Annual Report 2016

4 5
Contents
Chairman’s Report 7
Management Report & Analysis 12
Chief Executive Officer’s Report 12
Financial & Operational Performance 14
Organization & Human Resources 18
Health, Safety and Environment 21
Projects 24
Distribution of Power 29
Supply of Power 32
Authorized Area Wise Information 37
Corporate Governance 39
Board of Directors 40
Financial Statements 44
6 7
Mission CHAIRMAN’S REPORT

“Lighting and Enriching Life through Safe, Reliable and Sustain-
able Electricity” Dear shareholders, Finance charges for the year showed an increase of
RO 4.4 Million compared to 2015. The increase in
It is indeed my privilege to present the Annual Re-
Vision port and Audited Financial Statements of Mazoon
the finance charges is mainly attributable to compa-
ny’s decision to avail long- term loans in 2015 and
“ Leaders in Providing Electricity in Oman” Electricity Company for the year ended 31 Decem-
2016 to finance the capital expenditure, as per the
ber 2016. The overall economic slowdown expe-
funding strategy.
Values rienced in Oman following the drop in oil prices
was reflected in electricity sector also. Accordingly, The net profit for the year was RO 18.661 Million
“Safety, Team Work, Integrity, Professionalism, and Respect.” the growth rate in Customers, Regulated Units dis-
The company believes the Vision to be achieved by;
tributed and Revenue were lower compared to the Operational Performance
previous years.
One of the highlights of the operational perfor-
· Caring for the safety of the employees, contractors, customers and public
Business Growth mance excellence was the achievement of reduc-
· Demonstrating adherence to HSE standards tion of distribution system losses to the best ever
During the year, the company added 23,811 new
reported levels.The distribution system loss for the
· Transforming to a customer oriented organization; customers (growth of 6.5 percent) thereby reach-
year was 9.33 percent compared to 10.74 percent
ing a total 390,689 customers as at the end of 2016.
o Providing connections faster reported in 2015. However, the target set by the
Similarly, the regulated units sold to the customers
AER was 8.9 percent.
during 2016 were 7,919 GWh compared to 7,550
o supplying quality power
GWh of 2015. The growth rate was reduced to 5
Investments in property, Plant and
o minimizing interruption frequency and duration percent compared to 12.58 percent reported in
2015. equipment
o Proactively addressing customers’ issues
As required as per the license and the approved
· Continue to be a Socially responsible organization Financial Performance price control, the company continued to invest
Power Purchase costs (Bulk Supply Tariff-BST), heavily in in its networks to meet the distribution
o utilizing resources judiciously and economically
Transmission Connection charges (TC) and trans- system security standards and also the reasonable
mission Use of System Charges (TUoS), collectively demand criteria. Total capital expenditure during
o Take part and contribute to the development of the nation
termed as ‘Pass through costs’ increase by RO 14.86 the year was a record high RO 124 Million (2015-
Million in 2016 and hence the increase is reflected RO 95 Million).
in both Revenue and Operating costs.
Accordingly, the Net Book Value of assets has in-
The total Revenue for the year was RO 272.6 Mil- creased to RO 622 Million as at 31 December 2016
lion comparing with 257 Million in 2015 showing from RO 521Million reported in the previous year.
a growth of 6 percent. The revenue comprises of
revenue from sale of electricity to customers RO Customer Services
112.734 Million (2015- RO 111.223 Million) and As part of the customer service strategy the Nama
Government Subsidy RO 149.546 Million (2015- Holding group has implemented regular Survey of
137.624 Million). the customer satisfaction rate using ‘voice of cus-
Operating costs for the year were RO 222.039 Mil- tomer’ and the company obtained a score of 71
lion showing an increase of 17.5 million compared percent during 2016. The company will take every
to 2015 due to increased pass through costs and in- possible steps to improve the customer satisfaction
creased depreciation.Thus, the Gross profit report- levels in the coming years.
ed for the year was RO 50.594 Million as against RO
52.627 Million reported in 2015.
Customer Accounts (2006 - 2016)
8 9
450,000
390,689
400,000
Customer Accounts (2006 - 2016) 340,923
366,716 and dispersed network assets efficiently and in a
350,000 318,182 sustainable manner to elevate the company to be
450,000 269,099 292,963
“The Leader in Providing Electricity in Oman by
Customer
400,000 Accounts (2006 - 2016)
300,000
231,372
249,252
366,716
390,689
2021”.
350,000 250,000 218,069
340,923
450,000 200,795 208,077 269,099 292,963
318,182
300,000 The company has also achieved the project mile-
400,000 200,000 231,372
249,252 390,689
stones relating to the other strategic initiatives of
250,000 366,716
208,077 218,069 340,923
350,000 200,795
200,000 150,000 269,099 292,963
318,182 the group (i) Human Resources, (ii) Communication
300,000 249,252 and (iii) Customer Service programs.
150,000
250,000 100,000
208,077 218,069
231,372
100,000 200,795
200,000
50,000 50,000 Business Outlook
150,000
-
- Whilst the slowdown in the economic front may
100,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 continue in the coming year, the company expect
50,000
to overcome the impact by strict financial discipline
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 with budgetary control and also by aiming to in-
crease customers and regulated units.
Customer Segments 2016 Eng. Omar Ahmed Salim Qatan
Chairman, Board of Directors The company recognizes that there are uncertain-
Customer
Customer Segments
4% Segments 2016
1%
20%
2016 People
ties in demand and sales associated with the CRT
implementation. Further procuring long- term funds
at economic costs to meet the financing require-
4%
1% The Board is keen to enSure ‘caring & nurturing ment for the increasing capital expenditure will be a
20% 1% environment within the company and retention of major challenge in this economic situation.
4% the critical staff. The Board held meetings with the
20% managers, staff and the union representatives to lis- Acknowledgment
ten to their requirements and to address them on
I would like to express sincere gratitude to His Maj-
a timely manner. The company is also proud of its
esty Sultan Qaboos Bin Said for his wise and able
achievement to maintain 98 percent Omanisation
75% leadership and to the Government of the Sultanate
level in 2016 also.
of Oman for the continued support to the sector.
Commercial Domestic
I would also like to thank Public Authority for Elec-
Government
75%
others Health, Safety and Environment
tricity and Water, Authority for Electricity Regula-
The Board recognizes HSE as its highest priority tion, Electricity Holding Company and the sector
Commercial Domestic
Government others and allocates adequate time for discussion in every subsidiary companies.
meeting. However, unfortunately, one fatality involv-
ing contractors’ employees was reported during the My sincere appreciation and thanks to the fellow
year. Further, AER HSE audit during the year also Board members for their active involvement and
75% highlighted the need for substantial improvement contributions in guiding and directing the affairs of
Units Sold 2006 - 2016(MWh) in HSE compliance and the Board is committed to the company.
Commercial Domestic enSure such compliance. The Lost Time Injury Fre-
9,000,000 I also thank the management team led by Chief Ex-
Units Sold 2006
8,000,000 -Government
2016(MWh) others 7,550,441 7,919,836 quency Rate for the year was 0.26.
ecutive officer, Eng. Zahir Al Abri and the entire staff
6,705,708
7,000,000 of MZEC for their commitment, efforts and valu-
9,000,000
6,000,000
5,973,644 Strategic Vision and achievements
4,644,863 5,267,295 7,550,441 7,919,836 able contributions.
8,000,000
5,000,000
3,842,668 4,188,193 6,705,708 ISO 55000 certification in Asset management was
7,000,000
4,000,000
2,606,890 2,774,887 3,243,906 5,973,644 yet another successful accomplishment during the
6,000,000
3,000,000
4,644,863 5,267,295 year. This will help the company manage its large
5,000,000
2,000,000
3,842,668 4,188,193
4,000,000
1,000,000
2,606,890 2,774,887 3,243,906
3,000,000
-
2,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1,000,000
-
75%
10 Commercial
Government
Domestic
others 11
Units Sold 2006 - 2016(MWh)

9,000,000
7,550,441 7,919,836
8,000,000
6,705,708
7,000,000
5,973,644
6,000,000
4,644,863 5,267,295
5,000,000
3,842,668 4,188,193
4,000,000
2,606,890 2,774,887 3,243,906
3,000,000
2,000,000
1,000,000
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Energy Billed 2016
1,101,539 14%
Energy Billed 2016
347,979 4%
1,538,690 20%
347,979 4%
1,101,539 14% 1,538,690 20%
4,931,628 62%
Commercial Domestic Government others
4,931,628 62%
FINANCIAL PERFORMANCE
621
20
12 13
MANAGEMENT REPORT AND ANALYSIS riod as “Leaders in Providing Electricity in Oman”.

This leadership is expected to be demonstrated in:
· HSE excellence
Chief Executive Officer’s Report
· Customer satisfaction
2016 was yet another successful year for the company as the company reported growth
in customers, regulated units sold and total revenue. · Financial performance
The capital expenditure (value of work done) during the year reach RO 124 Million · Operation efficiency
(2015-95 Million) achieving 130 percent of the target mainly as a result of enhancing the
The company identifies the risks following the de-
project management function and directly procuring major materials through frame-
crease in the oil price and will exercise strict finan-
work agreement.
cial discipline and adhere to prudent and economic
Though LTIFR was 0.26, below the target one unfortunate events of a fatality involving spending while managing the day to day operations.
contractor’s employee was reported during the year. Meeting the regulatory compliance, and the expec-
tations of customers, employees and other stake-
The company was successful in keeping the distribution system loss below 10 percent holders within these constraints will be extremely
to reach 9.33 percent though could not achieve the target of 8.9 percent set by Author- challenging yet the management team is committed
ity for Electricity regulation (AER). to manage the operations and deliver the expected
and targeted results. Zahir Bin Abdullah Al Abri
Human Resource Development
Chief Executive Officer
The company also is aligned with the group initiatives towards implementation of the
‘Integrated Talent Management Framework’ (ITMF) and has achieved the tasks of (i) De-
velopment of Competency framework and Implementation Plan and (ii) Development
of Performance Management System and Implementation Plan, agreed for the year.
Asset Management
One of the strategic objectives of the company is the adoption of the best practices in
the asset management and has decided to pursue ISO 55000 certification. During 2016
the company carried out ISO 55000 certification audit with the help of M/s. Lloyd’s
Register and succeeded to achieve the certification.
Customer Services
The company has successfully accomplished the tasks of implementing of Billing System
and ‘In-Housing’ the billing activity. The company is aligned with the NAMA group in
relation to the Manual meter Reading System and progressing in implementation of
Automated Meter Reading for high value customers as per AER program.
Communication
The company has achieved all the tasks relating to Communication Strategy agreed
with the EHC Group.
Having recognized the accomplishment of the major milestones set as part of the Vision
of the previous plan period, the company has set new Vision for the coming five-year pe-
14 15
Financial
4,931,628 and
62% Operational Performance The gross Value Added decreased by RO 3 Million compared to 2015. Approximately 57 percent
4,931,628 62%
4,931,628 62% of the value added equivalent to RO 32 Million were retained for maintenance & expansion in the
form of depreciation and retained earnings (2015- RO 38 – 64 percent) as given in Table 2 below.
1. Financial performance
Table 2: Application of Value Added

Though the total Revenue showed a growth of 6 percent to reach RO 272.6 Million comparing
with 257 Million in 2015 the EBIT showed decrease of 2.5 million to reach RO 30.767 Million 2016 2015
mainly on account of increase in subsidy revenue by RO 12 Million and increase in General and RO’000 Percent RO’000 Percent
Administrative expenses by RO 0.670 Million. Application of Value Added
The Net Book Value of Assets increased from RO 521 Million in 2015 to RO 622 Million in 2016 To pay employees
due to the increased capital expenditure of RO 124 Million (2015- RO 95 Million) Employee related costs )12,461( 22.3% )10,878( 18.29%
To pay directors
These major financial performance indicators are shown in the graph 1 below. Sitting fee and other remuneration )55( 0.1% )52( 0.09%
To pay Government
Figure 1: Financial Performance
Income tax )3,756( 6.7% )3,003( 5.05%
FINANCIAL PERFORMANCE To pay providers of capital
FINANCIAL PERFORMANCE Equity dividend )7,500( 13.4% )7,500( 12.61%
621621
To provide for the maintenance and expansion
520520
of the company
Depreciation )22,777( 40.7% )19,747( 33.21%
273273
257257
Retained profit )9,348( 16.7% )18,296( 30.77%

124124
95 95
)55,897( 100.00% )59,476( 100.00%

31 31
33 33
Total
REVENUE EBIT CAPEX NET BOOK VALUE OF
REVENUE EBIT
2015 2016
CAPEX ASSETS
NET BOOK VALUE OF
ASSETS
2. Operational Performance
2015 2016
1.1. Gross Value added statement 2.1. Business growth
The gross value added during 2016 was RO 55.897 million compared to RO 59.476 Million of pre- The number of customers increased from 366,716 to 390,689 by the end of 2016 and the regulated
vious year as shown in the Table 1 below. units distributed increased to 7,920 GWh as shown in figure 2 below. The growth in number of
customers and Regulated units sold were 7 percent and 5 percent respectively.
Table 1: Gross Value Added
Figure 2: Operational performance
2016 2015
RO’000 RO’000
Value Added
Customers Regulated Units Sold (GWh)
Revenue 272,633 257,203
395,000 8,000
Less: Power purchase, spares and repairs )201,084( )186,732( 390,000
390.689 7,920
7,900
Less: General and Administrative expenses )8,056( )8,889( 385,000
7,800
380,000
Less: Interest on loan from bank for working capital )8,350( )3،972( 375,000 7,700
Value added by Distribution and supply activities 55,143 57,610 370,000 7,600
365,000 366.716 7,550
Add: Other income 2,567 2,404 360,000 7,500
7,400
Total Value Added 57,710 60,014 355,000
350,000 7,300
2015 2016 2015 2016
23,573,327 27%
21%
16 17
2.2. Operations Efficiency

The distribution system loss for the year was reported at 9.33 percent compared to 10.74 percent
in 2015 and the target set by54,025,830
AER 8.9 percent. CAIDI for the year increased to 90 minutes com-
pared to 81 minutes reported in 48%
2015.
Commercial Domestic Government others Operational Performance 2006 - 2016
CAIDI was 90 minutes in 2016
180
Figure 3: Operational indicators 157
160
140
120 107
Distribution System Losses % CAIDI (Minutes) 100 112
87 81 90
80 67
11.00% 92 64 60
10.74% 60 70
90 54
10.50% 90.01 40
88
20
10.00% 86
0
84
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
9.50% 82
9.33% 81
9.00% 80
78
8.50% 76
2015 2016 2015 2016
Operational Performance 2006 - 2016

