions the results of its operations, and its cash flows in line with internationally recognized Accounting Standards.

Subsidiary Board

Subsidiary CEO/GM Group CEO or Business Segment VP

NH Board


STRATEGY

KPMG were the Statutory Auditors of NH during 2017. KPMG is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide Audit, Financial.

Advisory, Enterprise Risk Services, and Tax services to selected clients.

BUSINESS CONTINUITY AND RISK MANAGEMENTThe Business Continuity Management Framework (BCMF) implemented to help Nama Holding build its business continuity capability, and ensure ongoing performance of the essential functions and process before, during and after disaster or crisis that could result in a business disruption. The business continuity framework adopted is based on ISO 22301 standard.

Enterprise Risk Management at NH aims to strengthen governance at the Group level through implementation of the strategic initiatives on Enterprise Risk Management (ERM). The main activities include:

1) Design, develop, implement, maintain and review the ERM policy, framework, processes, procedures and documents and records to ensure relevance, appropriateness, completeness, effectiveness and alignment to the Group Risk Management Policy;

2) Continuous implementation, maintenance and improvement of the NH ERM Framework 3) Continuous embedment of Risk Management (RM) into the NH processes like planning,

budgeting, reporting, etc.4) Raising the level of maturity across the group by developing a risk maturity model to

measure quality of RM activities and the extent to which they are embedded in the implementation.

CODE OF ETHICS AND BUSINESS CONDUCTThe Code of Ethics and Business Conduct (CEBC) applies to the Board of Directors of the Nama Group companies and all the employees therein, as well as all consultants, contractors, suppliers and persons representing NG in their commercial operations. This CEBC emphasis;

•NG commitment to ethics and compliance with the law,• Set forth basic standards of ethical and legal behavior; and•Help to detect and prevent wrongdoing.

NH has implemented an online system in 2017 for CEBC and made awareness sessions to all staff of NH. Subsequently, all staff successfully attended their assessment online.

WHISTLE BLOWINGFulfilling its responsibilities under the best practices of Corporate Governance, the Whistle Blowing Policy is developed in line with the Sector’s Policy Statement on Fraud Deterrence. The purpose of this policy is to support the mission and values of the Nama Group (NG) and ensure that directors, officers, employees, former employees, suppliers, contractors, customers and clients of NG can report misconduct, wrongdoing, violations, illegal activities as outlined in the policy on the dedicated web Site: www.wajib.nama.om.


OUR STRATEGY

NAMA GROUP STRATEGY:Nama Holding works closely with all of its subsidiaries on developing strategies that serve the overall mission and objectives of the Group. We drive the performance together to achieve our vision to be a leading reference in utility services in the region in 2022.

We strive for improvement in performance and capabilities based on the five strategic focused areas, to serve the growing customer base and participate effectively in the economic development of Oman. Our strategies clearly reflect our commitment to satisfy the expectation of our customers and to embrace the challenges the future brings.

KEY STRATEGIC FOCUS AREAS: CORE OBJECTIVES:

Health, Safety and Environment No harm to people or environment

Human Resource Development Competent People

Customer Experience Delighted Customer

Service Reliability Ensure that electricity is always available

Cost Efficiency Best in class cost per unit

The above strategic focus areas and other financial and compliance related objectives have been developed to provide strategic direction to the Group Companies, as fundamental guidance, in developing their respective Business Plans. Furthermore, the subsidiaries are encouraged to explore and identify additional strategies towards fulfilling their respective visions and stakeholders expectations and requirements.

Our subsidiaries have aligned their strategic objectives to Nama Group strategic direction. We have started benchmarking the Group performance to regional utilities. It was decided to expand our benchmarking initiative to include more of the international key utilities, in the near future to ensure the alignment of the new Government Policy. This will enable us to enhance our performance to reach international levels and to adopt best-practices. The outcomes of the yearly benchmarking exercise play a key role in shaping our future strategies and identifying key strategic initiatives that we need to develop or adopt.


HSE

HEALTH, SAFETY AND ENVIRONMENT

HEALTH, SAFETY AND ENVIRONMENT As a professional and moral obligation, Nama Group is striving to maintain international standards and high HSE performance. It embarks on the journey towards aspired goal of providing safe and sustainable electricity services.

HSE in Nama Group complies with relevant HSE standards prevailing in the Sultanate of Oman along with international standards. The Group is committed to set up HSE performance objectives, measure results, assess and continually improve processes, assuring best practices and services, through the use of effective management systems. Nama Group aims to keep this commitment in the best interests of its employees, customers, contractors and those might be affected by its operations.

Nama Group’s HSE is looking forward to eliminate incidents especially that might lead to loss of lives, destruction of property, and affect the environment. Furthermore, there is a strong direction to improve the safety culture as it is integrity between NG employees, contractors and community. Accordingly, Nama Group focused on three main emphasis areas of improvements in 2017 namely; HSE leadership at all level, integrating HSE goals with business objectives, and learning from incidents. Also, NG implemented programmes and initiatives, which drive towards its objectives as follows:

Life Saving Rules Nama Group aims to promote a common HSE culture for its employees and contractors. Accordingly, Nama Life Saving Rules was established with zero tolerance on consequence management for nonconformance. Several new HSE tools & techniques were introduced and over 130 HSE staff and supporting teams from NG were trained on using them. The training will be extended to all NG employees and

Continually improve processes, assuring best practices and services, through the use of effective

managementsystems.

contractors in the second phase plan of this project.

