His Majesty Sultan Qaboos Bin Said · gratitude to His Majesty Sultan Qaboos Bin Said for his wise...
Transcript of His Majesty Sultan Qaboos Bin Said · gratitude to His Majesty Sultan Qaboos Bin Said for his wise...
His Majesty Sultan Qaboos Bin Said
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011CITY COMPANY S.A.O.C ANNUAL REPORT 2011
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011CITY COMPANY S.A.O.C ANNUAL REPORT 2011
CONTENTS
Chairman’s Report 4Board of Directors 6Management Team 7Vision, Mission and Values 8General Manager’s Report 10Management Report & Analysis 13Financial and Operational Performance 14Organization & Human Resource 17Health, Safety and Environment 18Projects 19Regulatory Compliance 20Third Price Control 20Distribution of Power 21Supply of Power 23Governorate Information 25Corporate Governance 36Financial Statements 37
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
CHAIRMAN’S REPORT
Dear shareholders,
I have great pleasure in presenting, on behalf of the Board, the Annual Report and audited Fi-nancial Statements of Mazoon Electricity Company SAOC for the year ended 31 December 2011. The year 2011 was an exceptional year witnessing sector wide industrial unrest and protests. Yet the company was able to report growth and achieved operational efficiencies, improving perfor-mance in CAIDI, Lost Time Injury and Distribution System Losses.
Business growth
The number of customers increased to 269,099 from 249,252 in 2010 showing a growth of 7.96 percent. Regulated units sold to customers showed a growth of 10.91 percent compared to 2010 to reach 4,645 GWh.
Revenue
The revenue for the year was RO 129 million compared to RO 113 million of 2010 with an increase of 14.16 percent. The revenue consists of RO 65.84 million (2010-RO 58.71 million) from sale of power, RO 61 million (2010-RO 51.87 million) from subsidy and RO 2.1 million (2010-RO 1.9 mil-lion)from other income.
Net profit
The company reported a net profit of RO 10.175 million compared to RO 12.36 million of 2010 owing to the increased staff costs after recruiting 114 new employees following government di-rectives and due to changes in staff cost policies. In addition to salary costs relating to new em-ployees and the cost of living allowance, the company has for the first time, provided RO 1.30 mil-lion towards gratuity to the Omani national employees transferred from the Ministry of Housing, Electricity & Water in 2005.
4
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
Capital expenditure and assets
Though hampered by the industrial unrest in the first half of the year, the company was able to execute capital project to the tune of RO 54 million showing an increase of 20 percent compared to RO 45 Million of 2010. The company continued to invest in its prop-erty plant & equipment over and above the annual depreciation so that the net book value of assets has increased from RO 211 Million at the beginning of the year to reach RO 253 Million as at 31 December 2011.
Reduction in distribution system losses
For the third consecutive year the company was able to reduce the distribution system losses beyond the reduction target set by AER and thus entitled to sys-tem loss incentive as part of Maximum Allowed Rev-enue. The distribution system loss for the year was 14.26 percent against the target of 15.70 percent set by the AER.
Health, Safety and Environment
During the year the company focused mainly on im-plementing the recommendations of the HSE auditor appointed by AER and on training for the employees. Four major HSE incidents involving the public and the contractor’s employees, happened during the year. Two of the incidents happened while attempting theft of network assets and one was from illegal connec-tion, all resulting in fatalities. The most unfortunate in-cident was the loss of life of three people due to elec-tric shock from a pool of water under a 11 KV terminal pole carrying a Low Tension circuit, in Jalan Bani Bu Ali. The company has augmented its HSE initiatives by ad-vertisement through the media and public campaign (by the HSE department and the operational staff) to create awareness among the public about the dan-gers of electricity and the safety precautions.
Strategic vision and key focus areas
The company recognizes the importance of main-taining the momentum in improving the operational efficiency and achieving the financial objectives to accomplish the vision of “MZEC to be one of the lead-ing distribution and supply companies in the region by 2016”. The key focus areas in the third price control period would be (i) reduction of distribution system losses as per the targets agreed with AER, (ii) improved performance in public safety and (iii) economic invest-ments to meet the growing demand and DSSS com-pliance.The company shall continue to abide by the corporate governance principles and comply with all regulatory requirements in order to enhance the shareholders’ value.
Acknowledgment
On behalf of the board, I would like to express sincere gratitude to His Majesty Sultan Qaboos Bin Said for his wise and able leadership. We thank the Government of the Sultanate of Oman, Public Authority for Elec-tricity and Water, Authority for Electricity Regulation, Electricity Holding Company and the sector subsidiary companies for their continued support and coopera-tion.I would like to thank the fellow board members for their active participation and contributions in guiding and directing the company. I would like to express my appreciation to the executive management and the employees for their commitment and contributions in achieving the financial and operational objectives.