Distribution System Losses were %9.33 in 2016
3. Significant Ratios
30.00%
Significant ratios are shown in Table 3. 24.88%
25.00% 24.88%
21.33%
Table 3: Significant ratios 20.00%
15.32% 15.31%
17.77% 14.26%
15.00%
Particulars 2016 2015 11.19%
10.28% 10.74%
9.33%
MWh/connection MWh 20.27 20.59 10.00%
Average Customers per district office Number 24,418 20,382 5.00%
Total Revenue/MWh billed RO 34.42 33.97
0.00%
Staff Cost per MWh RO 1.57 1.44 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Opex cost per MWh RO 7.02 6.728
Total Cost per MWh RO 30.86 30.067
Earnings per share RO 0.12 0.18
Net assets per share RO 4.15 3.47
Return on equity Percent 7% 11%
18 19
Organization and Human Resources Human Resources

The total number of employees as at 31 December 2016 was 524, employed in the four categories
Figure 4 shows the organization structure of the company during 2016.
shown in Table 4. The company continued to maintain the highest Omanisation level achieving 98
percent in 2015 also.
Figure 4: Organization structure
Table 4: Employee details
BOARD OF COMPANY Function 2016 2015

DIRECTORS SECRETARY Administrative/Supervisory 173 173
Managerial/Executives 37 39
Technical 271 264
Other 43 48
Total 524 522
CHIEF
BOARD
AUDIT & RISK EXECUTIVE
EXECUTIVE
COMMITTEE OFFICER
COMMITTEE
(CEO)
CHIEF CHIEF CHIEF

INTERNAL OPERATIONS OPERATIONS
AUDITOR OFFICER OFFICER
(CIA) DISTRIBUTION SUPPLY
SENIOR SENIOR
MANAGER MANAGER
PLANNING &
SHARED
ASSET
SERVICES
MANAGEMENT
SENIOR SENIOR
MANAGER
MANAGER
HUMAN
RESOURCES FINANCE
MANAGER
MANAGER REGULATORY
RISK &
HSE CORPORATE
STRATEGY
MANAGER EXPERT
CORPORATE BUSINESS
COMMUNICATIONS DEVELOPMENT
20 21
Development Health, Safety and Environment (HSE)

The training programs conducted during the year based on the training need analysis is given in the Tables
The LTIFR reported for the year was 0.28 compared to the target <1. The company carried out an assessment
(table 5) below
during the year with the help of an independent consultant and appropriate steps have been taken towards bridg-
ing the gaps or deficiencies identified for obtaining the OHSAS certification.
Admin & Supervisory (A&S)
Mana- Techni- Figure 5: HSE Key Performance Indicators
HSE CS IT Other Total
gerial cal
Expenditure (RO) 37648 43033.2 6299.11 6147 0 6585.6 99713 Performance
PerformanceStatistics
Statistics from Jan -- Dec
from Jan Dec2016
2016
Total Number of employees
receiving training
4 62 84 45 1 63 259 Performance Statistics from Jan - Dec 2016
Total Number of courses 65 154 77 9 0 38 343 LTIFR ==
LTIFR
Number
Numberofof
WsWs* *1000000/number
1000000/number
Managerial
LTIFR =worked
of of hours
worked hours
Number of Ws * 1000000/number
11 Fatality
Fatality
M T HSE CS IT Other Total 1 Fatality LostTime
Lost Time
Expenditure (RO) 19952 8450.65 399.44 0 0 0 28802
of worked hours
00 Incident
Incident
Lost Time
Total Number of employees 0 Ristricted
Incident Ristricted Work
Work
receiving training
30 13 2 0 0 0 45
00 Case (RWC)
Case (RWC)
Ristricted Work
Total Number of courses 30 30 4 0 0 0 64
0 Case (RWC) First AID
48
48 First AID
Technical 48 First AID
M T HSE CS IT Other Total 6809
6809 Near
NearMiss
Miss
Expenditure (RO) 568 86020.4 18920.7 0 0 1083 106592
6809 Near Miss
1 123 170 0 0 5 299
receiving training
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec .Accum
Total Number of courses 1 389 203 0 0 5 598
Man
235281 241867.5 214049 207939 384548 977355 246708 267148 259729 376565.5 318310 318,476 3270741
hours

Other Fatality 0 0 0 0 0 1 0 0 0 0 0 0 1
M T HSE CS IT Other Total
LTI 0 0 0 0 0 0 0 0 0 0 0 0 0
Expenditure (RO) 0 3806 729.8 0 0 3810.4 8346
0 21 11 0 0 22 54 RWC 0 0 0 0 0 0 0 0 0 0 0 0 0
receiving training
Total Number of courses 0 22 16 0 0 22 60 First Aid 1 3 2 1 0 9 5 6 3 7 10 1 48
Near
709 622 164 209 837 574 158 559 632 774 553 1018 6809
Miss
LTIFR 0 0 0 0 0 0.55 0.49 0.44 0.39 0.34 0.31 0.28 0.28

22 23
Our contribution to Society

Table 6: HSE Performance as on 31-12-2016
Largest distribution company in Oman
Actual Previous and Providing electricity to customers in
KPIs Target
2016 2015 the authorised area of 75,000KM2 in four
Near Misses, unsafe conditions, unsafe acts: 5500 6809 5024 Governorates.
Occupational Illness Frequency (OIF) 1≤ 0 0 Creating employment opportunities
No. of First Aid Cases - 48 5 directly and indirectly.
No. of Restricted Work Cases - 0 0
Creating opportunities for
Safety:
Capital projects contractors
Fatality 0 1 2 and suppliers and Service
Lost Time Incident Frequency (LTIF) 1≤ 0.28 0.15 providers.
Total Recordable Case Frequency (TRCF)
(Fatality, Lost time Injuries, Restricted Work 4≤ 0.28 0.46
Cases,)
Road Traffic Accident (RTA) 4≤ 0.59 0
Roll Over Accident (ROAF) 1≤ 0 0.13
Environment:
0 0 1
Incidents
Table7: MZEC & Contractors HSE Performance as on 31-12-2016
Actual
KPIs Previous 2015
2016
33 KV Network projects spending for
Man –Hours Worked creating opportunities in industries,
MZEC: 971,498 939,031 commercial and tourism sectors.
Contractors: 2,617,719 5,533,375
Proud to be part of the overall
Total: 3,589,217 6,472,406
Development of the nation for more
Km Driven than a Decade.
MZEC: 4,571,947.70 9,000,000
Contractors: 5,605,565.00 5,898,161
Total: 10,177,512.70 14,898,161
190 Last 304 days
Safe Working Days without LTI or Fatality:
Fatality in 24th June 2016 Previous achievement
24 25
Projects Sl. Tender

Project cost
Date of
Project details (OMR) with
No. no. energization
Capital Expenditure contingency
The total capital expenditure mainly comprises of 33 KV investments, customer extension and oth- Construction of 33 kV incomer
er LT investments during the year was RO 124 million showing increase of 29 percent compared feeders for SUMAIL primary
9 63/2013 362,362.00 10-Feb-16
to RO 95.7 Million of 2015. substation at SUMAIL in
DAKHILIYAH GOVERNORATE
The major projects energized during the year were; Construction of 33kV incomer
Table 8: feeder and 11kV outgoing feeders
10 67/2013 for HASSAS primary substation 182,182.00 17-Mar-16
Project cost at SUMAIL in DAKHILIYAH
Sl. Tender Date of
Project details (OMR) with GOVERNORATE
contingency Upgrading HASSAS (33/11kV)
Upgrading of new BAHLA primary s/s from 2x6 MVA to 2x20 MVA
11 61/2013 726,529.03 17-Mar-16
substation from 2x6 MVA to s/s at SUMAIL in AL DAKHLIAH
2x20 MVA (33/11kV) MVA and 05 Jan 2016 & GOVERNORATE
1 71/2013 888,125.00
construction of 11 kV outgoing 13 Jan 2016 Construction of 2x20MVA primary
feeder at BAHLA in DAKHILIYAH substation (33/11kV) at BERKAT AL
GOVERNORATE 12 86/2013 840,000.00 27-Mar-16
MOUZ in NIZWA at DAKHILIYAH
Construction of 3x20MVA GOVERNORATE
MADINAT NIZWA primary Construction of 33kV feeder
2 60/2013 949,000.00 26-Jan-16
substation (33/11kV) at NIZWA in from AL MUDHAIRIB grid station
DAKHILIYAH GOVERNORATE 13 48/2014 559,880.50 12-Mar-16
to YAHMADI sub-station in
Construction of 33kV feeders and SHARQIYAH GOVERNORATE
11kV feeders for MADINAT NIZWA Construction of 3x20MVA primary
3 66/2013 339,339.00 26-Jan-16
primary substation at NIZWA in substation (33/11kV)at SIEH AL
DAKHILIYAH GOVERNORATE 14 75/2013 782,782.00 10-Apr-16
AULA at JALAAN BANI BU ALI in
Construction of AL-QURAIHAT SHARKHIYAH GOVERNORATE
T.B substations (3x20MVA) with 33kV Construction of 33kV incomer
4 4,514,250.00 26-Jan-16
115/2013 incomers and 11kV outgoing feeders feeders and 11kV outgoing feeders
at MUSANA'A in SOUTH BATINAH 15 35/2014 for SAIH AL-ULA primary substation 1,038,084.30 10-Apr-16
Upgrading of Al BIDOOA primary at JAALAN BANI BU ALI in SOUTH
substation from 2 x 6MVA to 2x SHARQIYAH GOVERNORATE
5 76/2013 707,543.54 8-Feb-16
20MVA (33/11kV) at BAHLA in Construction of 2 x 6 MVA al
DAKHILIYAH GOVERNORATE HASSAS-b primary substation
Upgrading of SUMAIL primary (33 / 11 kV) with 33kV incomer
16 49/2014 755,436.00 18-Apr-16
substation from 2x20MVA to feeders and 11kV outgoing feeders
6 57/2013 770,125.18 1-Feb-16
3x20MVA (33/11kV) at SUMAIL in at SUMAIL in DHAKHILIYAH
DAKHILIYAH GOVERNORATE GOVERNORATE
Upgrading al SELLAHA and afi Construction of 2x3 MVA primary
T.B
7 substations to (2x20MVA) at 2,711,346.00 21-Feb-16 substation at sient with associated
324/2011
SOUTH BATINAH region (2) 33 kV and 11 kV feeder works
17 2/2015 & construction of 33 kV feeder 1,524,356.90 27-Apr-16
Upgrade WADI QURYAT (33/11kV)
from BAHLA grid to Al BIDOOA
s/s from 2x6 MVA to 2x20 MVA
at BAHLA in DAKHLIYAH
8 77/2013 MVA and construction of 11 kV 720,017.00 15-Feb-16
GOVERNORATE
outgoing feeder at BAHLA in AL
DAKHLIAH GOVERNORATE
26 27
Project cost Project cost

Sl. Tender Date of Sl. Tender Date of
Project details (OMR) with Project details (OMR) with
No. no. energization No. no. energization
contingency contingency
Construction of 3x20 MVA SUR was
primary substation (33/11kV) at energized on
18 59/2013 715,290.00 5-May-16
SUKAYKIRAH in SUR at SOUTH 01.05.2016
Supply, installation, testing and
SHARQIYAH GOVERNORATE JBBA &
commissioning of 10 numbers 36kV,
Extension of 33kV feeder from AL 25 10/2014 1,529,695.00 MUDHIRIB
20MVAr capacitor banks for grid
AFLAJ primary substation to AL- was energized
substations
AYOON & AL-QWAYIAH primary 02.05.2016
19 01/2015 492,763.70 2-May-16 Blucity energised
substation (33/11kV) at MUDAIBHI
in NORTH SHARQYIAH on 11.07.2016
GOVERNORATE 26 T.30/2013 IBRA gs 1,585,191.31 4-Jun-16
Construction of two new incomer Construction of 33kV & 11kV
33kV feeders and seven 11kV feeders from AL MINTRIB primary
03 JUL 2016 -
outgoing feeders from DIYAN and s/s and construct AL SHARIQ s/s
20 16/2015 535,216.00 18-May-16 27 47/2015 868,999.58 SS & One line
AL KADHRA primary substations 1x6MVA, (33/11kV) with 33kV &
energised
at SUWAIQ in NORTH BATINAH 11kV feeders in BEDYAH at NORTH
GOVERNORATE al SHARQIYAH GOVERNORATE.
Construction of 3x20MVA HEEL 04-Jul-2016
Construction of 33kV feeders from
primary substation (33/11kV) 2 feeders from
21 79/2013 780,000.00 26-May-16 IBRA grid & related 33kV interlink
at SUMAIL in DAKHILIYAH 28 44/2015 989,604.00 IBRA grid
works at IBRA in SHARQIYAH
GOVERNORATE 19 Sep 2016
GOVERNORATE
Construction of 33kV incomer interlink
feeders and 11kV outgoing feeders Construction of 33kV incomer
22 37/2014 for BARKAT AL MOUZ and al HEEL 2,744,723.30 26-May-16 feeders and 11kV outgoing feeders
primary substation at NIZWA in for upgrading of m industrial primary 2 # 11KV
Feeders
DAKHILIYAH GOVERNORATE substation and construction of 33kV
29 31/2015 1,133,154.00 Temporary
ALKUDRA GS incomer feeders and 11kV outgoing Energized
energized on feederfor upgrading of MULADAH 29.06.2016
Construction of new grid station at primary substation at MUSANAh in
25.05.2016
T.B MADINAT BARKA and ALKHADRA SOUTH BATINAH GOVERNORATE
23 2,728,195.79 MADINAT
37/2012 and associated 132kV ohl (over head
BARKA Construction of 33kV feeders
lines) works
Energized on from KHADRA grid station to 1 feeder
29.06.2016 30 97/13 KHADRA primary substation at 188,016.95 energized on
Upgrade al ghafat (33/11kV) s/s SUWAIQ in NORTH BATINAH 23.05.2016
from 2x6 MVA to 2x20 MVA and GOVERNORATE
24 62/2013 construction of 11 kV outgoing 919,995.40 12-Jun-16 1 Feeder
Construction of 9 nos.33kV feeder
feeder at BAHLA in AL DAKHLIAH 28.06.2016
31 26/2014 from MADINAT BARKA grid station 708,651.90
GOVERNORATE 2 Feeders
at BARKA in SOUTH BATINAH
27.04.2016
28 29
Sl. Tender
Project cost
Date of
Distribution of power
Project details (OMR) with
contingency Distribution System Assets
Upgrading of BIDAYA primary Distribution system assets as at the end of the year are shown in the Table 8 below.
substation from 2x20MVA Table 9: Distribution system assets
to 3x20MVA (33/11kV) and
1 Feeder
32 40/2014 construction of 33kV incomer 1,309,635.36
01.06.2016 Particulars Unit of MeaSure 2016 2015
feeder and 11kV outgoing feeders
KV S/s 33/11 Number 253 239
at BIDAYA in NORTH BATINAH
GOVERNORATE KV S/s 11/0.433 Number 17278 16310
33 21A/2014 MOD ADAM project Sponsored 3-Oct-16 KV TX 33/11 Number 423 439
Construction of (33/11kV) primary KV TX 33/0.433 Number 39 77
substation (1x6MVA) with 33 kV KV TX 11/0.433 Number 16798 15982
34 52/2015 412,995.00 13-Oct-16
feeder at TAWI AL BADOO in
SOUTH BATINAH GOVERNORATE KV network OH 33 Km 3680 3271
Construction of (3x20 MVA) KV network Cable 33 Km 923 550
NAMAAN primary substation KV network OH 11 Km 9472 9256
35 20/2014 1,100,980.61 14-Nov-16
(33/11kV) at BARKA in SOUTH
BATINAH GOVERNORATE KV network Cable 11 Km 2580 2152
Construction of 33kV incomer KV network OH 0.433 Km 9875 9821