International Integrated HSE Management SystemsMost of the NG Companies are now certified with the International Integrated HSE Management Systems which include OHSAS 18001 (Occupational Health), ISO 14001 (Environment) and ISO 9001 (Quality), and several external verification audits were carried out in 2017 which resulted on recertification of the mentioned standards.

HSE CampaignsNG Companies went vigorously with 2017 HSE Campaigns covering vast majority of projects and operational areas, while Joint Management HSE site visits were carried out jointly by leaders from NH and NG Companies CEOs.


LOST TIME INJURY FREQUENCY (LTIF):

MEDC MZEC MJEC DPC RAECO GPDC WJPC OPWP OETC NH NG

2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017

0.300.31

0.43

0.200.20

0.43

0.04 0.0500 00 0 00 0 0

6.26

0.09 0.15 0.12 0.11

1009080706050403020100

ACCUMULATIVE SAFE MAN HOURS (MILLION):

MEDC MZEC MJEC DPC RAECO GPDC WJPC OPWP OETC NH NG

2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017 2016 | 2017

1.5561.296

10090

2.3242.1186.972

28.011 18.2344.9549.938 4.9964.914

0.482 0.1190.59811.561 12.963

3.2700.1590.160 0.153

80706050403020100

48.765

72.797

Fatalities and Lost Time Incidents (LTIs):Nama Group is taking HSE seriously and consider it as an integral part of its business values and objectives with the main focus on no harm to people, reduce impact to environment and no damage to assets. Despite current improvements on various aspects of HSE management elements, unfortunate incidents continue to strike. Nonetheless, NG is leaving no stone unturned when it comes to learning from those incidents and put additional controls to ensure non-reoccurrence of similar incidents.

HSE Achievements in 2017:Nama Group has already achieved number of remarkable initiatives and objectives to ensure that our HSE approach is equipped with key functions and talents. ORACLE/NIMS HSE Function was implemented in addition to introducing BowTie, Tripod BETA, Audit XP to 30 NG HSE Professionals and 100 NG supporting staff in different training programmes. In addition, NG successfully provided Unified Incident Lateral Learnings & HSE Alerts amongst the Group, while all subsidiaries undergone OHSAS 18001 verification audit.


CUSTOMER SERVICES

CUSTOMER SERVICES:The distribution companies are in continuous pursuit to enhance customer experience across touch points. These companies have been working via an integrated customer service improvement programme to enhance the efficiency of their customer service operations and provide customers with accessible & convenient services.

To achieve the sought enhancements in customer service and efficiency, the distribution companies opened competition to meter reading & collection services. Competition in the meter reading operations resulted in major improvements in the quality of meter reading in addition to more flexibility in reading arrangement, which also led to reduced operational costs.

Moreover, opening competition in collection service resulted in a considerable expansion and proliferation of electronic collection channels, which lead to an increase of over 300% in the number of e-payment by

customers since 2016.

During 2017, the distribution companies expanded their usage of electronic bills distribution methods and capitalised on SMSes, email, websites and mobile apps to deliver the bills to their customers. This has reduced the cost of bills delivery and the time it takes to send the bill to the customer.

Moreover, using e-bill has increased the reliability and security of bills distribution.

Moreover, the distribution companies are utilising the economies of scale of Nama Group, when possible, to obtain better rates from service provider for services provided for their customers. To enhance the efficiency of meters reading in 2017, the distribution companies started using smart meters to read the electricity consumption of high value customers. These smart meters will not only reduce the cost of meter reading, but will also provide more accurate meter reads for this segment of customers.

Meter Reading Coverage percentage is 88.6%Compared to 87% in 2016

Percentage of E-Bill distribution is 13.4% Compared to 7.5% in 2016

Electronic collection percentage , end of 2017, 23% Compared to 7%, beginning of 2016

Complaints resolution in time = 97.5%Compared to 96% in 2016

Views of the Customers

The Group continuously aims to record accurate meter readings which are reflected in customer bills. The Group is currently implementing a number of models in meter readings including prepaid meters, automatic meters, manual reading meters, self-reading meters, and accurate readings that reflect consumer consumption.

Distribution Companies aim to deliver bills to customers reliably and comfortably. The Program aims to better use of SMS, e-mail, and other electronic messaging systems to distribute bills.

The Group has recently changed the design of bills to allow customers to read them more easily and understand their details.

The program aims to diversify the methods of payment to facilitate the payment of bills by subscribers, and the group encourages the use of electronic payment method as it is easier than visiting company offices to pay.

Distribution companies pay great attention to the complaints and inquiries of their customers and aims to record all their inquiries and resolve them as fast as possible.

The Group works to enable its frontline employees to assist the customers in the best and fastest way possible.