5
Eng.Omar Khalfan Nasser Al Wahaibi Chairman, Board of Directors
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
6
BOARD OF DIRECTORS
Eng.Omar Khalfan Nasser Al Wahaibi Chairman
Eng.Hassan Al AbdawaniDeputy Chairman
John Robertson WrightMember
Michael LimMember
Abdul Aziz Al KharosiMember
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
7
MANAGEMENT TEAM
Eng. Abdullah Said Al BadriGeneral Manager
Salim Said Al KamyaniCommercial Affairs Manager
Biju Joseph PadanilamHead of Corporate andStrategy Office
Eng. Saleem Nasser MahrouqiHSE Manager
Eng. Abdul Aziz Shidhani Planning and RegulatoryAffairs Manager
Eng.Majid Nasser Al Busaidi Senior ManagerAssets Management
Salim Yasir Al SulemaniSenior Manager Shared Services
Eng. Mohammed Al QurriProjects Manager
Eng. Mohammed Abdullah Al HajriSenior Manager OperationAl Dakhilya
Eng. Nasser Khalid Al RashidiSenior Manager OperationSouth Batinah
Eng. Mohammed Hamed Al BusaidiSenior Manager OperationAl Sharqiya
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
8
OUR VISION
OUR MISSION
OUR VALUES
MZEC to be one of the leading electricity distribution and supplycompanies in the region by 2016
Deliver electricity to customers safely reliably and economicallyin accordance with the license
Ownership, Team Work and Customer Focus.
MAZOON ELECTRICITY COMPANY
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
STRATEGIC OBJECTIVES- Enhancement of business profitability- Reduction of system losses- Comply with MZEC statutory obligations- Maintain average time duration of 5 working days for simple connections- Improve efficiency of response and customer fuse off call within 3 hours- Electrification of accessible villages- Develop employees competencies to the job requirements- MZEC continue to be an attractive place to work
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
GENERAL MANAGER’S REPORT
The year 2011 was yet another successful year for the company showing growths in customers (7.96 percent) and Revenue (14.16 percent) and achieving major financial and operational objec-tives. The first half of the year witnessed unprecedented country wide public protests and strikes, affecting severely the entire operations of the company for a few months. Yet, with the support of the government and commitment and contributions from the employees, the company could recover and report better financial and operational results.
The company has reported (i) ‘Exceeding Target’ performance in 1 KPI, (ii) Achieving Targets in 6 KPIs and (iii) ‘Substantially Achieving Target’ in the case of 2 KPIs, out of the nine Key Performance Indicators agreed with the shareholders.
The company continued its successive stride of reducing distribution system loss beyond the re-duction target to report 14.26 percent in 2011 as against the AER target of 15.70 percent thereby entitling the company for an incentive of RO 461 thousand, for the third consecutive year.
The company reported Earnings Before Interest and Tax of RO 25.19 million, approximately 104 percent of the targeted EBITDA of RO 24.20 million. The Customer Average Interruption Duration Index (CAIDI) was brought down to 60 minutes from 64 minutes of previous year and 65 minutes targeted. Compared to the target of 18 towards Lost Time Injury, set based on the number of company employees and emergency & maintenance contractor’s employees, there was only one incident (involving contractor employees) during the year.
Though the capital project work was severely affected during the months of protests and strikes, the company could execute projects worth RO 54 million thereby substantially achieving the tar-get of RO 69 million which was set in the beginning of the year.
10
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
The gross value addition during the year was RO 31.54 million showing an increase of RO 2.17 million com-pared to 2010. The company has retained RO 21.025 million (66.66 percent) towards maintenance & expan-sion of the company (in the form of depreciation and retained earnings). During the year the company has completed electri-fication of 23 villages that meet reasonable demand criteria and 20 villages that do not meet reasonable demand criteria. The project work is in progress in re-spect of 36 villages and are expected to be completed in early 2012.
The strategic projects SCADA phase 1 and the imple-mentation of Customer Relations Management ( CRM) were successfully completed by the company during the year.
One of the appreciable achievement of the company was the successful submission, consultation and fina-lization of the third price control with limited support from external experts.
The company responsibly took part in the government directive to provide employment to Omani nationals and recruited 114 new employment aspirants. For the second consecutive year the company received award from the Ministry of Manpower for achieving 98 per-cent omanisation. The realigned organization struc-ture following business process mapping carried out in 2010 was implemented effective from January 2011 for enhancing the efficiencies and synergies in opera-tions.Apart from the public protests and strikes, the year was full of challenges and the sailing has never been
smooth. One of the greatest challenges the company faced during the year was the restoration of supply in Jalan Bani Bu Ali area consequent to grid failure. Four major HSE incidents happened; two resulting from theft attempts, one arising from illegal connection and the tragic incident at Jalan Bani Bu Ali, were heart-ening and the company give highest priority to opera-tional and public safety.