feedrs and 11kV outgoing feeders KV network Cable 0.433 Km 7119 6368
36 17/2015 for NAMAAN primary substation 910,823.76 14-Nov-16
at BARKA in SOUTH BATINAH Distribution System Maintenance
GOVERNORATE
The company continued to outsource the emergency & maintenance services in all the districts to
Construction of new 33kV
Fdr -2 on 22 contractors.
feederes (2 lines) from NIZWA
Nov 2016
37 138/2013 grid station to NIZWA university 304,733.00 Demand Profile
Fdr-1 on 29 Nov
primary substation at NIZWA in
2016 The maximum load experienced in company’s network showed a growth of 5 percent to reach
DAKHILIYAH GOVERNORATE
1,974 MW recorded on 10 July 2016 at 15:00 Hours (2015- 1,877MW).The lowest demand on the
Construction of (33/11kV) primary same day was 969.45MW.
substation (1x6MVA) with 33 kV
38 51/2015 444,444.00 21-Nov-16 Figure 5: Maximum demand
feeder at WADI MISTAL in SOUTH
BATINAH GOVERNORATE
Construction of 3 nos 33kV incomer Maximum Demand
feederes and 11kV outgoing feeders 2000
39 139/2013 for IZKI heights primary substation 550,550.00 29-Dec-16 1975
1980
(33/11kV) in IZKI at DAKHILIYAH
1960
GOVERNORATE
1940
Construcitn of two 33kV tapping 1920
feeders from IBRA grid station to 21 Sep 2016 &
40 43/2015 410,685.00 1900
WADI AL TAYEEN 33kV feeders in al 20 Oct 2016 1877
1880
SHARQIAYAH GOVERERNORATE
1860
Construction of 33kV interlink 1840
between breek primary
1820
41 12/2015 substation to BIDAYA junction at 226,737.50 20-May-16 2015 2016
SUWAIQ in NORTH BATHINA
GOVERNORATE
1960 1500
1940
30 1920 1000 31
1900
1877 500
1880
1860
0
The
1840 lowest load reported during the year was 347 MW on 10 March 2016 at 04 hours and the Distribution
Jan
System
Feb
Losses
Mar Apr May Jun Jul Aug Sep Oct Nov Dec
maximum
1820 load experienced on the same day was 1075 MW. The distribution system loss during the year was 9.33 percent as against the AER target of 8.9 per-
2015 2016 Max load.2016 Min load.2016 Max load.2015 Min load.2015
Figure (6) below depicts the demand profile over the 24 hour period on the days of the peak de- cent (2015- Actual 10.74 percent). Figure 8 shows the distribution system losses reported for the
mand during summer and lowest demand during winter. company and the governorates.
Figure 6: Peak and Low demand 24 hour profile Figure 8: Distribution system losses
2500
Losses Results
2000 16
13.38 14.3
14
11.3
1500 12 10.74
10.1 9.5 9.3
10 8.9
7.97
8
1000 5.3 5.7
6
4.6
4
500
2
0
0 SB DK S.SH N.SH Mazoon
04:00AM
05:00AM
06:00AM
07:00AM
08:00AM
09:00AM
10:00AM
11:00AM
12:00PM
13:00PM
14:00PM
15:00PM
16:00PM
17:00PM
18:00PM
19:00PM
20:00PM
21:00PM
22:00PM
23:00PM
2015 2016 Target
Min Load- 2015 Min Load- 2016 Max load-2015 Max Load-2016
The distribution system loss is calculated as the difference between the energy entering the dis-
tribution network and the energy metered at customer end. (Excluding the directly transmitted
Monthly maximum and minimum demand during the year compared to the previous year 2015 is power) as given in the table (10) below.
shown in Figure 7 below.
Table 10: Distribution system losses
Figure 7: Summer and winter monthly profile
2016 2015
Particulars
MWh MWh
2500 Bought from PWP 8,867,836 8,581,450
Less: Supplied directly to customer by OETC (104,048) (143,675)
2000
Less: Transmission system loss (143,508) (139,506)
1500 BST at bulk supply points 8,620,280 8,298,269
1000
Supplied/Billed 7,919,836 7,550,441
Less: Supplied directly to customer by OETC (104,048) (143,675)
500
Net Regulated units distributed 7,815,351 7,406,766
0 Distribution losses 804,929 891,503
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Distribution losses (percentage) 9.33% 10.74%
Max load.2016 Min load.2016 Max load.2015 Min load.2015
Losses Results
16
13.38 14.3
14
32 33
Customer Segments 2015
Supply of power 3,841 Electricity Imported at bulk supply point and billed
14,461 1%
Customer Profile 4% The electricity imported at the bulk supply points and billed quantities for each month during 2016
3,841 73,367
along with 2015figures are given in the Figure 10.
14,461 as at the
The total number of customers 1% end of 2016 was 390,689 compared to 366,878 of 2015 20%
4% (6 percent) during the year. This comprised of 292,190 (75 percent)
showing an increase of 23,973 Figure 10: Electricity imported at bulk supply point and billed (MWh)
residential and 79,407 (20 percent) commercial customers 73,367
as shown in Figure 9.
20%

Figure 9: Customer segments 4,800,000
Customer Segments 2015 4,000,000
Customer Segments 2015 3,200,000

3,841 3,841
14,461
4%
14,461
1%
3,841 1% 2,400,000
14,461 1%
4% 4% 73,367
20%
73,367 73,367 1,600,000
20%
20% 800,000
275,047
75%
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
275,047 Commercial
Imported at Bulk Supply point 2016 Imported at Bulk Supply point 2015 Billed 2016 Billed 2015
75% Domestic
Commercial Government 3,841
275,047 others 14,461 1%
75% Domestic Sale of power
275,047
75% Government
4%
Commercial 73,367
The electricity units sold increased by 5 percent in 2016 and the revenue from sale of electricity
Domestic others
Commercial
Government
Domestic
20% by 1 percent.The category wise electricity consumption and the revenue is given in Table
increased
Customer Segments
11.
2016Billed 2016
others
Government
others
275,047 Energy Energy Billed 2015
75%
Customer
Segments Segments 2016
Table 11: Number of customers, Electricity Supplied and Revenue
Customer 2016 4,032 347,979
Commercial Category Number of customers 1% 1,101,539
4% MWh billed4%
325,753
Revenue
Domestic
4,032 15,060 14% 1,538,690 1,455,438
2016 20% 2015 2016
1,161,968 2015 2016 2015
19%
15,060 1%
4,032
Government 4,032 4% 16%
4%
15,060 1%
others 15,060 1%
79,407
79,407
Residential 292,190 274,796 4,931,628 4,459,221 54,025,830 55,367,285
4%
20%
79,407 20%
4% 20%
79,407 Commercial 79,407 73,431 1,538,690 1,424,810 30,213,064 27,459,733
20%
275,047
Government 15,060 14,814 1,101,539 1,164,372 23,573,327 24,860,333
75%
* Others 4,032 3,837 347,979 502,038 4,921,592 3,541,472
Commercial
4,607,282
4,032 Domestic Total
4,931,628
62% 390,689 366,878 7,919,836 7,550,441 112,733,814 61%
111,228,824
292,190 15,060 1% Government
75%
292,190
75%
4% others *Commercial Domestic Government others
Others: include Agriculture/Fisheries, Hotels/Tourism and Industrial

79,407
Commercial Domestic Government others 20%
292,190
292,190
75%
75% Commercial Domestic Government others

4,032
15,060 1%
2,400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1,600,000
34 Imported at Bulk Supply point 2016 Imported at Bulk Supply point 2015 Billed 2016 Billed 2015 35
395,000 8,000
390,000
390.689 7,920
800,000 7,900
385,000
380,000 7,800
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 375,000 7,700
3,841 370,000
366.716 7,600
Energy billed
Imported at Bulk Supply point 2016 14,461
Imported at Bulk Supply point 2015
Billed 2015 Billed 2016 1% Sales
365,000 revenue
7,500
7,550
360,000
4%
Residential, commercial and government customers accounted for approximately 96 percent of 355,000
The revenue from sale of electricity showed a 7,400
growth of 1 percent to record RO 112.7 million
350,000 73,367
the total energy sold (62 percent, 19 percent and 14 percent respectively). The overall growth in during 2016 compared
2015 to RO 111.22016 2015. 7,300
Million in Figure 12 shows the sales revenue 2016
for the
energy sales compared to 2015 was 5 percent. Energy billed under various customer categories 20% 2015
different categories of customers during 2016 compared to 2015.
are shown in Figure (11) below.
Figure11: Electricity Sales (MWh) by customer segments Figure12: Electricity Sales (RO) by customer segments
Energy
Energy Billed 2016 Billed 2016
Energy Billed 2015 Energy Billed 2015
Sales Revenue (2006 - 2016) / Sales (Million)
347,979
347,979 325,753
1,101,539
4%
4% 325,753
4% 1,455,438 120,000 111,229 112,734
14% 1,101,5391,538,690 4%
Customer Segm
20% 1,161,968 19% 98,112
14% 16% 1,538,690 100,000 1,455,438
86,382
20% 1,161,968 19% 74,837
80,000
Apr May Jun Jul Aug Sep Oct Nov Dec 16% 66,941
275,047 60,000
75% 34,559 36,716
43,246
49,274
42,584 3,841
016 Imported at Bulk Supply point 2015 Billed 2016 Billed 2015
Commercial
40,000
20,000
14,461
4%
1%
Domestic
-
Government
May Jun Jul Aug others 3,841 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
4,931,628Sep Oct Nov Dec 4,607,282
62% 61% 14,461 1%
Imported at Bulk Supply point 2015 Billed 2016 Billed 2015 4%
Commercial Domestic Government others Commercial Domestic Government others
Revenue
73,367 by customer category 2016
20%
Revenue by c
Customer Segments
Revenue2016
by customer category 2016
4,607,282 4,64
4,931,628
4,921,592
61%
16 Energy Billed 2015
62%
15,060
4,032
1%
4,921,592
4%
4%
30,213,064
Energy Billed 2015
4%
Commercial Domestic
23,573,327 Government
23,573,327
others
30,213,064
27% 27% 25,418,992
79,407
21% 21% 275,047 23%
325,753 325,753 20%
4% 4% 75%
1,455,438
8,690 1,161,968 19%
1,455,438 Commercial
0% 16% 1,161,968 19%
16% Domestic
275,047 Government
75% others
Commercial
54,025,830
Domestic 48%
Government
4,607,282
others
54,025,830 Customer Segm
61% 48%
292,190
Commercial Domestic Government others 4,032
75%
Customer SegmentsCommercial
2016 Domestic Government others 15,060
4%
1%
Commercial
4,607,282 Commercial Domestic Distribution
Government others System Losses % CAIDI (Minutes)
61% 4,032 11.00% 92
10.74%
15,060 1% 90
10.50% 90.01
others Commercial Domestic Government others 88
14,461 1%
4%
73,367
36 20% 37
Authorized Area Wise Information

16 Revenue by customer
Revenue by customer category
category 2015
2015 Al Dakhilyah
The relevant information and statistics relating to Dakhliya is given in Table 12
4,648,724
4,648,724
4% Table 12: Dakhliya Governorate statistics
4% 28,958,101
28,958,101
26% 26% Unit of
Particulars 2016 2015
25,418,992 Measure
25,418,992
23% 275,047 Area Km² Km² 31,190 31,190
23% 75% Customers Number 112,742 106,290
Commercial Revenue RO 31,801,088 30,347,869
Domestic Max Load MW 565.8 555.6
Government Min Load MW 92.8 55.1
others Bulk Supply Tariff (purchase) MWh 2,375,622 2,261,205
Regulated Units Distributed (sales) MWh 2,250,104 2,081,660
Distribution System Loss Percent 5.3% 7.94%
52,203,006 Customer Average Interruption Duration Index (CAIDI) Minutes 76 57.9
47%
52,203,006
Customer Segments 2016 Number of 33/11 kV Ss
Number of 11/0.433 kV Ss
Number
Number
77
4930
69
4884
Commercial Domestic 47% others
Government Number of 11/0.433 kV TX Number 5002 4726
4,032 Number of 33/11 kV TX Number 123 130
15,060 1% Number of 33/0.433 kV TX Number 6 8
Commercial Domestic Government others 4%
79,407
Al Sharqiyah North
20%
The relevant information and statistics relating to Sharqiya is given in Table 13
Table 13: Sharqiya North Governorate statistics
Unit of
Measure
Area Km² Km² 23,594 23,594
Customers Number 71,103 67,146
Revenue RO 13,763,791 14,442,734
Max Load MW 309.9 279.6
Min Load MW 42.2 38.5
292,190 Bulk Supply Tariff (purchase) MWh 1,266,332 1,109,807
75%
Distribution System Loss Percent 7.5% 7.18%
Commercial Domestic Government Customer
others Average Interruption Duration Index (CAIDI) Minutes 148.8 100.6
Number of 33/11 kV Ss Number 42 41
Number of 11/0.433 kV Ss Number 3844 3750
Number of 11/0.433 kV TX Number 3870 3660
Number of 33/11 kV TX Number 78 79
38 39
Al Sharqiyah South
The relevant information and statistics relating to Sharqiya is given in Table 13
CORPORATE GOVERNANCE
Table 13: Sharqiya South Governorate statistics
Unit of Company Philosophy