To ensure the permanent collection and analysis of all customer views, distribution companies have organized a quarterly questionnaire to measure customer satisfaction regarding services provided through company channels.

The results have enabled these companies to identify fields of improvement, and understand customer expectations.

Customer Services Achievements in 2017:


HUMAN RESOURCE DEVELOPMENT

Competencies DevelopmentHuman resources is the key driver to achieve the Group vision. Accordingly, having competent employees is an essential objective. Therefore, the Group developed the competency framework for 18 disciplines with clear competency dictionary. The Group started assessing all Omani employees since 2015 to ensure each employee has Personnel Development Plan (PDPs) and more than 820 employees were assessed into 2017. The total number of assessed employees since 2015 is 1910.

Ruwad Programme (batch 2)Ruwad is one of the developmental initiatives rolled out across Nama Group. The key objective of Ruwad is to identify potential employees showing high performance and groom them to become future leaders. The

programme aims to develop individuals’ capabilities and leadership competencies and empower them to take the leadership roles. The program was launched in 2014 as 16 employees were selected. The selection process for batch 2 was started in 2017 and 38 candidates were identified. This batch of employees shall receive a formal education during 2018 through one of the top institutes in customized leadership training, which is HEC Paris.

Training and development: To enhance the overall efficiency of the Group, we have embarked on an ambitious plan to consolidate the common services among our subsidiaries. As a result, Nama Institute for Competency Development (NICD) was established in 2014 as a training center which aims to develop competencies of human resources in the utility sector.

Total Number of Trainees and Training Hours:

•Total number of trainees increased by 14%•Total number of training hours increased by 17%

[ Training Hours ]2017

43,456

2016

36,267

[ Number of Trainees ]20172016

2,244

1,931


FINANCIAL AND OPERATIONAL PERFORMANCE

FINANCIAL & OPERATIONAL PERFORMANCE HIGHLIGHTS

REDUCTION IN SUBSIDY

9.0%

GROWTH INELECTRICITY REVENUE

6.2%

COST PER UNITDECREASED BY

4.3%

8%

STAFF EFFICIENCY INCREASED BY

GROWTH INCUSTOMER NUMBERS

6.8%NETWORK RELIABILITY

99.99919%

6.3%

GROWTH IN TOTAL GROUPCAPITAL INVESTMENT

GAS CONSUMPTIONEFFICIENCY INCREASED BY GROWTH IN UNITS SOLD

6.8%3%


NAMA GROUP FINANCIAL PERFORMANCE:

Nama Group recorded a remarkable financial year in 2017 with growth in Earnings before Interest and Tax (EBIT) by 6.3% to OMR 163.2M. Profit before Tax shows a declining trend compared to the previous year, primarily due to the increasing cost of finance driven by Nama Group’s comittment to expand the capital investment and expansion of the network and enhancing it’s reliability.

NAMA GROUP’S OPERATIONAL PERFORMANCE:

Oman’s continuous demand in the Electricity and the related Water Sector has expanded over the past few years. However, improvements in the network efficiency enabled Nama Group to deliver better value to its growing customer in 2017. The customer base increased to 1,147,401 customers with an average of 6.8% in comparison with 2016 records, and the electricity supplied increased to 32,277 GWh by 7%. Based on 2017 statistics, the Omanization percentage within the Group reached up to 92 % as an essential element of NG’s development plan.


Total Revenue in 2017 and 2016

Subsidy 43%

Water Soldto PAEW

14%

CustomerRevenue41%

Others Assets sales+Operational+Other2%

20162017

Subsidy41%

Water Soldto PAEW

13%

CustomerRevenue44%

Others (Assets sales+Operational+Other)2%

Depreciation11.04%

TotalDirect Cost

72.08%

General andAdmin expenses

11.81%

Finance Cost5.06%

Depreciation12.27%

TotalDirect Cost

68.76%

General andAdmin expenses

11.28%

Finance Cost7.69%

20162017

Note:• The gross operating revenue of the Group increased by 0.2% • Subsidy participation in total revenue decreased by 2% primarily due to the impact of the CRT (Cost-Reflective Tariff) implementation.

Note:Total Direct Cost includes: • Energy and water procurement costs • Repairs, spares consumption and maintenance costs • Other direct cost

• Total Revenue in 2017: OMR 1.123 Billion• Total Revenue in 2016: OMR 1.121 Billion

Total Expenses in 2017 and 2016

• Total Expenses in 2017: OMR 1.061 Billion • Total Expenses in 2016: OMR 1.038 Billion

Note:• Although total units sold have increased by 6,7% year-on-year, our total expenses only increased by 2% resulting in our concerted efforts on cost efficiencies across the Group.