The third price control casts more responsibilities on the company in respect of execution of capital expenditure program, Distribution System Security Standards compliance, distribution system losses, further operational efficiency and HSE compliance to “deliver electricity to the customers safely, reliably and economically in accordance with the Licence”. The key focus areas for the coming years include:
- Further reduction of distribution system losses as agreed with Authority for Electricity Regulation
- Execution of Capital Expenditure Program as per the third price control
- Improving Safety in operations and Public safety- Implementation of the new billing system.- Distribution System Security Standards Compliance
and other licence conditions- Application of innovative methods for preventing
asset vandalism and improving substation security- Create ‘empowering environment for employees’
The company has revised its strategic objectives tak-ing into consideration the above requirements and is committed to; improve efficiency and compliance in operations, ensuring value services to the customers, be an attractive place to work for the employees and enhance shareholders value.
11
Abdullah Said Al BadriGeneral Manager
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
12
MANAGEMENT REPORT & ANALYSIS
Majid Nasser Al BusaidiSenior Manager Asset Management
Khalfan Nasser Al RawahiCounterpart for Asset Lifecycle Manager
Salim Yasser Al SuleimaniSenior Manager Shared Service
Ahmed Saif Al MahriziAdmin and HR Manager
Ahmed Zayed AL ShaqsiControl Center Manager
Hamed Said Al JassasiFinance Manager
Sultan Saleem Al Alawi IT Manager
Asset Management Division
Shared Services Division
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
13
MANAGEMENT REPORT & ANALYSIS Nakhal Fort
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
14
Financial and Operational Performance
1. Financial performance
The Key financial indicators; Revenue, EBITDA, Capex and Net Book Value of assets for the year in comparison with the corresponding figures of the previous year are given in Figure 1 below.
Figure 1: Financial Performance
1.1. Gross Value added statement
The gross value added during 2011 showed an increase of RO 2.175 Million compared to 2010 as shown in the Table 1 below.
Table 1: Gross Value Added
2011 2010
RO›000 RO›000
Value Added
Revenue 128,995 112,509
Less: Power purchase, spares and repairs (91,088) (78,513)
Less: General and Administrative expenses (6,473) (5,092)
Less: Interest on loan from bank for working capital (762) (646)
Value added by Distribution and supply activities 30,672 28,258
Add: Other income 869 1,108
Total Value Added 31,541 29,366
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
15
Application of value added is provided in the Table 2 below which shows that out of the RO 31.541 million
value added, 66.66 percent is retained for maintenance & expansion of the company owing to a change in the
dividend policy.
Table 2: Application of Value Added
2011 2010
RO’000 Percent RO’000 Percent
Application of Value Added
To pay employees
Employee related costs (8,788) 27.86% (5,684) 19.36%
To pay directors
Sitting fee and other remuneration (58) 0.18% (45) 0.15%
To pay Government
Income tax (670) 2.12% (1,404) 4.78%
To pay providers of capital
Equity dividend (1,000) 3.17% (12,146) 41.36%
To provide for the maintenance and expansion of the company
Depreciation (11,850) 37.57% (10,087) 34.35%
Retained profit (9,175) 29.09% - -
Total (31,541) 100.00% (29,366) 100.00%
2. Operational Performance
2.1 Business growth
The units sold during the year increased by 10.91 percent due to increase in the number of customers by 7.96 percent and increased consumption per customer. The growth in customers and regulated units sold are shown in Figure 2 below.
Figure 2: Operational performance
Customers Regulated Units Sold ( GWH)
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
16
2.2 Operations Efficiency
The distribution system loss was 14.26 percent compared to target set by AER 15.70 percent and 15.32 percent of 2010. The CAIDI which is a measure of interruption duration has been brought down to 60 minutes compared to 64 minutes reported in 2010. The performance in distribution system loss and CAIDI are shown in Figure 3 below.
Figure 3: Operational indicators
3. Significant Ratios
As shown in the Table 3 below the customer per district office, the units sold per customer and the total rev-enue per unit have increased compared to 2010. The staff cost per unit and the total cost per unit are increased mainly due to recruitment of 114 new staff as per government directive and the changes in sector wide policies relating to staff costs.
Table 3: Significant ratios
Particulars Unit of Measure 2011 2010
MWh/connection MWh 17.26 16.80
Average Customers per district office Number 14,950 13,847
Total Revenue/MWh billed RO 27.77 26.86
Staff Cost per MWh RO 1.89 1.35
Opex cost per MWh RO 6.98 6.26
Total Cost per MWh RO 25.62 23.89
Earnings per share RO 18.438 24.72
Net assets per share RO 232 238
Return on equity Percent 7.94 10.20
Distribution System Loss CAIDI ( Minutes)
14.26
14.00
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
17
Organization and Human ResourcesThe company implemented the realigned organization structure given in Figure 4 effective from 01 January 2011.
Figure 4: Organization structure
The total number of staff at the end of the year was 493 consisting of 484 Omani Nationals and 9 Expatriate as given in Table 4 below. The company continued to maintain the level of Omanisation above 98 percent and has received award from Ministry of Manpower for highest omanaisation.
Table 4: Employee details
Function 2010 2011
Administrative/Supervisory 175 217
Managerial/Executives 8 21
Technical 168 241
Other 7 14
Total 358 493
HUMAN RESOURCES
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
18
Training and Development
Training programs conducted during the year based on the training need analysis is given in the Table 5 below.