Measure The company’s corporate governance system has been built on the philosophy and principles
Area Km² Km² 14,080 14,080 outlined in code of corporate governance issued by the Capital Market Authority/Ministry of com-
Customers Number 68,003 64,279 merce and industry.The Company achieved significant progress in the implementation of corporate
Revenue RO 19,417,467 18,733,176 governance through the application of the principles of transparency and neutrality stipulated in
Max Load MW 319 301 the company law, tender law and conflict of interest law. The company has also implemented “code
Min Load MW 63 44.2 of ethics” and obtains fraud and conflict of interest declarations from all the employees and direc-
Bulk Supply Tariff (purchase) MWh 1,467,834 1,334,694 tors annually as part of implementing the governance.
Regulated Units Distributed (sales) MWh 1,349,514 1,182,836 The company regularly reports its compliance with the statuary laws, regulations and policies
Distribution System Loss Percent 4.6% 11.38% through quarterly report submitted to board and main shareholders EHC. Also company has ad-
Customer Average Interruption Duration Index (CAIDI) Minutes 77 83.3 opted corporate governance framework and its compliance is reviewed and reported to Audit
Number of 33/11 kV Ss Number 39 38 committee and the Board.
The company has also appointed internal auditor and legal advisor and also has implemented
manuals for internal regulations & legal procedure.The transactions with major related parties, the
Number of 33/11 kV TX Number 69 70 companies within the same holding group, are in the normal course of business and are at arm’s
Number of 33/0.433 kV TX Number 8 16 length.
South Al Batinah 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
The relevant information and statistics relating to South Al Batinah is given in Table 14
of the company. The Board has constituted Audit and Risk Committee, and Board Executive Com-
mittee.
Table 14: South Al Batinah Governorate statistics
Additionally the Board and Committees carries out performance assessment annually.
Unit of
Measure
Area Km² Km² 6,260 6,260
Customers Number 138,841 129,163
Revenue RO 47,751,468 47,705,051
Max Load MW 807.8 773.4
Min Load MW 128.4 121
Bulk Supply Tariff (purchase) MWh 3,777,124 3,592,563
Distribution System Loss Percent 14.3 13.38
Customer Average Interruption Duration Index (CAIDI) Minutes 94.9 102.9
Number of 33/11 kV Ss Number 95 91
Number of 33/11 kV TX Number 153 160
40 41
Board of Directors The meetings of the board and the attendances in the various meetings during 2016 are given in
the table 16 below:
Composition of the Board
Table 16: Meetings of the board and members’ attendance
The Board comprises of 5 members – 4 nominated by the Electricity Holding Company SAOC
and 1 nominated by the Ministry of Finance- pursuant to the article No “15” of the articles of
Member Position AGM Board meetings
association, as amended, of the company.
30/3/2016 14/2/2016 23/2/2016 30/3/2016 21/6/2016 27/9/2016 24/10/2016
Members of the Board
Mr. Omar Ahmed Salim
Chairman Yes Yes Yes Yes Yes Yes Yes
The details of the Directors of the company holding their office as at the 31 December 2016 and Qatan
their membership in the board of other companies in the Sultanate of Oman are as follows; Ms. Fatma Khalifa Al Deputy
Yes Yes Yes Yes Yes Yes Yes
Maskiry Chairman
Table 15: Board of directors Mr. Sunil A Raykar Member Yes Yes Yes Yes Yes Yes Yes
Mr. Omar Ahmed Salim Qatan, Ms. Fatma Khalifa Al Maskiry Mansoor. AlHinai Member No Yes Yes Yes Yes No Yes
Chairman Mr. Abdull Aziz Bin

(Asst. General Manager SME Credit & Marketing, Mohammed Bin Said Al Member No Yes Yes No Yes Yes Yes
(Former CEO of Oman Oil marketing Company Bank Muscat) Kharusi
SAOG)
· Nominated by Electricity Holding Company.
· Nominated by Electricity Holding Company. · Non Executive/Independent Director.
· Non Executive/Independent Director. · Chairperson of other Boards – Nil Audit and Risk Committee
· Chairperson of other Boards – 1 · Member of other Boards – Nil
· Member of other Boards – Nil · Member of other committee – 1
· Member of other committees– 1 A. Terms of Reference
Mr. Sunil A Raykar Mr. Mansoor Al Hinai The Board constituted the Audit and Risk Committee pursuant to Article (54) of the Articles of
Association and its terms of reference include all matters specified under that article.
(Financial Advisor-Ministry of Finance, Directorate (VP Distribution & Supply Business)
General of Investments)
· Nominated by Electricity Holding Company.

· Nominated by Electricity Holding Company. B. Composition of the Audit and Risk committee
· Non Executive/Independent Director
· Non Executive/Independent Director. · Chairman of other Boards – Nil The Audit Committee comprises of three independent and nonexecutive directors of the Compa-
· Chairman of other Boards – · Member of other Boards – 2 ny and the details of meetings and attendance of the members are as shown in the table 17 below.
· Member of other Boards – · Member of other committees– 3 Table 17: Audit and Risk Committee Meetings
· Member of other committees– 1
Date
Mr. Abdull Aziz Bin Mohammed Bin Name Position
22/02/2016 04/03/2016 19/06/2016 03/07/2016 10/10/2016 20/12/2016
Said Al Kharusi
Mr. Sunil A Raykar Chairman Yes Yes Yes Yes Yes Yes
Member (Director of Budget Services Sector,
MOF) Mr. Abdull Aziz Bin
Mohammed Bin Said Al Member Yes Yes Yes Yes No Yes
· Nominated by Ministry of Finance. Kharusi
· Non Executive/Independent Director. Mansoor. AlHinai Member Yes Yes Yes No Yes Yes
· Chairman of other Boards – Nil.
· Member of other Boards –
· Member of other committee – 1
42 43
(i) Board Executive Committee: Remuneration Matters

The committee consists of the Chairman of the Board as the Chairman, and two of the Board The company paid RO 1,069 thousand towards remuneration to the key management personnel
members as members met five time during the year of 2016 as shown in Table 19 below. (including the Directors remuneration of RO 55 thousand) during the year.
(ii) Table 19: Board Executive Committee Non- compliance by the company
Date No penalty or strictures have been imposed on the company by Muscat Securities Market/Capital
Name Position Market Authority or Ministry of commerce & Industries on any matter related to capital market
23/03/2016 20/06/2016 07/09/2016 09/10/2016 09/11/2016
during the year.
Mr. Omar Ahmed Salim Qatan Chairman Yes Yes Yes Yes Yes
Communications with the shareholders and Investors
Ms. Fatma Khalifa Al Maskiry Member Yes Yes No Yes Yes In relation to various strategic initiatives and policy issues the company maintains close liaison with
the Electricity Holding Company (EHC), the Major shareholder. The company’s financial and oper-
Mansoor. AlHinai Member Yes Yes Yes Yes Yes ational 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 2016 the shareholding was as follows:
Table 20: Distribution of Shareholding
Shareholding
Shareholders
RO percent
Electricity Holding Company SAOC 149,985,000 99.99
Mr. Omar Ahmed Salim Qatan

Chairman Ministry of Finance 15,000 0.01
Total share capital 150,000,000 100
The Statutory Auditors

Ms. Fatma Al Maskiry Mr. Sunil A Raykar
Deputy Chiarman Member M/s. Deloitte & Touche (M.E.) & Co, LLC were the Statutory Auditors of the Company for the year
2016.
Mr. Mansoor AlHinai Mr. Abdull Aziz Al Kharusi

Member Member
44 45
Contents
Independent auditor’s report 44-46
Statement of financial position 47
Statement of profit or loss and other

comprehensive income 49
Statement of changes in equity 50
Statement of cash flows 51
Notes to the financial statements 53-91
Report and
financial statements
for the year ended 31 December 2016
46 47
Independent auditor’s report to the shareholders of Independent auditor’s report to the shareholders of
Mazoon Electricity Company SAOC Mazoon Electricity Company SAOC (continued)

Report on the financial statements Responsibilities of board of directors for the financial statements (continued)
Opinion
We have audited the financial statements of Mazoon Electricity Company SAOC (the “Company”), requirements of the Commercial Companies Law of 1974, as amended, and for such internal control as the
which comprise the statement of financial position as at 31 December 2016, and the statement of profit Board determines is necessary to enable the preparation of financial statements that are free from material
or loss and other comprehensive income, statement of changes in equity and statement of cash flows for misstatement, whether due to fraud or error.
the year then ended, and notes to the financial statements, including a summary of significant accounting
policies set out on pages 8 to 41. In preparing the financial statements, the Board is responsible for assessing the Company’s ability to con-
tinue as a going concern, disclosing, as applicable, matters related to going concern and using the going
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial concern basis of accounting the Board either intends to liquidate the Company or to cease operations, or
position of the Company as at 31 December 2016, and of its financial performance and its cash flows for has no realistic alternative but to do so.
the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Auditor’s responsibilities for the audit of the financial statements
Basis for opinion
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsi- free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that in-
bilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the cludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
Financial Statements section of our report. We are independent of the Company in accordance with the conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstate-
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA ments can arise from fraud or error and are considered material if, individually or in the aggregate, they
Code) together with the ethical requirements that are relevant to our audit of the financial statements could reasonably be expected to influence the economic decisions of users taken on the basis of these
in Sultanate of Oman, and we have fulfilled our other ethical responsibilities in accordance with these financial statements.
requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. As part of an audit in accordance with ISA’s, we exercise professional judgement and maintain professional
skepticism throughout the audit.We also:
Other information · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
The Board is responsible for the other information. The other information comprises the Board of Direc- or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
tors’ report which is expected to be made available to us after the date of this audit report. is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material mis-
statement resulting from fraud is higher than one resulting from error, as fraud may involve collusion,
Our opinion on the financial statements does not cover the other information and we do not and will not forgery, intentional omissions, misrepresentations, or the override of internal control.
express any form of assurance conclusion thereon.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures
In connection with our audit of the financial statements, our responsibility is to read the other information that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the ef-
fectiveness of the Company’s internal control.
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially · Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti-
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of mates and related disclosures made by Board.
this other information, we are required to report that fact. We have nothing to report in this regard.
· Conclude on the appropriateness of the Board’s use of the going concern basis of accounting and, based
Responsibilities of board of directors for the financial statements on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
The Board of Directors (the “Board”) is responsible for the preparation and fair presentation of the finan-
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
cial statements in accordance with International Financial Reporting Standards and the relevant disclosure
related disclosures in the financial statements or, if such disclosure are inadequate, to modify our opin-
48 49
Independent auditor’s report to the shareholders of Statement of financial position

Mazoon Electricity Company SAOC (continued) at 31 December 2016
Auditor’s responsibilities for the audit of the financial statements (continued)

2016 2015
Notes RO ’000 RO ’000
ion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. ASSETS
However, future events or conditions may cause the Company to cease to continue as a going concern. Non-current assets
Property, plant and equipment 5 621,831 520,688
· Evaluate the overall presentation, structure and content of the financial statements, including the dis-
closures, and whether the financial statements represent the underlying transactions and events in a
Current assets
manner that achieves fair presentation.
Inventories 6 3,774 4,473
We communicate with the Board regarding, among other matters, the planned scope and timing of the Government subsidy receivable - 24,694
audit and significant audit findings, including any significant deficiencies in internal control that we identify Trade and other receivables 7 45,133 40,613
during our audit. Other current assets 16 6,194 -
Cash and cash equivalents 8 10,255 1,062
Report on other legal and regulatory requirements
In our opinion, the financial statements comply, in all material respects, with the relevant disclosure re- Total current assets 65,356 70,842
quirements of the Commercial Companies Law of 1974, as amended.
Total assets 687,187 591,530

EQUITY AND LIABILITIES
Capital and reserves
Share capital 9 150,000 150,000
Legal reserve 10 50,000 50,000
Deloitte & Touche (M.E.) & Co. LLC
General reserve 11 9,249 5,517
Muscat, Sultanate of Oman Retained earnings 41,705 34,276
March 2017 Total equity 250,954 239,793
LIABILITIES
Non-current liabilities
Term loan 19 207,134 192,237
Deferred tax liability 13 23,013 19,257
Deferred revenue 14 18,264 15,269
Provisions 12 1,500 1,615
Finance lease 20 496 463
Total non-current liabilities 250,407 228,841

50 51
Statement of financial position Statement of profit or loss and other comprehensive

at 31 December 2016 (continued) income
2016 2015 Notes 2016 2015

Notes RO ’000 RO ’000 RO’000 RO’000
Current liabilities
Trade and other payables 15 117,031 107,693 Revenue 21 272,633 257,203
Short-term borrowings 18 47,020 - Operating costs 22 (222,039) (204,576)
Term loan – current portion 19 18,868 7,434
Bank overdrafts 17 1,345 3,237 Gross profit 50,594 52,627
Provision for current tax 27 600 600 General and administrative expenses 23 (22,394) (21,722)
Deferred revenue – current portion 14 425 403 Other income 25 2,567 2,405
Provisions 12 415 386
Finance lease - current portion 20 122 110 Profit from operations 30,767 33,310
Other current liabilities 16 - 225 Finance income 26 68 45
Amounts due to Holding Company - 2,808 Finance costs 26 (8,418) (4,017)
Total current liabilities 185,826 122,896 Profit before tax 22,417 29,338
Taxation 27 (3,756) (3,003)
Total liabilities 436,233 351,737 Profit for the year and total comprehensive
18,661 26,335
income
Total equity and liabilities 687,187 591,530
_________________________ ______________________ ______________________
Omar Ahmed Salim Qatan Sunil Anant Raikar Zahir Abdullah Al Abri
Chairman Director Chief Executive Officer
The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements.
52 53
Statement of cash flows
-
-
26,335
-
43,604
171,354
18,661
Total
(1,500)
239,793
(7,500)
250,954
RO’000
-
-
-
-
(105,896)
-
105,896
-
Share-
holder’s
funds
RO’000
2016 2015
RO’000 RO’000
Cash flows from operating activities
(49,833)
(5,267)
26,335
-
(3,732)
18,661
64,541
(1,500)
34,276
(7,500)
Retained
41,705
earnings
RO’000
Profit before tax 22,417 29,338

Adjustments for:
Depreciation on property, plant and equipment 22,777 19,747
Gain on disposal of property plant and equipment (65) (24)
60
-
5,267
-
-
-
3,732
250
General
reserve
5,517
9,249
RO’000
Provision for inventory obsolescence - net 2

Reversal of allowance for doubtful debts (196) 564
Provision for employee benefits - net 117 (252)
Interest expense 8,418 3,952
Deferred revenue amortised (422) (377)
49,833
-
-
-
-
-
167
Statutory
reserve
50,000
50,000
RO’000
Operating cash flows before changes in working capital 53,106 52,950

Working capital changes due to:
Inventories 639 (89)
24,694
The accompanying notes form an integral part of these financial statements.