Profit in 2017 and 2016

Cost in 2017 and 2016Cost (OMR/MWh) per Category

Profit Before Tax

Cost per MWh Cost in 2017 and 2016

TotalDirect Cost

68.76%

Finance Cost7.69%

Depreciation12.27%

General andAdministration

Expenses11.28%

TotalDirect Cost

72.08%

Finance Cost5.06%

Depreciation11.04%

General andAdministration

Expenses11.81%

20162017

COST PERMWH IN 2016

OMR 34.295

COST PER MWH IN 2017

OMR 32.875

TOTAL PROFIT BEFORE TAX

IN 2016OMR

107.0 MTOTAL PROFIT BEFORE TAX

IN 2017OMR87.7M

• Cost per MWh in 2017: OMR 32.875• Cost per MWh in 2016: OMR 34.295

Note:• Cost per unit has primarily decreased due to a reduction in total direct costs and savings in general and administration expenses.

Note:Profit before tax has decreased compared to the previous year mainly due to the increase in financing cost, which is driven by the growth in Capital Investment expansion across Nama Group.

• Total Profit Before Tax in 2017: OMR 87.7 Million • Total Profit Before Tax in 2016: OMR 107.0 Million

Expenses

Revenue


Subsidy per Unit Subsidy in 2017 and 2016:

Subsidy per Customer Subsidy in 2017 and 2016:

Subsidy per Company Subsidy in 2017 and 2016:

• Subsidy per Unit in 2017: OMR 14.14 • Subsidy per Unit in 2016: OMR 16.43

• Total subsidy in 2017: OMR 456 Million • Total subsidy in 2016: OMR 497 Million

• Subsidy per Customer in 2017: OMR 398 • Subsidy per Customer in 2016: OMR 463

2017 MZEC32%

MEDC22%

RAECO20%

DPC8%

MJEC18%

2016 MZEC30%

MEDC25%

RAECO14%

DPC8%

MJEC23%

1000

900

800

700

600

500

400

300

200

100

0

18

16

14

12

10

8

6

4

2

0

2016 2017

456M

398

497M463

14.14

16.43

Subsidy (OMR Millions) Subsidy per Customer (OMR / Customer) Subsidy per Unit (OMR / MWh)

Note:• Subsidy per Unit decreased by 13.9% • Subsidy per Customer decreased by 14.0%


UNIT SOLD (GWH) IN 2017

32,277UNIT SOLD

(GWH) IN 201630,255

Unit Sold in 2017 and 2016:

• Unit Sold (GWh) in 2017: 32,277• Unit Sold (GWh) in 2016: 30,255

Notes: • Total electricity supplied reached 32,277 GWh in 2017 a 7% increase. Majority of the demand growth was driven in the Main Interconnected Network. • Cost-Reflective Tariff customers form 34% of total units sold in 2017, which contributed significantly towards reducing the Government subsidy revenue.

Unit Sold

Unit Sold (GWh) per Category in 2017 and 2016

Unit Sold (GWh) per Company in 2017 and 2016

2017 MZEC32%

MEDC22%

RAECO20%

DPC8%

MJEC18%

2016 MZEC30%

MEDC25%

RAECO14%

DPC8%

MJEC23%

2017 2016

CRT32.5%

Commercial14.6%

Residential45.8%

Government5.6%

Agriculture1.3%

Residential46%

Commercial22%

Government14%

Industrial0.2%

Industrial17%

CRTNotapplicable

Agriculture1%

MZEC36%

MEDC32%

RAECO3%DPC

9%

MJEC20%

2017 2016MZEC36%

MEDC32%

RAECO3%DPC

9%

MJEC20%

Number of Customers in 2017 and 2016 Customers

Agriculture0.76%

Residential74.31%

Commercial 20.62%

Government3.31%

CRTCost Reflected Tariff0.90%

Industrial0.04%

Agriculture0.78%

Residential74.53%

Commercial 20.65%

Government3.89%

CRTCost Reflected TariffN/A

Industrial0.09%

20162017

• Total Number of Customers in 2017: 1,147,401• Total Number of Customers in 2016: 1,074,608

Note: • Number of customers was increased by 6.8%• Cost-Reflective Tariff customers in 2017 account form under 1%, however as mentioned earlier, their contribution to unit sales is 34%.

TOTAL NUMBER OF CUSTOMERS

IN 2017: 1,147,401

TOTAL NUMBER OF CUSTOMERS

IN 2016:1,074,608

Customers per Company

Customers per Category


Electricity Losses Electricity Losses in 2017 and 2016

Electricity Losses per Company in 2017 and 2016

Electricity Losses per Network in 2017 and 2016

2016COMPANY 2017

MEDC 7.49% 6.92%

MZEC 9.26% 9.08%

MJEC 9.9% 9.3%

DPC 9.98% 9.7%

• MIS and DPC Electricity Losses in 2017: 8.4%• MIS and DPC Electricity Losses in 2016: 8.8%

Note: • Electricity Losses decreased by 0.4%• Distribution Losses has reduced to 8.4% in MIS due to metering and distribution network enhancements and better management practices. DPC distribution losses have marginally reduced to 9.70% in 2017.