Table 5: Training details
Course In country Overseas
Courses Participants Courses Participants
Management and Professional Development related 3 6 8 12
Safety 15 726 3 5
Information Technology related 3 11 3 6
Administrative 17 481 1 1
Finance 1 4 3 8
Customer Service - - 3 5
Technical 13 255 7 13
English Second Language 1 3 1 1
Other courses/Seminar 1 10 11 29
Site Visit/Inspection - - 4 7
Total 54 1496 44 87
Health, Safety and Environment (HSE)The auditor appointed by AER conducted HSE audit to ensure compliance with distribution licence conditions 7 & 17 and also with Ministerial Decision on Occupational safety and health. Various actions were identified and implemented based on the recommendations of the auditor. The company is also in the process of building the HSE Maturity Model recommended by the consultants M/s. COWI During the year four major HSE incidents happened involving the public and the contractor’s employees. Two of the incidents happened while attempting theft of network assets and one was from illegal connection, result-ing in the death of one each in the three incidents. The most unfortunate incident was the loss of life of three people due to electric shock from a pool of water under a 11 KV terminal pole carrying a Low Tension circuit, in Jalan Bani Bu Ali
Key performance indicators
The Key performance Indicators relating to the company’s employees and emergency & maintenance contrac-tors’ employees are shown in the Table 6 below .
Table 6: HSE Key Performance Indicators
Particulars Performance Indicator 2011 2010
Occupational Safety Fatalities - -
Road Safety LTI 1 2
No. of car damages - -
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
19
The company has established an Executive Committee headed by the General Manager to drive the implemen-tation of HSE action plan and to follow up action progress on a monthly basis.
The company conducted training on the ESR and Building & Fire Safety for all concerned employees, as well as, for new recruitment technical staff. The training details are given in table 7 For ensuring safe operations, the company focused on providing concerned engineers professional tools and signs like caution & danger signs, approved earth kits, caution tapes & plastic chain, PPE, live line testing device, safety locks and key safe devices to be used during carrying out switching programs. MZEC arranged defensive driving courses for employees and also are in process of setting speed limit devices for all vehicles.
Table 7: HSE Training
No. Particulars Participants
1 Accident Reporting & Investigation 15
2 Behavioral Safety 54
3 Call Center Training 9
4 Construction Health & Safety 10
5 Fire Warden, Fire safety and Fire Fighting 136
6 Introduction of HSE 190
7 Work-Related Stress Management 52
8 One Day Practical Training (Safety) 59
9 Defensive driving – Heavy and light vehicles 33
10 First Aid 83
11 Personal Protective Equipment Awareness 29
12 Electrical Safety Rule and Safe System of Work 56
Total 726
The company conducted workshop involving all the distribution companies in the sector for best solutions for controlling the Assets Vandalism. Towards protection of public against electrical hazards the company carried out awareness programs and use SMS service during severe climatic conditions for safety advises. In order to ensure substation security for reducing the occurrence of assets posing threat to public safety the company has introduced dedicated substation inspection team which carries out inspection of:
1. Distribution substations on monthly basis.2. Primary substations on weekly basis.
3. Electrical feeders (Poles, AB Switches, stay wires & surge arrestor) once in every three months
ProjectsCapital Expenditure
The major projects awarded during the year were: - Construction of 2×20 MVA Substation with New 33 KV & 11 KV Feeders At-Hufri in Barka At South Batinah
Region (RO 1,998,122.918), - Construction of 2×20 MVA Substation with New 33kv & 11kv Feeders In Khadhara Bu Rushaid in Suwaiq At
South Batinah Region (RO 2,298,307.316), - Construction of Three Feeders 33KV from Blue City Grid Station to Billah and Barka New Substations at Barka
in South Batinah Region (RO 1,548,998) and- Upgrading of Saqsooq Substation From 2x6 MVA to 3x20 MVA Indoor Station At Barka in South Batinah Re-
gion (RO 1,753,124.01)
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
20
The total capital expenditure (Value of work done) during the year was RO 54 million compared to RO 45 million in 2010.The major projects completed were:
- ‘Extension of Power Supply to Jarwalah in Ibra, Al Rahab, Al Eyesi, Al Seleel, Khab Al Khees, Al Qulait, Alka, Wusal, Aljar, Hail Bareik, Jabtain in Dima & Tayeen in Sharqiah Region with a value of RO 1,053,360.
- Construction of 132/33KV Grid Station & Associated Transmission System in Nakhal Area. RO 829,493.28 - Construction of New 2x20 MVA Ibra-1 Sub Station at Ibra in Sharqiya region RO 825,206.104 and - Construction of Primary Sub Station with ( 2x10 MVA ) Transformers for Power Supply to Adam Airport at
Dakhilya Region. RO 741,394.5
During the year the company electrified 23 villages meeting Reasonable demand criteria set by the Author-ity and 20 villages not meeting the reasonable demand criteria. Project work in respect of the remaining 36 villages are in progress and is expected to be completed in early 2012.