Government subsidy receivable (24,694)
-
-
-
-
149,500
-
Share
capital
500
-
RO’000
150,000
150,000
Other current assets (6,194) -

Statement of changes in equity
Trade and other receivables (4,324) (10,044)

Trade and other payables 9,338 43,827

Deferred revenue 3,439 3,100
Payment of employment benefits (203) -
Profit for the year and total comprehensive income
Profit for the year and total comprehensive income
Other current liabilities (225) (5,022)
Net cash from operating activities 80,270 60,028

)Transfer to general reserves (note 11
)Transfer to general reserves (note 11
Cash flows from investing activities

(124,053)
)Transfer to legal reserve (note 10
Purchase of property, plant and equipment (95,739)

Proceeds from disposal of property, plant and equipment 198 63
At 31 December 2016
Net cash used in investing activities (123,855)

)Dividend paid (note 29
Increase in share capital
(95,676)
Cash flows from financing activities
At 1 January 2015
At 1 January 2016
Net movement in short- term borrowings 47,020 (162,000)

Dividend paid
Net movement in term loan 25,702 199,671

Finance lease 45 573
Amount due to Holding Company (2,808) -
Bank overdraft (1,892) 1,383
54 55
Statement of cash flows Notes to the financial statements

for the year ended 31 December 2016 (continued) for the year ended 31 December 2016
2016 2015 1. General

RO’000 RO’000
Mazoon Electricity Company SAOC (the “Company”) is a closely held Omani joint stock company regis-
Interest paid (7,789) (3,849)
tered under the Commercial Companies Law of Oman.The establishment and operations of the Company
Dividends paid (7,500) (1,500)
are governed by the provisions of the Law for the Regulation and Privatisation of the Electricity and Relat-
ed Water Sector (the Sector Law) promulgated by Royal Decree 78/2004.
Net cash from financing activities 52,778 34,278
The Company is primarily undertaking regulated distribution and supply of electricity in the South Batinah,
Net change in cash and cash equivalents 9,193 (1,370) Dakhliyah, North Sharqiyah and South Sharqiyah governorates of Oman under a license issued by the Au-
Cash and cash equivalents at the beginning of the year 1,062 2,432 thority for Electricity Regulation, Oman (AER).
The Company commenced its operations on 1 May 2005 (the Transfer Date) following the implementation
Cash and cash equivalents at the end of the year (Note 8) 10,255 1,062
of a decision of the Ministry of National Economy (the Transfer Scheme) issued pursuant to Royal Decree
78/2004.
Mazoon Electricity Company SAOC is a 99.99% subsidiary of the Electricity Holding Company SAOC
(EHC or the Holding Company); a Company registered in the Sultanate of Oman and 0.01% is held by the
Ministry of Finance (MOF), of the Government of Sultanate of Oman.
2. Application of new and revised International Financial

Reporting Standards (IFRS)
2.1. New and revised IFRSs applied with no material effect on the financial state-
ments
The following new and revised IFRSs, which became effective for annual periods beginning on or after 1
January 2016, have been adopted in these financial statements. The application of these revised IFRSs has
not had any material impact on the amounts reported for the current and prior years but may affect the
accounting for future transactions or arrangements.
· IFRS 14 Regulatory Deferral Accounts
· Amendments to IAS 1 Presentation of Financial Statements relating to Disclosure initiative
· Amendments to IFRS 11 Joint arrangements relating to accounting for acquisitions of interests in joint
operations
· Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets relating to clarification
of acceptable methods of depreciation and amortisation
The accompanying notes form an integral part of these financial statements.
56 57
Notes to the financial statements Notes to the financial statements

for the year ended 31 December 2016 (continued) for the year ended 31 December 2016 (continued)
2. Application of new and revised International Financial 2. Application of new and revised International Financial
Reporting Standards (IFRS) (continued) Reporting Standards (IFRS) (continued)
2.1. New and revised IFRSs applied with no material effect on the financial 2.2. New and revised IFRS in issue but not yet effective (continued)
statements (continued)
· Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture: Bearer Plants Effective for annual
· Amendments to IAS 27 Separate Financial Statements relating to accounting investments in subsidiaries, New and revised IFRSs periods beginning on or
joint ventures and associates to be optionally accounted for using the equity method in separate finan- after
cial statements IFRIC 22 Foreign Currency Transactions and Advance Consideration
· Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities The interpretation addresses foreign currency transactions or parts of
and IAS 28 Investment in Associates and Joint Ventures relating to applying the consolidation exception for transactions where:
investment entities
· there is consideration that is denominated or priced in a foreign
· Annual Improvements to IFRSs 2012 – 2014 Cycle covering amendments to IFRS 5, IFRS 7, IAS 19 and currency; 1 January 2018
IAS 34
· the entity recognises a prepayment asset or a deferred income lia-
2.2. New and revised IFRS in issue but not yet effective bility in respect of that consideration, in advance of the recognition
of the related asset, expense or income; and
The Company has not yet applied the following new and revised IFRSs that have been issued but are not
yet effective: · the prepayment asset or deferred income liability is non-monetary.
Amendments to IFRS 2 Share Based Payment regarding classification
Effective for annual 1 January 2018
and measurement of share based payment transactions
New and revised IFRSs periods beginning on or
after Amendments to IFRS 4 Insurance Contracts: Relating to the different
effective dates of IFRS 9 and the forthcoming new insurance contracts 1 January 2018
The amendments to IFRS 1 standard.
and IAS 28 are effective for
annual periods beginning on Amendments to IAS 40 Investment Property: Amends paragraph 57
Annual Improvements to IFRS Standards 2014 – 2016 Cycle amending to state that an entity shall transfer a property to, or from, investment
or after 1 January 2018, the
IFRS 1, IFRS 12 and IAS 28 property when, and only when, there is evidence of a change in use. A
amendment to IFRS 12 for
annual periods beginning on or change of use occurs if property meets, or ceases to meet, the defi-
1 January 2018
after 1 January 2017 nition of investment property. A change in management’s intentions
for the use of a property by itself does not constitute evidence of a
Amendments to IAS 12 Income Taxes relating to the recognition of change in use. The paragraph has been amended to state that the list
1 January 2017
deferred tax assets for unrealised losses of examples therein is non-exhaustive.
Amendments to IAS 7 Statement of Cash Flows to provide disclosures Amendments to IFRS 7 Financial Instruments: Disclosures relating to
that enable users of financial statements to evaluate changes in liabili- 1 January 2017 When IFRS 9 is first applied
disclosures about the initial application of IFRS 9
ties arising from financing activities.
IFRS 7 Financial Instruments: Disclosures relating to the additional hedge
accounting disclosures (and consequential amendments) resulting When IFRS 9 is first applied
from the introduction of the hedge accounting chapter in IFRS 9
58 59

2. Application of new and revised International Financial 2. Application of new and revised International Financial
Reporting Standards (IFRS) (continued) Reporting Standards (IFRS) (continued)
2.2. New and revised IFRS in issue but not yet effective (continued) 2.2. New and revised IFRS in issue but not yet effective (continued)
Effective for annual Effective for annual

New and revised IFRSs periods beginning on or New and revised IFRSs periods beginning on or
after after
IFRS 9 Financial Instruments (revised versions in 2009, 2010, 2013 and IFRS 15 Revenue from Contracts with Customers
2014)
In May 2014, IFRS 15 was issued which established a single comprehen-
IFRS 9 issued in November 2009 introduced new requirements for sive model for entities to use in accounting for revenue arising from
the classification and measurement of financial assets. IFRS 9 was sub- contracts with customers. IFRS 15 will supersede the current revenue
sequently amended in October 2010 to include requirements for the recognition guidance including IAS 18 Revenue, IAS 11 Construction Con-
classification and measurement of financial liabilities and for derecog- tracts and the related interpretations when it becomes effective.
nition, and in November 2013 to include the new requirements for
general hedge accounting. Another revised version of IFRS 9 was is- The core principle of IFRS 15 is that an entity should recognize revenue
sued in July 2014 mainly to include a) impairment requirements for to depict the transfer of promised goods or services to customers in
financial assets and b) limited amendments to the classification and an amount that reflects the consideration to which the entity expects
measurement requirements by introducing a ‘fair value through other to be entitled in exchange for those goods or services. Specifically, the
comprehensive income’ (FVTOCI) measurement category for certain standard introduces a 5-step approach to revenue recognition:
simple debt instruments. · Step 1: Identify the contract(s) with a customer.
A finalised version of IFRS 9 which contains accounting requirements 1 January 2018
· Step 2: Identify the performance obligations in the contract.
for financial instruments, replacing IAS 39 Financial Instruments: Rec-
ognition and Measurement.The standard contains requirements in the · Step 3: Determine the transaction price.
following areas:
· Step 4: Allocate the transaction price to the performance obliga-
· Classification and measurement: Financial assets are classi- 1 January 2018 tions in the contract.
fied by reference to the business model within which they are held
and their contractual cash flow characteristics. The 2014 version · Step 5: Recognise revenue when (or as) the entity satisfies a per-
of IFRS 9 introduces a ‘fair value through other comprehensive in- formance obligation.
come’ category for certain debt instruments. Financial liabilities are
classified in a similar manner to under IAS 39, however there are Under IFRS 15, an entity recognises when (or as) a performance ob-
differences in the requirements applying to the measurement of an ligation is satisfied, i.e. when ‘control’ of the goods or services un-
entity’s own credit risk. derlying the particular performance obligation is transferred to the
customer. Far more prescriptive guidance has been added in IFRS 15
· Impairment: The 2014 version of IFRS 9 introduces an ‘expect- to deal with specific scenarios. Furthermore, extensive disclosures are
ed credit loss’ model for the measurement of the impairment of required by IFRS 15.
financial assets, so it is no longer necessary for a credit event to Amendments to IFRS 15 Revenue from Contracts with Customers to
have occurred before a credit loss is recognised clarify three aspects of the standard (identifying performance obli-
gations, principal versus agent considerations, and licensing) and to 1 January 2018
· Hedge accounting: Introduces a new hedge accounting mod-
provide some transition relief for modified contracts and completed
el that is designed to be more closely aligned with how entities
contracts.
undertake risk management activities when hedging financial and
non-financial risk exposures.
· Derecognition: The requirements for the derecognition of fi-
nancial assets and liabilities are carried forward from IAS 39.
60 61

for the year ended 31 December 2016 (continued)
2. Application of new and revised International Financial
Reporting Standards (IFRS) (continued)
2.2. New and revised IFRS in issue but not yet effective (continued)
Effective for annual 3. Summary of significant accounting policies

New and revised IFRSs periods beginning on or
after
IFRS 16 Leases Statement of compliance
IFRS 16 specifies how an IFRS reporter will recognise, measure, pres- The financial statements have been prepared in accordance with International Financial Reporting Stan-
ent and disclose leases. The standard provides a single lessee account- dards, (IFRS) and the requirements of the Commercial Companies Law of 1974 as amended, of Sultanate
ing model, requiring lessees to recognise assets and liabilities for all 1 January 2019 of Oman.
leases unless the lease term is 12 months or less or the underlying
asset has a low value. Lessors continue to classify leases as operating Basis of preparation
or finance, with IFRS 16’s approach to lessor accounting substantially
unchanged from its predecessor, IAS 17. These financial statements are prepared on the historical cost basis except the finance lease payable which
are valued at amortised cost and certain financial instruments initially measured at fair value.
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures (2011) relating to the treat- Effective date deferred indefi- Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
ment of the sale or contribution of assets from and investor to its nitely transaction between market participants at the measurement date, regardless of whether that price is di-
associate or joint venture. rectly observable or estimated using another valuation technique. In estimating the fair value of an asset or
a liability, the Company takes into account the characteristics of the asset or liability if market participants
Directors anticipates that these new standards, interpretations and amendments will be adopted in the
would take those characteristics into account when pricing the asset or liability at the measurement date.
Company’s financial statements as and when they are applicable and adoption of these new standards,
Fair value for measurement and/or disclosure purposes in these financial statements is determined on such
interpretations and amendments, except for IFRS 9, IFRS 15 and IFRS 16, may have no material impact on
a basis, except for leasing transactions that are within the scope of IAS 17 and measurements that have
the financial statements of the Company in the period of initial application.
some similarities to fair value but are not fair value, such as net realizable value in IAS 2.
Directors anticipates that IFRS 15 and IFRS 9 will be adopted in the Company’s financial statements for
The preparation of financial statements in conformity with IFRS requires the use of certain critical ac-
the annual period beginning 1 January 2018 and that IFRS 16 will be adopted in the Company’s financial
counting estimates. It also requires management to exercise its judgment in the process of applying the
statements for the annual period beginning 1 January 2019. The application of IFRS 15 and IFRS 9 may have
Company’s accounting policies. The areas involving a higher degree of judgment or complexity or areas
significant impact on amounts reported and disclosures made in the Company’s financial statements in re-
where assumptions and estimates are significant to the financial statements are disclosed in note 4.
spect of revenue from contracts with customers and the Company’s financial assets and financial liabilities
and the application of IFRS 16 may have significant impact on amounts reported and disclosures made in In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
the Company’s financial statements in respect of its leases. based on the degree to which the inputs to the fair value measurements are observable and the signifi-
cance of the inputs to the fair value measurement in its entirety, which are described as follows:
However, it is not practicable to provide a reasonable estimate of effects of the application of these stan-
dards until the Company performs a detailed review. · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
· Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
· Level 3 inputs are unobservable inputs for the asset or liability.
The preparation of financial statements in conformity with IFRS requires the use of certain critical ac-
62 63