10

9

8

7

6

5

4

3

2

1

0

2016MIS DPC

2017

8.70%8.30%

9.98%9.70%

10

9

8

7

6

5

4

3

2

1

0

2016MIS DPC

2017

8.70%8.30%

9.98%9.70%

MIS AND DPC ELECTRICITY

LOSS IN 2017:

8.4%

MIS AND DPC ELECTRICITY

LOSSES IN 2016:

8.8% Power Generated

v v v Gas Consumption: Gas Consumption in 2017 and 2016

Power Generated by Nama Group 3,422 2,969

Power Generated and Purchased by IPPs 30,017 32,567

Total Power Generated 33,439 35,536

2017Power Generated (GWh) 2016

• 2017: 22.1 MM Sm3/day• 2016: 21.6 MM Sm3/day

Notes: • Gas consumption for MIS and DPS was increased by 2.3% due to the growth in demand (Generation output) which was increased by 6%. The gas efficiency improved by 3% compared to 2016.

22.1 MMSm3/d

2017 2016

21.6 MMSm3/d

Power Generated in 2017 and 2016

Notes: • Power Generated by the Group in 2017 is 2,969 GWh which is lower, Compared to 3,422 GWh in 2016. Power procurement from (Independent Power Plants) IPPs has increased by 8.4% over 2016 to 32,567 GWh mainly due to commissioning of Musandam IPP and higher utilisation from the Sur IPP.

2016 2017M3/MWh

23724522.1 MMSm3/d

2017 2016

21.6 MMSm3/d


• Total amount of Capital Expenditure in 2017: OMR 469.7 Million • Total amount of Capital Expenditure in 2016: OMR 448.9 Million

Note:• Capital Expenditure increased by 6.3%

Distribution of the Capital Expenditure (additions) per Company:

MAJOR NETWORK PROJECTS AND ACHIEVEMENTS IN 2017:

Project NameSr. #

Commissioning of Musandam IPP project with a production capacityof 120MW by Musandam Power Company

Commissioning of Salalah II IPP with a production capacity of 445MWby Dhofar Generation Company

132kV Circuit Reinforcement Linking Wadi Kabir, Al Falaj & MuttrahGrid Stations

Construction of New 132/11kV Grid Station at Daghmar IWP GridStation &132kV Feeder Works from Quriyat Grid Station

Construction of 132/33kV Grid Station at1. Al Dreez and Associated OHL from Ibri station2. Saada and Associated 132kV LILO works3. Suwaiq 4. Salalah Free Zone 5. Jebreen

Upgrading 132/33kV Mobella-1 Grid Station to 220kV

Construction of 220/132/33 kV Grid Stations at Suhar Free Zone

1

2

3

4

5

6

7

TOTAL AMOUNT OF CAPITAL

EXPENDITUREIN 2017:

OMR 469.7MILLION

TOTAL AMOUNT OF CAPITAL

EXPENDITUREIN 2016:

OMR 448.9MILLION

2017

OETC39%

MZEC24%

MZEC12%

MJEC11%

RAECO10%

DPC4%

OTHERS 0.43%2017

2016

OETC30%

MZEC28%

MZEC12%

MJEC12%

RAECO12%

DPC5%

2016OTHERS 0.40%

Capital Expenditure Total Capital Expenditure in 2017 and 2016:

v v v

Total Capacity (MW)

Total 7898 7898

2016 2017

Average Demand (MWh) 3,364 3,578

Growth (%) 3.9% 6.4%

Peak Demand (MW) 5,920 6,116

Growth (%) 6.4% 3.3%

20172016Demand

Average Demand (MWh) 349 368

Growth (%) 4% 5%

Peak Demand (MW) 497 552

Growth (%) 0.5% 11.1%

20172016Demand

Supply and Demand Electricity Supply and Demand in 2017 and 2016:

Contracted: Electricity Supply

Electricity Demand-MIS

Electricity Demand-DPC


LAMAR FINANCING PROJECTNama Group is a growing entity and plays a very significant role in the economy of the nation. The Group invested heavily in capital expenditure to expand and develop its networks and systems to satisfy the requirements and demands of the market.

Availability of capital funding is critical to the successful achievement of Nama Group mission. The Group has made significant progress in Lamar Project since its launch in 2014. Nama Group, led by Nama Holding, has successfully raised funds of OMR 1.6 Billion across various funding sources and tenors.

Diversification of sources, optimization of rates and hedging of the interest rates have helped the Group achieving its target financial cost metrics efficiently in comparison to their allowed price control returns.

The fundraising programme will further support Nama Group’s capital expenditure for distribution and transmission network, and to refinance the existing short term borrowings.

FUNDS RAISED OF LAMAR PROJECT SINCE 2015 TILL 2017:

2015:• Completed OETC Bond for OMR 385 Million • Completed MEDC financing programme for OMR 170 Million• Completed MZEC financing programme for OMR 240 Million

2016:• Completed MJEC financing programme for OMR 127 Million• Completed DPC financing programme for OMR 100 Million

Total Funds raised: OMR 1.6 Billion

OMR1.6

Billion

2017:• Completed OETC Bond for OMR 192.5 Million• Completed MZEC Sukuk for OMR 192.5 Million• Completed MEDC financing programme for OMR 81.2 Million• Completed MJEC financing programme for OMR 63.5 Million• Completed DPC financing programme for OMR 41.1 Million.