Strategic Projects
The company has successfully completed and implemented SCADA phase 1 connecting all indoor primary sub-stations and the Customer Relations Management (CRM) projects.
Regulatory ComplianceExecutive Task Team Actions (ETT) Summer 2011
The ETT actions for 2011 were broadly categorized into four categories; (i) 33 KV projects, (ii) additional projects (iii) ensuring 0.95 power factor at capacitor banks and (iv) connection of temporary generators.All the 33 KV projects planned for the summer as part of ETT actions were commissioned before the target date except in the case of Ibra and Al Hamra substations which were delayed by one month due to the strikes, but the contingency measures were taken to meet the demand in these two substations. All the 21 additional projects as part of ETT actions were carried out before summer. Resetting of capacitor banks were carried out in order to ensure a Power Factors of 0.95 at Grids. Temporary generators were connected at Mudhaibi, Sur, JBB Ali and MIS to meet the additional demand.
Third Price controlThe second price control was for the three year period 2009 to 2011 and the third price control values for the years 2012 to 2014 were determined by the Authority during the year. The third price control submission, con-sultation and approval process took approximately one year and the various stages in the process are shown in Table 8 below;
Table 8: Third price control submission and approval process
S. No. Particulars Date
1 ‘Proforma’ submission 07 May 2011
2 Initial Notified Values by AER 22 August 2011
3 Company’s response to Initial Notified Values 08 October 2011
4 Final Notified Values 20 November 2011
5 Company’s response to Final Notified Values 10 December 2011
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
21
Distribution of power Distribution System Assets
Distribution system assets as at the end of the year are shown in the Table 9 below.
Table 9: Distribution system assets
Particulars Unit of Measure 2010 2011
33/11 KV S/s Number 184 192
11/0.433 KV S/s Number 11,667 12,586
33/11 KV TX Number 309 330
33/0.433 KV TX Number 77 74
33 KV network OH Km 3,405 3,430
Cable Km 263 300
11 KV network OH Km 7,816 8,094
Cable Km 729 874
0.433 KV network OH Km 8,215 8.458
Cable Km 1,379 1,747
Distribution System Maintenance
The emergency & maintenance services in all the districts are outsourced to contractors. The company also has contract for substation security inspection by dedicated teams.
Demand Profile
The peak load experienced during the year was 1,268 MW, (recorded on 20th June 2011 at 15:00) compared 1,125 MW of last year showing a growth of 12.71 percent. The lowest demand on the same day was 735.93 MW.
The lowest load reported during the year was 197.62 MW on 01 January 2011 at 04 hours. and the maximum load experienced on the same day was 440 MW.Demand profile over the 24 hour period on the days of the peak demand during summer and lowest demand during winter are shown in Figure (6) below
Figure 6: Peak and Low demand 24 hour profile
Maximum DemandFigure 5: Maximum demand
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
22
Figure 7 below shows the monthly maximum and minimum demand during the year compared to the previous year 2010.
Figure 7: Summer and winter monthly profile
Distribution System Losses The distribution system losses for the year was 14.26 percent compared to 15.70 percent target set by the Au-thority and 15.32 percent in last year. The distribution system losses for the company and the region along with the previous year’s actual are given in Figure 8.
Figure 8: Distribution system losses
As seen in the graph the major reduction in South Al Batinah region (from 19.06 percent in 2010 to 16.87 per-cent) and marginal reduction in Dakhliya region contributed to the overall reduction of the distribution of sys-tem losses and hence an entitlement of incentive of RO 461 thousand. The calculation of distribution system loss is given in the table (10) below.
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
23
Table 10: Distribution system losses
Particulars 2011 2010
MWh MWh
Bought from PWP 5,523,430 5,069,270
Less: Supplied directly to customer by OETC (51,366) (48,737)
Less: Transmission system loss (114,524) (132,093)
BST at bulk supply points 5,357,540 4,888,440
Supplied/Billed 4,644,863 4,188,193
Less: Supplied directly to customer by OETC (51,366) (48,737)
Net Regulated units distributed 4,593,497 4,139,456
Distribution losses 764,043 748,984
Distribution losses (percentage) 14.26% 15.32%
Supply of powerCustomer Profile
A total of 19,847 new customers were added during the year and the number of customers as at the end of the year was 269,099 which comprised of 209,898 (78 percent) residential and 44,520 (17 percent) commercial customers as shown in Figure 9.
Figure 9: Customer segments
Electricity Imported at bulk supply point and billed
The electricity received at the bulk supply points and the billed quantities for each month during 2011 in com-parison with 2010 are given in the Figure 10.
Figure 10: Electricity imported at bulk supply point and billed (MWh) (2010 &2011)
79%
1%
5%
15%
78%
1%
4%
17%
Customer segments 2011Customer segments 2010
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
24
Sale of power
The electricity units sold increased by 11 percent in 2011 while the revenue from sale of electricity increased by 12 percent. The category wise electricity consumption and the revenue is given in Table 11.