3. Summary of significant accounting policies (continued) 3. Summary of significant accounting policies (continued)
Basis of preparation (continued) Property, plant and equipment (continued)
Depreciation (continued)
counting estimates. It also requires management to exercise its judgment in the process of applying the Gains and losses on disposals of property, plant and equipment are determined as a difference between the
Company’s accounting policies. The areas involving a higher degree of judgment or complexity or areas sale proceed and their carrying amounts and are recognised in the profit and loss.
where assumptions and estimates are significant to the interim financial statements are disclosed in note 4.
Financial instruments
Property, plant and equipment Financial assets and financial liabilities are recognised on the Company’s statement of financial position
Property, plant and equipment are stated at cost less accumulated depreciation and any identified impair- when the Company becomes a party to the contractual provisions of the instrument.
ment loss. Borrowing costs which are directly attributable to the acquisition of items of property, plant
and equipment, are capitalised. Non-derivative financial instruments
Non-derivative financial instruments comprise, trade and other receivables, receivables from related par-
Subsequent expenditure ties, cash and cash equivalents, loans and borrowings, and trade and other payables.
Expenditure incurred to replace a component of an item of property, plant and equipment is capitalised if
it is probable that the future economic benefits embodied within the part will flow to the Company, and its Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair
cost can be measured reliably. All other maintenance expenditure is recognised in the statement of profit value through profit or loss, any directly attributable transaction costs.
or loss and other comprehensive income as an expense as and when incurred. Subsequent to initial recognition, non-derivative financial instruments are measured at amortised cost
using the effective interest rate method, less any impairment losses.
Depreciation
Depreciation is recognised in the statement of profit or loss and other comprehensive income on a The Company classifies its financial assets as loans and receivables. The classification depends on the pur-
straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, pose for which the financial assets were acquired. Management determines the classification of its financial
since this most closely reflects the expected pattern of consumption of the future economic benefits em- assets at initial recognition.
bodied in the asset. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
The principal estimated useful lives used for this purpose are: not quoted in an active market. They are included in current assets, except for maturities greater than 12
months after the end of the reporting period. These are classified as non-current assets. The Company’s
Assets Years loans and receivables comprise trade and other receivables and bank and cash in the statement of financial
position.
Buildings 30
Electricity distribution works 25 - 50 Effective interest method
Substations, lines and cables 25 - 50 The effective interest method is a method of calculating the amortised cost of a debt instrument and
Other plant and machinery 20 - 50 of allocating interest income over the relevant period. The effective interest rate is the rate that exactly
Furniture, fixtures and vehicles 5-7 discounts estimated future cash receipts (including all fees and paid or received that form an integral part
Plant spares 20 of the effective interest rate, transactions costs and other premiums or discounts) through the expected
life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial
Capital work-in-progress recognition.
Capital work-in-progress is stated at cost. When the underlying asset is ready for use in its intended Income is recognized on an effective interest basis for debt instruments other than those financial assets
condition and location, work-in-progress is transferred to the appropriate property, plant and equipment classified at fair value at profit or loss.
category and depreciated in accordance with depreciation policies of the Company.
64 65

Financial instruments (continued)
Derecognition of financial assets Cash and cash equivalents

The Company derecognises a financial asset only when the contractual rights to the cash flows from the Cash and cash equivalents comprise cash on hand and demand deposits. Cash equivalents are short term,
asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the highly liquid investments that are readily convertible to known amount of cash, which are subject to an
asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying
insignificant risk of changes in value and have maturity of three months or less at the date of acquisition.
amount and the sum of the consideration received and receivable and the cumulative gain or loss that had
been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
Financial liabilities
Financial liabilities and equity instruments Financial liabilities are subsequently measured at amortised cost using the effective interest method.
Classification as debt or equity Trade and other payables

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course
in accordance with the substance of the contractual arrangements and the definitions of a financial liability of business from suppliers. Accounts payable are classified as current liabilities if payment is due within
and an equity instrument. one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after de- Liabilities are recognised for amounts to be paid for goods and services received, whether or not billed to
ducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, the Company.
net of direct issue costs.
Finance lease
Borrowings Assets held under finance leases are initially recognised as assets of the Company at their fair value at the
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are classified inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding
as current liabilities unless the Company has an unconditional right to defer settlement of the liability for liability to the lessor is included in the statement of financial position as a finance lease obligation.
at least twelve months after the reporting date. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are rec-
Trade and other receivables ognised immediately in profit or loss.
Trade and other receivables are initially recognised at fair value and subsequently are stated at amortised
cost using the effective interest rate method less impairment losses. A provision for impairment of trade Impairment
receivables is established when there is objective evidence that the Company will not be able collect all
amounts due according to the original terms of receivables. The amount of the provision is the difference Financial assets
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are
the effective interest rate. The amount of the provision is recognised in the statement of profit or loss impaired where there is objective evidence that, as a result of one or more events that occurred after
“General and administrative expenses”. Subsequent recoveries of amounts previously written off are cred- the initial recognition of the financial asset, the estimated future cash flows of the investment have been
ited against general and administrative expenses in the statement of profit or loss and other comprehen- impacted.
sive income.
66 67

Impairment (continued)
Financial assets (continued)
For financial assets, objective evidence of impairment could include: Inventories

· significant financial difficulty of the counterparty; Inventories are stated at the lower of cost and net realisable value. Costs comprise purchase costs and
where applicable, direct labour costs and those overheads that have been incurred in bringing the inven-
· default or delinquency in payments; or tories to their present location and condition. Cost is calculated principally using the weighted average
· it becomes probable that the borrower will enter bankruptcy or financial reorganisation. method. Provision is made for slow moving and obsolete inventory items where necessary, based on man-
agement’s assessment.
Certain categories of financial assets, such as trade receivables that are assessed not to be impaired indi-
vidually are subsequently assessed for impairment on a collective basis. Borrowing costs
Objective evidence of impairment for a portfolio of receivables could include the Company’s past experi- Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are
ence of collecting payments, an increase in the number of delayed payments in the portfolio past the credit added to the cost of those assets, until such time as the assets are substantially ready for their intended
period as well as observable changes in national or local economic conditions that correlate with default use or sale. Investment income earned on the temporary investment of specific borrowings pending their
on receivables. expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial as- All other borrowing costs are recognised in the statement of profit or loss in the year in which they are
sets with the exception of trade receivables, where the carrying amount is reduced through the use of a incurred.
provision account.
Employee benefits
When a trade receivable is considered uncollectible, it is directly written off after obtaining appropriate A liability is recognised for benefits accruing to employees in respect of wages, salaries and annual leave
approvals. Subsequent recoveries of amounts previously written off are credited to the statement of profit when it is probable that settlement will be required and they are capable of being measured reliably.
or loss and other comprehensive income.
Liabilities recognised in respect of employee benefits are measured at their nominal value using the current
Non-financial assets remuneration.
The carrying amounts of the Company’s non-financial assets other than inventories are reviewed at each Provision for employee benefits is accrued having regard to the requirements of the Oman Labour Law
reporting date to determine whether there is any indication of impairment. If any such indications exist 2003 as amended or in accordance with the terms and conditions of the employment contract with the
then the asset’s recoverable amount is estimated. employees, whichever is higher. Employee entitlements to annual leave are recognised when they accrue
An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its val- to employees and an accrual is made for the estimated liability arising as a result of services rendered by
ue in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are employees up to the reporting date. These accruals are included in current liabilities, while that relating to
discounted to their present value using a pre-tax discount rate that reflects current market assessments of end of service benefits is disclosed as a non-current liability.
the time value of money and the risks specified to the asset. Impairment losses recognised in prior periods End of service benefit for Omani employees are contributed in accordance with the terms of the Social
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. Securities Law 1991 and Civil Service Employees Pension Fund Law. Gratuity for Omani employees who
An impairment loss is reversed if there has been a change in estimates used to determine the recover- transferred from the Ministry of Housing, Electricity and Water on 1 May 2005 is calculated based on the
able amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not terms agreed between the Holding Company and the Government. An accrual has been made and is clas-
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no sified as a non-current liability in the statement of financial position.
impairment loss had been recognised. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which are separately identifiable cash flows (cash generating units).
68 69

Taxation (continued)
Provisions Current and deferred tax is recognised as an expense or benefit in the statement of profit or loss and
Provisions are recognised in the statement of financial position when the Company has a legal or construc- other comprehensive income except when they relate to items credited or debited directly to equity, in
tive obligation as a result of a past event and it is probable that it will result in an outflow of economic which case the tax is also recognised directly in equity.
benefit that can be reliably estimated.
Government subsidy
The amount recognised as a provision is the best estimate of the consideration required to settle the The Government of the Sultanate of Oman has funded the excess of economic costs over customer and
present obligation at reporting date, taking into account the risks and uncertainties surrounding the ob- other revenue within the Electricity and Related Water Sector. This funding is included in revenue. The
ligation. Where a provision is measured using the cash flows estimated to settle the present obligation, Company recognises the subsidy when the right to receive the subsidy is established.
its carrying amount is the present value of those cash flows. Where some or all of the economic benefits
required to settle a provision are expected to be recovered from third party, the receivable is recognised Government grants
as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably. Grants from the Government are recognised at their fair value where there is a reasonable assurance that
the grant will be received and the Company will comply with all attached conditions.
The amount are recognised in the statement of financial position when the Company has a legal or con-
structive obligation as a result of a past event and it is probable that it will result in an outflow of economic Government grants relating to costs are deferred and recognised in the profit or loss over the period
benefit that can be reliably estimated. necessary to match them with the costs that they are intended to compensate.
Government grants relating to construction of assets are included in deferred revenue within liabilities
Taxation and are credited to profit or loss on a straight line basis over the expected useful lives of related assets.
Income tax is calculated as per the Income Tax Law of the Sultanate of Oman.
Revenue
Current tax is the expected tax payable on the taxable income for the year, using the tax rates enacted
or substantially enacted at the reporting date, and any adjustment to income tax payable in respect of Revenue represents fair value of income receivable in the ordinary course of business from the sale of
previous years. electricity to the Government, commercial and residential customers within the Company’s distribution
network, revenue recognised in respect to customer contributed assets in accordance with IFRIC 18 and
Deferred tax is provided using the liability method, providing for temporary differences between the car- other electricity related revenue. Total revenue in excess / (deficit) of the maximum allowed by the reg-
rying amounts of assets and liabilities for financial reporting purposes and the amounts used for income ulatory formula in accordance with the licensing requirements is deferred to the subsequent year and is
tax purposes. Deferred tax is calculated on the basis of the tax rates that are expected to apply to the year shown as other current liabilities / (other current assets).
when the asset is realised or the liability is settled based on tax rates (and tax laws) that have been enacted
or substantially enacted by the reporting date. The tax effects on the temporary differences are disclosed Other income includes meter connection fees, tender fees, fines and application of deferred revenue on
under non-current liabilities as deferred tax. customer contributions and is accounted on an accrual basis.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be Customer contributions
available against which the unused tax losses and credits can be utilised. The carrying amount of deferred
Effective from 1 July 2009, the Company has adopted IFRIC 18, whereby customer contributions towards
tax assets is reviewed at reporting date and reduced to the extent that it is no longer probable that the
the cost of property, plant and equipment have been recognised in the profit or loss in accordance with
related tax benefit will be realized.
the provisions of IFRIC 18.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation au-
thority and the Company intends to settle its current tax assets and liabilities on a net basis.
70 71

3. Summary of significant accounting policies (continued)
Operating costs 4. Critical accounting judgments and key sources of estimation

Electricity purchases
uncertainty
The bulk supply tariff represents the purchase cost of electricity from Oman Power and Water Procure- The preparation of financial statements in conformity with IFRS requires the use of certain critical ac-
ment Company SAOC, a related party. counting estimates. It also requires management to exercise its judgment in the process of applying the
Company’s accounting policies.The Company makes estimates and assumptions concerning the future.The
Transmission use of system charges resulting accounting estimates will, by definition, seldom equal the related actual results.
The transmission use of system charges represent the charges payable to Oman Electricity Transmission Estimates and judgments are continually evaluated and are based on historical experience and other fac-
Company SAOC, a related party, for the transmission of electricity generated by the generation compa- tors, including expectations of future events that are believed to be reasonable under the circumstances.
nies into the Company’s distribution network. The areas requiring a higher degree of judgment or complexity, or areas where assumptions and estimates
are significant to the financial statements are set out below:
Transmission connection charges
The transmission connection charges represent the charges payable to Oman Electricity Transmission Depreciation
Company SAOC, a related party, for connections to the transmission system to cover the capital cost of Depreciation is charged so as to write off the cost of assets over their estimated useful lives. The calcu-
the connection assets and ancillary assets and the ongoing cost of maintaining the connection assets. Such lation of useful lives is based on management’s assessment of various factors such as the operating cycles,
assets are single user assets, solely required to connect an individual user to the transmission system, the maintenance programs, and normal wear and tear using its best estimates.
which are not and would not normally be used by any other connected party.
Allowance for doubtful debts
Finance income and costs
Allowance for doubtful debts is based on management’s best estimates of recoverability of the amounts
Finance income and costs are accounted for on accrual basis. due along with the number of days for which such debts are outstanding.
All interest and other costs incurred in connection with borrowings are expensed as incurred, as part of
Provision for inventory obsolescence
financing costs and are accounted for on accrual basis, except that the interest costs incurred on borrow-
ings specifically undertaken to finance the construction of qualifying assets, are capitalised along with the Provision for inventory obsolescence is based on management’s assessment of various factors such as us-
cost of the asset during the construction period. ability, the maintenance programs, and normal wear and tear using its best available estimates.
Foreign currency Taxation

