Oman to offer 47-year land concessions for green hydrogen projects

Published on October 31, 2022

Developers of green hydrogen projects in the Sultanate of Oman will be eligible for land concessions spanning 47 years, among other incentives, a key official of the Ministry of Energy and Minerals has stated.

Eng Abdulaziz al Shidhani , Director General Renewable Energy and Hydrogen, noted that land allocations – covering blocks of around 320 sq kilometres apiece – will be based on a competitive bidding system, registrations for which opened earlier this week.

“What are we providing for investors is a (concession) for a duration of 47 years from the signing of the project development agreement and sub-usufruct award,” said Eng Al Shidhani. “Land lease starts with a floor of 20 baizas per square metre, which ultimately will be based on a competitive bidding process,” he stated, adding that the already reduced land fees will be further discounted during the development stages by up to 100 per cent.

Speaking at a media briefing earlier this week, the official pointed out that the Omani government, for its part, will be entitled to receive base royalties (starting from 5 per cent in kind) and surplus royalties. In addition, a 20 per cent stake in the project must be offered to a government-owned entity – presently OQ, the state-owned integrated global energy group. Furthermore, project developers have to bear applicable corporate taxes, he said.

Significantly, the scope of green hydrogen projects covers integrated development encompassing renewables generation, green hydrogen production, derivatives conversion, and offtake of output. Common infrastructure, such as pipelines for water and hydrogen, will be tendered out separately.

The government, for its part, is not committed to offtaking any electricity output from the project, primarily because it has its own strategy to procure new renewables capacity to meet the country’s energy requirements, he said.

The official stressed that land allocations will only be made to serious developers. “Oman is looking for real investors; those who will not be utilising the allocated land within a specific timeframe for their intended project will have the land taken away from them.”

While the Ministry of Energy and Minerals will play the role of regulator and policymaker for the new green hydrogen industry, its implementation will be closely orchestrated by Hydrogen Oman (Hydrom), the new state-owned entity established as a subsidiary of Energy Development Oman (EDO).

“Hydrom will oversee the entire operation – managing the common infrastructure, the bidding process, and so on, while also coordinating the off-take between the investors. It will also oversee coordination between the investors and utilities, such as the existing electricity and water companies, the gas network, and the Public Authority for Special Economic Zones and Free Zones,” he added.

Source: Press release