GROUP COMPANIESPERFORMANCE


WAJPCO 2017 2016

Revenue RO’000 14,699 17,132

Net profit before tax RO’000 5,415 2,923

EBIT Margin RO’000 5,427 2,934

Capital investment/expenditure RO’000 46 79

Omanization% 89% 89%

Total Number of Employees 54 61

Total Safe Working Hours 159,788 1,600,322

Number of Lost Time Injury 1 0

Electricity Generated (GWh) 376 615

Plant Availability% average 90% 87%

GPDC 2017 2016

Revenue RO’000 44,070 42,936

Net profit before tax RO’000 (1,805) (1,171)

EBIT Margin RO’000 (1,597) (1,011)

Capital investment/expenditure RO’000 46 857



Total Safe Working Hours 6,585,343 5,988,575


Electricity Generation (GWh) 1969 2069

Water Production (M.CuM) (Million Cumbic Meter) 37.8 33.6

Plant Availability Power% 92% 90%

Plant Availability Water% 89.5% 87.7%


OPWP 2017 2016

Revenue RO'000 761,829 722,890

Net profit before tax RO'000 (852) (2,857)

EBIT Margin RO'000 22,481 18,867

Capital investment/expenditure RO'000 475 376

Omanization % 85% 85%




Power Generation in Main interconnection system(MIS) (GWh)

31,534 29,549

Cost per Unit (RO/MWh) in MIS 16.97 17.22

Power Generation in Dhofar (GWh) 3,095 3,057

Cost per Unit (RO/MWh) in Dhofar 25.93 26.75

Water Produced (Cu.M,000) 302,702 281,498

Cost of Water (RO/CuM) Per Unit 0.423 0.460

OETC 2017 2016

Revenue RO'000 98,481 95,840

Net profit before tax RO'000 33,898 40,382

EBIT Margin RO'000 52,005 51,395

Capital investment/expenditure RO'000 183,565 132,184





Regulated Units Transmitted (GWh) 33,877 31,910

Peak load (MW) 6,870 6,623

System Reliability Index% 99.99% 99.99%

Transmission Loss% 1.64% 1.61%


MEDC 2017 2016

Revenue RO'000 313,502 304,695


EBIT Margin RO'000 18,437 23,437





Lost Time Injury 0 0

Number of Units Sold - GWH 10,919 10,381

Economic cost per Unit Sold RO PER MWH 28.9 29.0

Subsidy per MWh Sold (RO/MWh) 10.32 11.68

GOVERNMENT SUBSIDY (RO 000's) 98,496 12,309

Number of Customers 362,891 336,523

Actual Meter Reading% 91.8% 92.51%

Number of Complaints Logged 2,797 4,973

Complaints closed on time% (Within 10 working days) 100% 100%

SAIFI (System Avarage Intruption Frequancy Index) 1.64 1.36

CAIDI (Customer Avarage Intruption Duration Index) Minutes 104.02 124.26

SAIDI (System Avarage Intruption Duration Index) Minutes 170.6 168.99

Distribution Loss% 6.92% 7.49%

MZEC 2017 2016

Revenue RO’000 290,609 272,633

Net profit before tax RO’000 19660 22,417

EBIT Margin RO’000 33575 30,767

Capital investment/expenditure RO’000 180,996 123,886






Cost per Unit Sold RO PER MWH (Ops cost/RUS) 28.13 32.28


GOVERNMENT SUBSIDY (RO 000’s) 148,559 149,546


Actual Meter Reading% 92% 88.50%


Complaints closed on time% 95% 94%


CAIDI (Customer Avarage Intruption Duration Index) Minutes 91.92 72


Distribution Loss% 9.08 9.26


MJEC 2017 2016Revenue RO'000 240,863 231,685


EBIT Margin RO'000 18,002 17,211







Cost per Unit Sold RO per MWh 24.55 25.13



Actual Meter Reading% 85% 85%


Complaints closed on time% 95% 91%





DPC 2017 2016Revenue RO'000 91,857 84,994


EBIT Margin RO'000 7,945 6,340







Cost per Unit Sold RO PER MWH 29.41 28.60




Actual Meter Reading (%) 85% 84%

Number of Complaints Logged 702 224

Complaints closed on time (%) 73% 95%






RAECO 2017 2016

Revenue RO'000 109,728 95,090


EBIT Margin RO'000 12,847 14,402






Electricity Generated (GWh) 832 939

Number of Units Sold - GWH 914 849

Cost per Unit Sold RO PER MWH 77.4 100.81

Water Produced (M. CuM) Million Cumbic Meter 3.57 3.42

Number of Water Sold (M. Cu.M) 3.36 3.22

Subsidy per MWh Sold (RO/MWh) 93 91



Actual Meter Reading (%) 80% 79%

Number of Complaints Logged 74 65

Complaints closed on time (%) 98.52% 98%

CAIDI (Customer Avarage Intruption Duration Index) minutes 97 104

NICD 2017 2016

Revenue RO'000 812 866

Net profit before tax RO'000 -38 -61

EBIT Margin RO'000 -22 -51

Capital investment/expenditure RO'000 24 15



Total Safe Working Hours 1435 1,099


Number of trainees 2244 2,346

Number of Training Hours 43456 36,267

Number of training Days 494 383

Number of man Days 6208 5,181


SUSTAINABILITY


NAMA GROUP SUSTAINABILITY:In 2017, Nama Group made progress in its strategy of sustainability; we are still committed to positively influencing the whole Sultanate from Social, Economic, and Environmental aspects. We aim to leave a positive legacy for communities we offer our services too.