Items included in the Company’s financial statements are measured using Rials Omani which is the curren- The Company has considered revenue arising from customer contributed assets recognised under IFRIC
cy of the Sultanate of Oman, being the economic environment in which the Company operates (the func- 18, ‘Transfers of assets from customers’ as taxable income based on management discussions with the tax
tional currency). The financial statements are prepared in Rials Omani, rounded to the nearest thousand. authorities.
Foreign currency transactions are translated into the functional currency using the exchange rates prevail- Revenue recognition
ing at the transaction date. Foreign exchange gains and losses resulting from the settlement of such trans-
actions and from the translation at year-end exchange rates of monetary assets and liabilities denominated Due to the various reasons, a certain portion of the Company’s revenue is estimated rather than based
in foreign currencies are recognised in the statement of profit or loss and other comprehensive income on actual billing. Detailed computations were made on the basis of pre-determined billing patterns and
as they arise. unit usage related criteria in order to arrive at the estimated revenue from those customers where the
Company is unable to obtain meter readings. If the actual meter readings for such customers differ from
the estimates, the Company’s revenue for the period would impact to the extent of such differences.
Notes to the financial statements 72
5. Property, plant and equipment
Build- Furni-
Electric- Other
ings on Lines ture, Capital
ity dis- Sub- plant Finance work-in-
lease- and ca- fixtures Plant
tribution station and ma- lease progress
hold bles and ve-
works assets chinery spares assets Total
land hicles
RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000 RO ’000 RO ’000
Cost
1 January 2015 19,715 261,786 135,510 51,415 24,551 9,613 2,480 - 44,199 549,269
Additions - - - - - 1,557 1,904 573 91,705 95,739
Transfers 201 35,337 8,980 9,161 2,233 - (1,981) - (53,931) -
Disposals - - - - - (244) - - - (244)
1 January 2016 19,916 297,123 144,490 60,576 26,784 10,926 2,403 573 81,973 644,764
Additions - - - - - 1,221 610 167 122,055 124,053
Transfers 1,963 54,424 20,866 22,375 2,689 - (842) - (101,475) -
Disposals - - - (182) - (792) - - - (974)
31 December 2016 21,879 351,547 165,356 82,769 29,473 11,355 2,171 740 102,553 767,843
The Company’s property, plant and equipment are constructed on lands leased from the Ministry of Housing, Government of Sultanate of Oman.
Notes to the financial statements

5. Property, plant and equipment (continued)
Build- Elec- Furni-

Other
ings on tricity Lines ture, Capital
Sub- plant Finance
lease- distri- and ca- fixtures Plant work-in-
station and ma- lease
hold bution bles and ve- progress
assets chinery spares assets Total
land works hicles
RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000 RO ’000 RO ’000
Depreciation
1 January 2015 2,576 65,651 14,210 12,801 3,677 5,282 337 - - 104,534
Charge for the year 662 10,693 3,267 2,013 1,210 1,758 144 - - 19,747
Transfers - - - - 102 (102) - -
Disposals - - - - - (205) - - (205)
1 January 2016 3,238 76,344 17,477 14,814 4,989 6,835 379 - - 124,076
Charge for the year 741 12,587 3,804 2,464 1,360 1,620 139 62 - 22,777
Transfers - - - - 129 - (129) - - -
Disposals - - - (65) - (776) - - - (841)
31 December 2016 3,979 88,931 21,281 17,213 6,478 7,679 389 62 - 146,012
Net book value

31 December 2016 17,900 262,616 144,075 65,556 22,995 3,676 1,782 678 102,553 621,831
31 December 2015 16,678 220,779 127,013 45,762 21,795 4,091 2,024 573 81,973 520,688
Capital work-in progress includes works which are in different stages of completion and relates to (a) construction and upgrading of substations and feeders, (b) elec-
73
trical distribution works networks, (c) extension of power supply to customers, (d) furniture and fixtures, computers and software, and (e) other common assets.
74 75

7. Trade and other receivables (continued)
6. Inventories Movement in allowance for doubtful debts

2016 2015
2016 2015
RO’000 RO’000
RO’000 RO’000
At beginning of the year 2,944 2,380
(Reversal) / provision for the year (196) 564
Spares and consumables 3,895 4,534
Provision for inventory obsolescence (121) (61)
At end of the year 2,748 2,944
3,774 4,473 The allowance for doubtful debts relates to government and private customers.
Movement in provision for inventory obsolescence Management believes that the other receivables classes within trade and other receivables do not contain
impaired assets.
At beginning of the year 61 59
Provision during the year 60 2 8. Cash and cash equivalents
At end of the year 121 61 2016 2015

RO’000 RO’000
Cash at bank 10,235 1,042

7. Trade and other receivables Cash on hand 20 20
10,255 1,062
Amounts due from private customers 33,348 31,472
Amounts due from Government customers 11,168 10,073
Allowance for doubtful debts (2,748) (2,944)
9. Share capital
The Company’s authorised, issued and paid-up capital consists of 150,000,000 shares of RO 1 each. The
Net trade receivables 41,768 38,601 details of the shareholders are as follows:
Amounts due from related parties (Note 28) 30 35
Prepayments 596 626 Percentage of Number of
Receivable from Government 1,549 538 shareholding shares issued
Other receivables 1,190 813 2016 2015 2016 2015
% %
45,133 40,613 Electricity Holding Company SAOC 99.99 99.99 149,985,000 149,985,000
Ministry of Finance 0.01 0.01 15,000 15,000
100.00 100.00 150,000,000 150,000,000
76 77

10. Legal reserve 13. Deferred tax liability

Article 106 of the Commercial Companies Law of 1974, as amended requires that 10% of a Company’s net Deferred income taxes are calculated on all temporary differences using a principal tax rate of 12%. The
profit be transferred to a non-distributable legal reserve until the amount of the legal reserve becomes net deferred tax liability in the statement of financial position and the net deferred tax charge to the profit
equal to at least one-third of the Company’s paid-up share capital. At 31 December 2016, legal reserve or loss are attributable to the following items:
was equivalent to one-third of the Company’s share capital and hence no further transfer from the current
year profit was made during the year. Recognized in
2016 January 1 income December 31
RO’000 RO’000 RO’000
11. General reserve
Assets
In accordance with the Company’s policy, an amount not exceeding 20% of the profit after transfer to legal Provision for inventory obsolescence (7) (7) (14)
reserve should be transferred to a general reserve until the balance of the general reserve reaches one Allowance for doubtful debts (354) 24 (330)
half of the share capital. Usufruct accruals (298) (23) (321)
(659) (6) (665)

12. Provisions Liability
2016 2015 Accelerated tax depreciation 19,916 3,762 23,678
RO’000 RO’000
Non-current 19,257 3,756 23,013
Provision for employee benefits – gratuity 1,500 1,615
The Company has not recognized deferred tax assets in respect of unused tax losses as there is uncertain-
Current ty of future taxable profit.
Provision for employee benefits - leave encashment 415 386
Recognized in
Movement in provision for employee benefits - gratuity 2015 January 1 income December 31
RO’000 RO’000 RO’000
At beginning of the year 1,615 1,645 Assets
Charge for the year 62 52 Provision for inventory obsolescence (7) - (7)
Payment during the year (177) (82) Allowance for doubtful debts (286) (68) (354)
At end of the year 1,500 1,615 Usufruct accruals (269) (29) (298)
Movement in provision employee benefits - Leave encashment (562) (97) (659)

Liability
At beginning of the year 386 608
Accelerated tax depreciation 16,816 3,100 19,916
Charge during the year 55 117
Payment during the year (26) (339)
16,254 3,003 19,257
At end of the year 415 386
78 79

17. Bank overdrafts (continued)
14. Deferred revenue limit of RO 10 million is interchangeable between overdraft and revolving short term loan upon a condition
that the combined utilisation of both the facilities not to exceed RO 15 million at any point of time. The
Deferred revenue represents Government project funding towards the cost of property, plant and equip- facilities are unsecured, payable on demand and carry interest rate at the rate of 2% to 4% (2015: 0.75%
ment and customer contributed assets before 1 July 2009. These funding/contributions are deferred over to 2.75%) per annum.
the life of the relevant property, plant and equipment.
Funding from government sponsored projects represents unconditional grant received/receivable from 18. Short-term borrowings
government / government authorities to the construction of the assets. From 1 July 2009 customer con-
tributions other than assets funded by government for the use of the public at large are recognised in 2016 2015
accordance with IFRIC 18 ‘Transfers of assets from customers’ and are not deferred. RO ’000 RO ’000
Short-term borrowings 47,020 -
2016 2015
RO ’000 RO ’000 The Company has entered into a loan facility agreement with Bank Muscat dated 11 December 2016, to
Non-current fund the capital expenditure requirement. The facilities are secured against the letter of comfort given by
Deferred revenue 18,264 15,269 the Electricity Holding Company SAOC. The loan is due for repayment on 15 June 2017 (with an option
Current to rollover for a maximum period of 3 months). The loan shall be refinanced from the proceeds of long
Deferred revenue 425 403 term loan which is expected to be availed by this time. The loan carries interest rate at the rate of 2.5%
per annum and the balance as at 31 December 2016 amounted to RO 27 million.
15. Trade and other payables The Company has entered into a revolving loan facility agreement with a minimum limit of USD 10 million
dated 8 December 2016 with a consortium comprising of Arab Banking Corporation (B.S.C.), BBK (B.S.C.)
Gulf International Bank B.S.C., National Bank of Abu Dhabi PJSC and Standard Chartered Bank with Arab
Accruals for capital projects 65,151 47,806 Banking Corporation acting as the Agent Bank, for an amount of USD 120 million (equivalent to RO 46.2
Amount due to related parties (Note 28) 21,966 45,502 million). The finances carry mark-up at the fixed rate equivalent to 3 months LIBOR plus a margin of 1.5%
Accruals and other payables 17,058 10,971 per annum. The loan facility is availed for a period of 12 months with an option to extend for further 12
Trade payables 12,856 3,414 months period. At 31 December 2016, the availed and outstanding facility amounted to RO 20.02 million.
The Company entered into multiple intercompany loan agreements during the year 2016 with the Electric-
117,031 107,693 ity Holding Company SAOC to fund its working capital requirements. At 31 December 2016, the carrying
amount of these loans were nil.
16. Other current assets / liabilities
Other current assets / liabilities represent revenue in short / excess of maximum allowed as per price 19. Term loan
control formula deferred to the subsequent year.
In year 2015, the Company entered into a Dual Currency Term Loan Facility Agreement with a consortium
of Lenders, with Ahli Bank acting as Facility Agent and Account bank, for an amount of RO 240 million. The
17. Bank overdrafts loans are unsecured and are for a period of 11 years as follows:
The Company has availed a working capital facility (overdraft and revolving short term loan) and bank guar- · RO 117 million, at 3.5 percent fixed interest per annum for a period of 5 years from the date of first
antee from Ahli Bank SAOG for an amount of RO 10 million and RO 5 million, respectively. The overdraft utilization of the RO tranche of the Term Loan, thereafter interest to be reviewed annually. The first
80 81

19. Term loan (continued) 20. Finance lease (continued)
quarterly installment repayment will on 30 September 2016. At the reporting date, the facility availed
Minimum lease pay- Present value of mini-
amounted to RO 112.56 million (31 December 2015: RO 99.911 million). ments mum lease payments
· USD 320 million (equivalent to RO 123 million), at fixed interest equivalent to 3 month LIBOR plus a 2016 2015 2016 2015
margin of 2 percent per annum for a period of 11 years from the date of first utilization. The first quar- RO ’000 RO ’000 RO ’000 RO ’000
terly installment repayment will be due on 30 September 2016. At the reporting date, the facility availed
Not later than one year 161 114 122 110
amounted to RO 118.272 million (31 December 2015: RO 105.219 million).
Later than one year and not later than five years 565 520 496 463
· Upfront fee of 1%, flat on the amount of the term loan, paid from the proceeds of first utilization of the
term loan. 726 634 618 573
2016 2015 Less: future finance charges (108) (61) - -
RO ’000 RO ’000
Present value of minimum lease payments 618 573 618 573
Long-term loan 230,832 205,130
2016 2015
Less: unamortized transaction cost (4,830) (5,459)
RO ’000 RO ’000
Carrying value of long term loan 226,002 199,671
Included in the financial statements as:
Total transaction cost 5,459 5,660 Finance lease – current portion 122 110
Less: amortized transaction cost during the year (629) (201) Finance lease – non-current portion 496 463
Unamortized transaction cost 4,830 5,459 At 31 December 618 573
Term loan - current portion 19,456 8,205
Less: unamortized transaction cost (588) (771) 21. Revenue
18,868 7,434
Electricity sales to private customers 89,161 85,809
Term loan – non-current portion 211,376 196,925 Electricity sales to Government customers 23,573 25,419
Less: unamortized transaction cost (4,242) (4,688) Government subsidy 149,546 137,624
207,134 192,237 Other revenue 3,935 3,329
266,215 252,181
Previous year revenue (excess) / less than of maximum allowed as per
20. Finance lease price control formula, brought forward
(1,129) 3,824
Previous year system loss incentive / (penalty) brought forward 629 (245)
During the year 2015, the Company entered into finance lease arrangement. The Company’s obligations
Previous year network system security incentive brought forward 725 1,668
under these finance leases are secured by a contractual agreement from the lessor to transfer the vehicle,
in the name of the Company at the end of the lease period of 6 years.The facilities carry interest that range System loss penalty for the year (305) (629)
from 3.5% per annum on reducing balance method and is repayable in monthly installments over 6 years. Network system penalty for the year (727) (725)
Amounts due within a year from the end of reporting period are disclosed as a current liability. Revenue in less than maximum allowed as per price control formula 7,225 1,129
272,633 257,203
82 83

22. Operating costs 24. Staff cost

2016 2015 2016 2015
RO ’000 RO ’000 RO ’000 RO ’000
Wages and salaries 9,583 8,519
Purchase of electricity (note 28) 166,469 152,902 Other allowances and benefits 2,816 2,307
Transmission use of system charges (note 28) 24,333 23,802 End of service benefits (Note 12) 62 52
Depreciation 20,955 17,844 12,461 10,878
Maintenance and repairs expenses 4,220 4,439
Transmission connection charges (note 28) 4,837 4,070 25. Other income
Spares and consumable expenses 892 1,162
2016 2015
Other direct costs 333 357
RO ’000 RO ’000
222,039 204,576
Penalties and fines 1,168 916
594
23. General and administrative expenses Sale of scrap 892
Sale of forms and tenders 158 89
Amortization of deferred revenue 422 377
Staff costs (note 24) 12,461 10,878 Gain on disposal of property and equipment 65 24
Commission 4,374 4,099 Other income 160 107
Service expenses 2,930 3,328 2,567 2,405
Depreciation 1,822 1,903
Directors remuneration and sitting fees 55 52 26. Finance income / costs
Other expenses 752 1,462
Finance income:
Interest on bank accounts 68 45
22,394 21,722
Finance costs:
Commission represents amount paid to Oman National Engineering and Investment Company SAOG for Interest on bank overdrafts (90) (59)
undertaking customer meter reading and billing services and provision of collection facilities. Interest on short-term borrowings (541) (2,090)
Interest on term loan (6,838) (1,458)
Transaction cost (629) (201)
Interest on intercompany (Note 28) (178) (144)
Finance charge on leased assets (47) -
Bank charges (95) (65)
(8,418) (4,017)
Interest is earned from current account balances held with banks during the year with interest rates from
0.75% to 0.85% (2015 0.75% to 0.85%) per annum.
84 85