Table 11: Number of customers, Electricity Supplied and Revenue
Category Number of customers MWh billed Revenue
2010 2011 2010 2011 2010 2011
Residential 196,620 209,898 2,712,734 2,999,418 29,656,786 33,230,904
Commercial 38,870 44,520 625,885 739,056 12,636,647 14,918,883
Government 11,603 12,152 617,696 711,880 12,905,390 14,990,904
Others * 2,159 2,529 231,765 194,508 3,513,335 2,701,524
Total 249,252 269,099 4,188,080 4,644,863 58,712,158 65,842,216
* Others: include Agriculture/Fisheries, Hotels/Tourism and Industrial
Energy billed
65 percent of the total electricity sold were to the residential customers and units sold to residential customers showed an increase of 10.58 percent. The increase in billed quantities in 2011 compared to 2010 in respect of commercial and government customers were 18 percent and 15 percent respectively. Energy billed under vari-ous customer categories are shown in Figure (11) below.
Figure11: Electricity Sales (MWh) by customer segments
Sales revenue
Figure 12 shows the sales revenue for the different categories of customers during 2011 compared to 2010.
Figure12: Electricity Sales (RO) by customer segments
2,999,418
194,508
711,880
739,056
33,230,904
2,701,524
29,656,786
3,513,333
12,905,39112,636,647
14,990,904
14,918,883
2,712,734
231,765
617,696
625,885
Energy Billed 2010
Revenue by Customers Category 2010
Revenue by Customers Category 2011
Energy Billed 2011
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
25
GOVERNORATE INFORMATION
Falaj Daris
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
Al Dakhilyah Governorate comprises of eight Willayats viz. Nizwa, Sumail, Bahla, Adam, Al Hamra, Manah, Izki and Bid Bid. The company has 6 offices in Al Dakhilyah Governorate and the organization structure is given in Figure 13
Al Dakhilyah Governorate comprises of eight Willayats viz. Nizwa, Sumail, Bahla, Adam, Al Hamra, Manah, Izki and Bid Bid. The company has 6 offices in Al Dakhilyah Governorate and the organization structure is given in Figure 13
AL DAKHILYAH
26
Bahla Fort
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
Figure13: Organisation structure-Dakhliya
The relevant information and statistics relating to Dakhliya is given in Table 12
Table 12: Dakhliya statistics
Particulars Unit of Measure 2011 2010
Area Km² Km² 31,190 31,190
Customers Number 79,376 73,928
Revenue RO 20,0191,86 17,619,430
Max Load MW 378 327
Min Load MW 61 60
Bulk Supply Tariff (purchase) MWh 1,561,404 1,423,696
Regulated Units Distributed (sales) MWh 1,376,451 1,229,755
Distribution System Loss Percent 10.35 10.71
Customer Average Interruption Duration Index (CAIDI) Minutes 49.62 41.63
Number of 33/11 kV Ss Number 59 56
Number of 11/0.433 kV Ss Number 3,787 3,525
Number of 33/11 kV TX Number 103 99
Number of 33/0.433 kV TX Number 12 12
27
Mohammed Abdullah Al Hajri Senior Manager OperationDakhliyah
Said Saleh Al BalushiDistribution Manager
Saleh Mohammed Al MufarajiCustomer Service Manager
Mohammed Salim Al AdawiHead of Admin and Finance
Salim Hassan Al AmeryHead of Projects
Senior Manager Operations
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
AL SHARQIYAH
The company has 7 offices in Al Sharqiyah governorates to service the customers in 10 Willayats viz. Sur, Ibra, Bidiya, Al Qabel, Al Mudhibi, Dema-w-Al Taein, Al Kamel& Al Wafi, JaBani Bu-Ali, Jaalan Bani Bu-Hassan and Wadi Bani Khalid (Masirah is not covered in MZEC authorized area as per license). The organisation structure relating to South & North Sharqiya Governorate operation is shown in Figure14 below.
28
Wadi Bani Khalid
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
AL SHARQIYAH
Figure14: Organisation structure-Sharqiya
The relevant information and statistics relating to Sharqiya is given in Table 13
Table 13: Sharqiya statistics
Particulars Unit of Measure 2011 2010
Area Km² Km² 37,180 37,180
Customers Number 98,449 90,289
Revenue RO 19,934,015 17,584,512
Max Load MW 406 353
Min Load MW 61 39
Bulk Supply Tariff (purchase) MWh 1,678,923 1,522,247
Regulated Units Distributed (sales) MWh 1,416,065 1,267,587
Distribution System Loss Percent 14.40 14.41
Customer Average Interruption Duration Index (CAIDI) Minutes 71.97 77.54
Number of 33/11 kV Ss Number 66 65
Number of 11/0.433 kV Ss Number 4,648 4,193
Number of 33/11 kV TX Number 112 106
Number of 33/0.433 kV TX Number 35 37
29
Mohammed Hamad Al BusaidiSenior Manager OperationSharqiya
Said Ali Al AraimiDistribution Manager
Khalfan Musabah Al JahmaniCustomer Service Manager
Saud Khamis Al FarajiHead of Admin and Finance
Hilal Hamdan Al HajriHead of Projects
Senior Manager Operations
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
SOUTH AL BATINAH
30
The company distributes electricity to its customers in Al Rustaq, Barka, Al Suwaiq, Al Musanah, Al Awabi, Nakhal, and Wadi Al Ma`awel willayats in South Al Batinah and has 5 offices. Figure 15 Shows the organization structure for South Al Batinah Governorate operations.