In the face of global economic disturbance, we strengthened the guidelines we use to enhance discipline in investments to serve our growing customer base. In addition, we introduced renewable and technological solutions to enhance our efficiency measures while giving a strong attention to the suitability aspect of our business. This direction helped consolidate the relation between offering a high level of services at optimum cost.

Social Pillar (Total expenses 123,500 OMR)Nama Group has given this dimension of our sustainability strategy a special attention, as we believe there is much to be done in this area to positively impact the lives of our customers. We have invested this year around 25% of our sustainability budget to show our commitment to our sociality.

Wiyakum Competition: This competition aims to promote a volunteering culture in the Sultanate through the participants who will become role models and change agents in their local communities through supporting various development initiatives that can create a sustainability impact. The competition is divided to two parts as per the target stakeholders:

• Public competition:This competition mainly targets the youth and Non-Government Organizations “NGO’s” and encouraged their involvement in identifying local issues and create a ripple effect through their effective development

of volunteering groups. 2017 was the third version of Wiyakum volunteering competition and done with the collaboration of National Youth Commission. A total of 2700 volunteers participated in this competition from 137 teams to showcase 18 projects that we implemented. We honored 5 winning teams at the end of the competition.

• Nama Staff Volunteering:This initiative targeted Nama Group staff aiming to promote volunteering culture among the staff, build bridges with the society and to encourage Nama Group staff to utilize their volunteering leave day. A total of 181 staff from Nama Group engaged in volunteering events in Oman Electricity Transmission Company and Mazoon Electricity Company and 40 volunteers from the Group participated in staff volunteering competition which is part of this initiative. We managed to implement 3 projects across the Sultanate through the 8 registered teams.

My House is safe (Baiti Amen): We believe that we have a big role to play on safety measures in the houses that we offer our service to. This was the main driver to build this programme to impact how our customers believe and practice Health Safety and Environment “HSE” at home. This programme targeted house wives and gave them the knowledge needed on First Aid skills and we also provided each participant with a Frist Aid kit to be kept in the right place at their houses.

The programme is an initiative by Al Ghubra Power and Desalination Company HSE team and implemented by representatives from Ministry of Health. The workshops covered Muscat area and we were targeting 1,000 housewives. Fortunately, we were able to train more than 1100 participants and we delivered 20 First Aid workshops

Sign Language Training by Oman Association of the Hearing Impaired: Nama Group collaborated with Oman Association of the Hearing Impaired to provide a professional training in sign language to customer service representatives from different Government service providers in Oman in order to enhance the quality of service we offer through our offices and in other Government agencies to the hearing-impaired citizens. We were able to train 30 participants from 12 governmental institutions by offering 144 training hours. A great achievement that we believe will offer an ease to those with hearing-impairment while seek the service from our service points or any of the participating Government agencies.

Social donations and sponsorships:During 2017, we offered support to different agencies as part of our sustainability programme. We have provided 85 wheelchairs for Oman Association for Disabled; 25 computer devices and Brail printing for Al Noor Association for the Blind. Also, we have supported 2 volunteering events for the Special Olympics Association that will be executed in 2018. Utilities Bills Donation Gate with Dar Al Atta Association was another initiative that we have worked on to enhance our contribution in easing the lives of our customers who are in need.

Environmental Pillar (Total expenses 168,200 OMR)Nama Ambassadors programme:Nama Group initiated a nationwide educational programme aiming to spread the knowledge of sustainability development among the Omani youth. The programme focuses on the environmental pillar of sustainability where participants (colleges and school’s students) formed teams to deliver projects reflecting what they have learned. The programme is delivered by an incubated

company in Nama Institute for Competency Development who was established specially to execute this programme. Through this programme, we were able to attract 1706 participated students who delivered more than 300 proposals. The participating teams were able to implement 20 projects after getting more than 10000 training hours. Unfortunately, we were able to choose only 7 winners where we believe that all of them deserve to win.

Energy Conservation Campaign: The energy conservation ranks very high on our initiatives in sustainability. We strongly believe that energy conservation is very key in enabling a more prosperous future for next generations.

In 2017, We delivered a group conservation campaign in line with the Gulf Cooperation Council united conservation efforts. The campaign aims to promote the importance of the efficient consumption of electricity and educate the stakeholders on the best ways of saving energy. It also aims to show the positive impact for the stakeholders because of efficient consumption and improve the stakeholder engagement toward their responsibility to participate in saving resources. Through this campaign we were able to attract more than 690 participants to our social media competitions and 2000 visitors to our one-day booth in a shopping mall. We drove this initiative with the help of traditional media channels where we made more than 20 interviews in radio and TV; and huge interaction though social media channels with more than 1000 posts. We ended this with more than 32 volunteers in the Earth Hour in Barka using solar devices.

The Environmental Society of Oman - Inter College Environmental Public Speaking Competition:


FOCUSING ON CAMPAIGNS TO

ENCOURAGE RESIDENTIAL CUSTOMERS TO

REDUCE ELECTRICITY CONSUMPTION.

The Environmental Society of Oman has joined hands with Emirates Environmental Group to become strategic partners and present the Inter College Environmental Public Speaking Competition in Oman. We have participated in the initiative to enhance the presentation, research and public speaking capabilities of young Omanis. We saw this as a perfect opportunity to showcase Omani youth capabilities at a regional level. One of the main topics of the competition is “the Future of Power” which goes in line with the environmental pillar of the sustainability policy. This initiative resulted in more than 120 students who benefited from this training and 3 teams won.

Environmental Donations and Sponsorships:Support first solar-powered Electric Vehicle Charging station in Sultan Qaboos University:Nama Group sponsored the construction of the first solar-powered electric vehicle charging station in the Sultanate at Sultan Qaboos University. This sponsorship is part of Nama’s sustainability strategy in keeping pace with the global trends towards using clean energy and to empower scientific researches in the energy fields, as well as supporting the Government’s efforts towards environmental conservation and sustainable resource management. The station is designed to carry out researches on electric vehicles charging and to measure the efficiency of electricity chargers.

Economic Pillar (Total expenses 101,000 OMR)Smart City Activities in Oman (The Research Council):Being a founding member at The Research Council programme, “A Multilateral Platform to Lead Smart City Activities in Oman” is one of our key sustainability achievements for the year. The programme fund covered the entire programme period 2017-2020. The objective of this initiative is to support the introduction of smart city innovations and to prototype and test smart solutions targeting city challenges.

This will offer an unmatchable opportunity for knowledge sharing in the Sultanate.

This initiative will help offering an access point for the up to date activities on smart city activities to Omanis, knowledge sharing sessions and showcasing the latest products, services offered through smart cities all over the globe. Through this programme, we were able to attract more than 120 participants in the Hackathon net competition with 20 registered teams and 6 winners who will be incubated with The Research Council and Al Rudha organization

Economic Donations and Sponsorships:As part of our commitment, Nama Group has sponsored several events related to our business line, included the Oman Vision 2040 for the Future Foresight Forum. Further, we supported the In-Country Value by training 75 Omani people in electrician fields, in addition to supporting Injaz Oman through the Board Membership fees, and finally the Research and Development Whitepaper by Sultan Qaboos University.


GLOSSARY OF TERMS

ORGANISATIONS:

AER: Authority for Electricity Regulation

DISCO: Distribution Companies

DPC: Dhofar Power Company

GPDC: Al Ghubrah Power and Desalination Company

MEDC: Muscat Electricity Distribution Company

MJEC: Majan Electricity Company

MOCI: Ministry of Commerce & Industry

MOF: Ministry of Finance

MZEC: Mazoon Electricity Company

NG: Nama Group

NGOs: Non-Government Organizations

NH: Nama Holding

NICD: Nama Institute for Competency Development

NSSC: Nama Shared Service Company

OETC: Oman Electricity Transmission Company

OPWP: Oman Power and Water Procurement Company

PAEW: Public Authority for Electricity

PDO: Petroleum Development Oman

RAECO: Rural Areas Electricity Company

SAOC: Societe Anonyme Omanaise Close

WJPC: Wadi Al Jizzi Power Company

GENERAL:

AGM: Annual General Meeting

BCMF: Business Continuity Management Framework

BoD: Board of Directors

CEBC: The Code of Ethics and Business Conduct

CEO: Chief Executive Officer

CRT: Cost Reflective Tariff

CUSC : Connection and Use System Charges

ERM: Enterprise Risk Management

EBIT: Earnings before Interest and Tax

GHRC: Group Human Resource Committee


GT: Gas Turbine

HSE: Health, Safety and Environment

HR: Human Resource

HT: High- tension line

IP: Injured person

IPP: Independent Power Project

IWPP: Independent Water and Power Project

LT: Low- tension line

LTI: Lost Time Incidents

LTIF: Lost Time Incidents Frequency

MIS: Main Interconnection System

NIMS: Nama Integrated Management System

NPV : Net Present Value

PDP: Personnel Development Plan

PV: Photovoltaics

PWPA: Power and Water Purchase Agreement

RFQ: Request for Quotation

SLA: Service Level Agreement

SMS: Short Message Service

WTE: Waste to Energy

UNITS:

CAIDI: Customer Average Interruption Duration Index

GWh: Giga watt Hour

Kv: Kilo Volt

M: Meter

M. m3: Million Cubic Meter

m3: Million Cubic Meter

m3/day: Cubic meter per day

MM Sm3/day: Million standard cubic meter per day

MW: Mega Watt

MWH: Mega Watt Hour

SAIDI: System Average Interruption Duration Index

SAIFI: System Average Interruption Frequency Index

annual report€¦ · i also thank our ceo, eng. omar al wahaibi and ceos of the subsidiary...

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