Al-Hazm Fort
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
31
Figure15: Organisation structure-South Al Batina
The relevant information and statistics relating to South Al Batinah is given in Table 14
Table 14: South Al Batinah statistics
Particulars Unit of Measure 2011 2010
Area Km² Km² 6,260 6,260
Customers Number 91,274 85,035
Revenue RO 25,889,015 23,508,294
Max Load MW 514 465
Min Load MW 65 69
Bulk Supply Tariff (purchase) MWh 2,258,560 2,123,326
Regulated Units Distributed (sales) MWh 1,852,347 1,690,851
Distribution System Loss Percent 16.87 19.06
Customer Average Interruption Duration Index (CAIDI) Minutes 59.12 70.3
Number of 33/11 kV Ss Number 67 63
Number of 11/0.433 kV Ss Number 4,151 3,949
Number of 33/11 kV TX Number 115 104
Number of 33/0.433 kV TX Number 27 28
Nasser Khalid AL ResheidiSenior Manager OperationSouth Al Batinah
Talal Said Al AbriHead of Projects
Yusuf Ahmed Al FarsiCustomer Service Manager
Ahmed Ali Al SyabiHead of Admin and Finance
Fahd Said Al AbriDistribution Manager
Senior Manager Operations
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
CORPORATE GOVERNANCE
32
Company Philosophy
The company recognizes that the corporate governance practices are fundamental in protecting the interest and enhancing the value to the shareholders and stakeholders. The company’s governance system has been built on the philosophy and principles outlined in code of corporate governance issued by the Capital Market Authority, Oman and has been integrated with ethical business practices, sound corporate culture with a frame work of transparent and impartial governing policies and procedures.
The company’s board consists of all independent and non executive directors and their functions and duties align with the provisions of Commercial Companies Law and the Articles of Association of the company. The Board has constituted Audit Committee and Internal Tender Committee.
The company has also appointed internal auditor and legal advisor and also has implemented manuals for in-ternal regulations. The transactions with major related parties, the companies within the same holding group, are in the normal course of business and are at arm’s length.
Nakhal Fort
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
33
Board of Directors
Composition of the Board
The Board comprises of 5 members – 4 nominated by the Electric-ity Holding Company SAOC and 1 nominated by the Ministry of Finance- pursuant to the article No “15” of the articles of associa-tion, as amended, of the company.
Eng.Omar Khalfan Nasser Al Wahaibi, Chairman(Chief Executive Officer, Electricity Holding Company)
Nominated by Electricity Holding Company. Non Executive/Independent Director. Chairman of other Boards - Nil Member of other Boards - 1 Member of other committee -2
Eng. Hassen Mohammed Jawad Ali Abdawani, Deputy Chairman(Deputy CEO & Vice president Transmission & Distribution, Electricity Holding Company)
Nominated by Electricity Holding Company. Non Executive/Independent Director. Chairman of other Boards – Nil Member of other Boards – 2 Member of other committee – 3
Chin Hee Michael Lim, Member (Executive Manager IT- Electricity Holding Company)
Nominated by Electricity Holding Company. Non Executive/Independent Director. Chairman of other Boards – Nil Member of other Boards – 2 Member of other committee – 3
John Robertson Wright, Member
Nominated by Electricity Holding Company. Non Executive/Independent Director. Chairman of other Boards – Nil Member of other Boards – 2 Member of other committee - 3
Abdul Aziz Bin Mohammed Bin Said Al Kharousi, Member(Director of Budget Services Sector, MOF)
Nominated by Ministry of Finance. Non Executive/Independent Director. Chairman of other Boards – Nil. Member of other Boards – Nil Member of other committee - 1
Members of the Board
The board of directors of the company changed following the Annual General Meeting held on 21.March 2011, and the new board assumed office effective from that date. Mr. Abdull Aziz Bin Mohammed Bin Said Al Kharusi was nominated by Ministry of Finance in place of Mr. Haitham bin Yosef Al-Zadjali in September. The details of the Directors of the company holding their office as at 31 December 2011 and their membership in the board of other companies in the Sultanate of Oman are as follows:
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
34
The meetings of the board and the attendances in the various meetings during 2011 are given in the table 16 below:
Table 16: Meetings of the board and members’ attendance
AGM Board meeting
Member Position 21/03/11 14/2/11 26/02/11 02/04/11 05/05/11 10/08/11
Mrs. Manal bint Chairperson yes yes yes Not Not Not
Mohammed AL-Abdwani member member member
Mr. Venugopal Deputy yes yes yes Not Not Not
Venkatesh Chairperson member member member
Eng. Said Mohammed Member no yes yes Not Not Not
Al Masoudi member member member
Mr. Ali Abdulla Al Abri Member yes yes yes Not Not Not
member member member
Mr. Haitham bin Member no yes yes yes yes yes
Yosef Al-Zadjali
Eng.Omar Khalfan Chairman Not Not Not yes yes yes
Nasser Al Wahaibi member member member
Eng. Hassen Mohammed Deputy Not Not Not yes yes yes
Jawad Ali Abdawani Chairman member member member
Mr. Chin Hee Michael Lim Member Not Not Not yes yes yes
member member member
Mr. John Robertson Wright Member Not Not Not no yes yes
member member member
Mr. Abdull Aziz Bin (from17 sep.) Not Not Not Not Not Not
Mohammed Bin Said Al Kharusi member member member member member member
* Yes - Attended
* No - Not AttendedMembers of Board changed after AGM on 21.03.2011
Audit Committee
A. Terms of Reference
The new Board has constituted the Audit Committee pursuant to Article (54) of the Articles of Association and its terms of reference include all matters specified under that article.
B. Composition of the Audit committee
The Audit Committee comprises of three independent and non executives directors of the Company and the details of meetings and attendance are as shown in the table 17 below.
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
35
Table 17: Audit Committee Meetings
Name Position 26 Feb 2011 05 May 2011 08 Aug 2011 05 Dec 2011
Mr. Venugopal Venkatesh Chairman yes Not member Not member Not member
Eng. Said Mohammed Al Masoudi Member yes Not member Not member Not member
Mr. Ali Abdullah Al Abri Member yes Not member Not member Not member
Mr. John Robertson Wright Chairman Not member yes yes yes
Mr. Chin Hee Michael Lim Member Not member yes yes yes
Mr. Haitham bin Yosef Al-Zadjali Member Not member yes yes Not member
Mr. Abdull Aziz Bin Mohammed Member Not member Not member Not member yes
Bin Said Al Kharosi
* Yes - AttendedMembers of Board changed after AGM on 21.03.2011
2. Internal Tender Committee:
The Internal Tender Committee established as per the provisions of the Government Tender Law consisted of Chairperson of the Board, one Board member and four members from the executive management team. The ITC was reconstituted following the appointment of new Board of Directors and presently there are four mem-bers in the ITC including the Chairman of the Board as the Chairman of ITC, Deputy Chairman of the Board, General Manager and Senior Manager Shared Services. The details of the meetings held during the year and the board members attendance are as follows:
Table 18: Internal Tender Committee Meetings and board members attendance
Name Position 11 Jan 22 Feb 30 Apr 23 May 31 Jul 29 Oct 27 Dec
Manal Mohammed Chairperson yes yes Not Not Not Not Not
AL-Abdwani member member member member member
(Chairperson BOD)
Mr. Haitham bin Deputy yes yes Not Not Not Not Not
Yosef Al-Zadjali Chairman member member member member member
Eng.Omar Khalfan Chairperson Not Not yes yes yes yes yes
Nasser Al Wahaibi member member
Eng. Hassen Mohammed Deputy Not Not yes yes no yes no
Jawad Ali Abdawani Chairman member member
Members of Board changed after AGM on 21.03.2011
Remuneration Matters
The company paid RO 507 thousand towards remuneration to the key management personnel (including the Directors remuneration of RO. 58 thousand) during the year.
Non- compliance by the company
No penalty or strictures have been imposed on the company by Muscat Securities Market/Capital Market Au-thority or Ministry of Commerce & Industries on any matter related to capital market during the year.
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
36
Communications with the shareholders and Investors
The company maintains close liaison with the Electricity Holding Company (EHC), the Major shareholder on var-ious strategic initiatives and policy issues. The company’s financial and operational performances are reviewed regularly by monthly reporting to Electricity Holding Company. The company’s annual report will be forwarded to the shareholders EHC and Ministry of Finance (MOF).
Distribution of Shareholding
As at 31st December 2011 the share holding was as follows:
Table 19: Distribution of Shareholding
Shareholders Shareholding
RO percent
Electricity Holding Company SAOC 499,950 99.99
Ministry of Finance 50 0.01
Total share capital 500,000 100
The Statutory Auditors
M/s. Price Water House Coopers were the Statutory Auditors of the Company for the year 2011.
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
FINANCIAL STATEMENTS
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
38
MAZOON ELECTRICITY COMPANY SAOCFINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2011
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
39
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
40
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
41
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
42
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
43
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
44
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
45
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
46
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
47
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
48
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
49
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
50
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
51
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
52
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
53
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
54
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
55
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
56
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
57
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
58
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
59
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
60
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
61
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
62
MAZOON ELECTRICITY COMPANY S.A.O.C ANNUAL REPORT 2011
63