27. Taxation (continued)
27. Taxation Management of the Company believes that additional taxes, if any, related to the open tax year would not
be significant to the Company’s financial position as at 31 December 2016.
Income tax is provided as per the provisions of the “Income Tax Law” in the Sultanate of Oman after adjust-
ing for items which are non-assessable or disallowed. The tax rate applicable to the Company is 12%.
28. Related party transactions
2016 2015
The taxation charge for the year comprises: RO’000 RO’000 Related parties comprise the shareholders, directors, key management personnel and business enti-
Recognized in profit or loss ties in which they have the ability to control or exercise significant influence in financial and operat-
Deferred tax for the current year 3,758 3,008 ing decisions (other related parties).
Deferred tax for the prior year (2) (5)
3,756 3,003 The Company maintains balances with these related parties which arise in the normal course of business.
Recognized in statement of financial position Outstanding balances at year end are unsecured and settlement occurs in cash.
Provision for current tax 600 600 2016 2015
In the current year after the adjustment of expenses as per tax law, the Company is in tax loss position RO ’000 RO ’000
accordingly no current tax has been recorded in the current year. Deferred tax assets of RO 1.06 million Transactions with related parties under common ownership
on carry forward tax losses for the current year has not been recognized as management understands that Expenses
there are remote chances of having taxable income until year 2020 due to higher tax depreciation charge Bulk supply tariff to
166,469 152,902
which would result in a lapse of current year carry forward losses Oman Power and Water Procurement Company SAOC
The Company is liable to income tax in accordance with the income tax law of the Sultanate of Oman at Transmission use of system charges to
24,333 23,802
the enacted tax rate of 12% on taxable income in excess of RO 30,000. Oman Electricity Transmission Company SAOC
Transmission connection charges to
The following is a reconciliation of income taxes calculated on accounting profits at the applicable tax 4,837 4,070
rate with the income tax expense for the year. The reconciliation of the accounting profit at the applicable Oman Electricity Transmission Company SAOC
rate of 12% (2015 – 12%) after the basic exemption of RO 30,000 with the taxation charge in the financial Training expenses to Nama Institute of Competency Development LLC 249 192
statements is as follows: Accounting services charges to Electricity Holding Company SAOC 207 177
2016 2015
196,095 181,143
RO ’000 RO ’000
Accounting profit before tax 22,417 29,338
Key management personnel compensation
Tax on accounting profit before tax at 12% 2,690 3,521
Add tax effect of: Key management personnel are those persons having authority and responsibility for planning, directing
Expenses that are not deductible 1 1 and controlling the activities of the Company, directly or indirectly, including any director (whether execu-
Unrecognised deferred tax on tax loss 1,067 (514) tive or otherwise). The compensation for key management personnel during the year is as follows:
Over provision of deferred tax liability in prior years (2) (5)
Tax charge for the year 3,756 3,003
Tax assessments for the years 2013 to 2015 are pending for assessment by Oman taxation authorities.The
86 87

28. Related party transactions (continued)
Key management personnel compensation (continued)
2016 2015 29. Proposed dividend

RO ’000 RO ’000
The Board of Directors of the Company at their meeting held on 21 February 2017 have proposed a cash
dividend of RO 0.05 per share aggregating RO 7,500,000 on the Company’s existing share capital (for the
Short-term employee benefits 933 859
year ended 31 December 2015, dividend of RO 0.05 per share aggregating RO 7,500,000 was proposed
Post-employment benefits 81 76
and paid as cash dividend during the year).This dividend is subject to the approval of the Company’s share-
Directors remuneration and sitting fees 55 52
holders in the Annual General Meeting.
1,069 987
30. Commitments and contingencies
Amount due to Holding Company - 2,808
2016 2015
The year end related party balances are as under: RO ’000 RO ’000
Capital commitments 54,753 28,019
2016 2015 Letter of guarantee 4,878 4,878
RO ’000 RO ’000
Payable to related parties under common ownership:
Oman Electricity Transmission Company SAOC 5,537 6,156 31. Financial risk management
Oman Power and Water Procurement Company SAOC 12,513 37,672
Electricity Holding Company SAOC 3,673 1,300 Overview
Muscat Electricity Distribution Company SAOC 5 5 The Company’s activities expose it to a variety of financial risks: market risk (including price risk, foreign
Nama Institute of Competency Development LLC 109 280 currency risk and interest rate risk), liquidity risk and credit risk. However, the Company’s overall risk man-
Majan Electricity Company 6 - agement programme focuses on the unpredictability of financial markets and seeks to minimise potential
Rural Areas Electricity Company SAOC 123 89 adverse effects on the Company’s financial performance.
21,966 45,502 Credit risk management is carried out by the Company and liquidity risk and market risk by the Holding
Company’s treasury department under policies approved by the Board of Directors. The Board provides
written principles for overall risk management, as well as written policies covering specific areas, such as
Receivable from related parties under common ownership: (Note 7)
foreign exchange risk, interest rate risk, use of derivative financial instruments and non-derivative financial
Oman Electricity Transmission Company SAOC 5 5
instruments, and investment of excess liquidity.
Electricity Holding Company SAOC 1 -
Muscat Electricity Distribution Company SAOC 22 28
Financial risk factors
Rural Areas Electricity Company SAOC 2 2
(a) Market risk
30 35
Price risk
These receivables balances represent cost incurred by the Company on behalf of other entities of the The permitted tariff (prices) for the supply and connection of electricity are determined by the permitted
group. tariff regulations issued by the Public Authority for Electricity and Water (PAEW). Hence, the Company is
not subject to significant price risk.
88 89

31. Financial risk management (continued) 31. Financial risk management (continued)
Financial risk factors (continued) Financial risk factors (continued)
(a) Market risk (continued) (a) Market risk (continued)
Cash flow and fair value interest rate risk (continued)
Foreign currency risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are A 1% decrease in interest rates would have had the equal but opposite effect to the amounts shown above,
denominated in a currency that is not the entity’s functional currency. The Company is exposed to foreign on the basis that all other variables remain constant.
exchange risk arising from currency exposures primarily with respect to the US Dollar. The Rial Omani is
pegged to the US Dollar. Since most of the Company’s foreign currency transactions are in US Dollars or The Company does not account for any fixed rate financial instrument at fair value, therefore a change in
other currencies linked to the US Dollar, management believes that exchange rate fluctuations would have interest rate at the reporting date will not affect the profit or loss and other comprehensive income.
an insignificant impact on the Company’s pre-tax profit for the year. The bank borrowings are at fixed interest rate except for the USD denominated portion of the term loan.
These borrowings are carried at amortised cost.
Cash flow and fair value interest rate risk
The Company has call deposits which are interest bearing and are exposed to changes in market interest (b) Liquidity risk
rates. The Company carries out periodic analysis and monitors the market interest rates fluctuations tak- Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding from an
ing into consideration the Company’s needs. adequate amount of committed credit facilities. The management maintains flexibility in funding by main-
At the reporting date the interest rate risk profile of the Company’s interest bearing financial instruments taining availability under committed credit lines.
were: The table below analyses the Company’s financial liabilities that will be settled on a net basis into relevant
2016 2015 maturity grouping based on the remaining period at the reporting date to the contractual maturities date.
RO ’000 RO ’000
The amounts disclosed in the table are the contractual undiscounted cash flows.
Bank overdrafts 1,345 3,237 Balances due within twelve months equal their gross balance.
Short-term borrowings 47,020 -
Finance lease 618 573 Gross Less than 1-3 3 -12 1 - 10
Term loan 226,002 199,671 31 December 2016 amount 1 month months months years
RO ’000 RO ’000 RO ’000 RO ’000 RO ’000
274,985 203,481 Non-interest bearing:
A 1% increase in interest rates at the reporting date would have reduced profit, on an annual basis, by the Trade and other payables 95,065 - 95,065 - -
amounts shown below. Amount due to related parties 21,966 - 21,966 - -
2016 2015 Interest bearing:

RO ’000 RO ’000 Term loan 230,832 240 4,804 14,412 211,376
Interest expense on bank overdraft 13 32 Short-term borrowings 47,020 10,010 - 37,010 -
Interest expense on short-term borrowings 470 - Finance lease 726 13 27 121 565
Interest expense on finance lease 6 6 Bank overdrafts 1,345 1,345 - - -
Interest expense on term loan 2,260 1,997 396,954 11,608 121,862 51,543 211,941
2,749 2,035
90 91

31. Financial risk management (continued) 31. Financial risk management (continued)
Financial risk factors (continued) Financial risk factors (continued)
(b) Liquidity risk (continued) (c) Credit risk (continued)
Trade and other receivables (continued)
Gross Less than 1-3 3 -12 1 - 10 The age of trade receivables and related impairment loss at the reporting date is:
31 December 2015 amount 1 month months months years
31 December 2016 Gross Impairment Not impaired
RO ’000 RO ’000 RO ’000 RO ’000 RO ’000
RO ’000 RO ’000 RO ’000
Non-interest bearing:
Trade and other payables 62,191 - 62,191 - -
Not past due 11,445 - 11,445
Amount due to related parties 45,502 - 45,502 - -
Less than 1 month 4,952 - 4,952
Amounts due to Holding Company 2,808 - - 2,808 -
1 month to 3 months 11,223 - 11,223
Interest bearing: - -
3 months to 1 year 11,369 - 11,369
Term loan 205,130 - - 8,205 196, 925
1 year to 2 years 3,338 1,662 1,676
Finance lease 693 11 22 98 562
More than 2 years 2,189 1,086 1,103
Bank overdrafts 3,237 3,237 - - -
44,516 2,748 41,768
319,561 3,248 107,715 11,111 197,487
31 December 2015
Not past due 9,136 - 9,136
(c) Credit risk
Less than 1 month 8,110 - 8,110
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instru- 1 month to 3 months 10,420 - 10,420
ment fails to meet its contractual obligations. The credit risk of the Company is primarily attributable to 3 months to 1 year 7,542 - 7,542
trade and other receivables, bank deposits and bank balances. 1 year to 2 years 3,990 954 3,036
More than 2 years 2,347 1,990 357
Trade and other receivables
41,545 2,944 38,601
The Company’s exposure to credit risk on trade and other receivables is influenced mainly by the indi-
vidual characteristics of each customer. The Company has established credit policies and procedures that Bank balances
are considered appropriate and commensurate with the nature and size of receivables. Trade receivables
The Company’s bank accounts are placed with reputed financial institutions with a minimum credit rating
primarily represent amount due from government and private customers. The Company has a significant
of P-2 as per Moody’s Investors Service ratings.
concentration of credit risk as below.
2016 2015
The exposure to credit risk for trade receivables at the reporting date by type of customer is:
Bank ratings RO’000 RO’000
2016 2015
RO ’000 RO ’000 Bank Muscat SAOG 9,852 834
Government customers 11,168 10,073 National Bank of Oman SAOG 380 11
Private customers 33,348 31,472 Ahli Bank SAOG 1 195
HSBC Bank Oman SAOG 2 2
44,516 41,545 10,235 1,042
92 93

31. Financial risk management (continued)
Financial risk factors (continued)
(c) Credit risk (continued)
Trade and other receivables (continued)
The carrying amount of financial assets represents the maximum credit exposure. The exposure to credit 33. Capital management
risk at the balance sheet date is on account of:
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
2016 2015 going concern and to provide an adequate return to shareholders.
RO ’000 RO ’000
Trade receivables 44,516 41,545 The Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence
Other receivables 425 403 and to sustain future development of the business. The capital structure of the Company comprises share
Amount due from related parties 30 35 capital, reserves and retained earnings. The Company is not subject to external imposed capital require-
Cash at bank 10,235 1,042
ments.
The Company sets the amount of capital in proportion to risk.The Company manages the capital structure
55,206 43,025 and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of
the underlying assets.
Categories of financial instruments
Other than the requirements of the Commercial Companies Law of 1974, as amended, the Company is
Financial assets
subject to externally imposed capital requirements under the “Dual currency term facility agreement” with
Cash at bank and in hand 10,255 1,062
lender which require the company to have a target debt-equity gearing ratio not exceeding 233.33% for
Loans and receivable at amortised cost
debt. The gearing ratio at 31 December 2016 of 105.48% is below the target.
Trade receivables 44,516 41,545
Due from related parties 30 35 Gearing ratio
Other receivables 425 403
Gearing ratio at the end of the reporting period was as follows:
44,971 41,983 2016 2015
Financial Liabilities RO ’000 RO ’000
Financial liabilities held at amortised cost Debt 273,640 202,908
Term loan 226,002 199,671 Bank overdrafts 1,345 3,237
Short term loan 47,020 - Cash and bank balances (10,255) (1,062)
Amount due to related parties 21,966 45,502
Amount due to holding company - 2,808 Net debt 264,730 205,103
Bank overdraft 1,345 3,237
Trade and other payables 95,065 62,191 Equity 250,954 239,793
391,398 313,409 Net debt to equity ratio 105.48% 85.53%
32. Fair value of assets and liabilities 34. Approval of financial statements
The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed The financial statements were approved by the Board and authorized for issue on 21 February 2017.
to approximate to their fair values.
Mazoon Electricity Company
PO Box: 1229, PC 131,Hamriya
Sultanate of Oman
Tel: +968 2457 3400 | Fax: +968 24573440
info@mzec.co.om | www.mzec.co.om

Annual Report 2016

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Annual Report 2016

Enviado por

Direitos autorais:

Formatos disponíveis

4 5

Mission CHAIRMAN’S REPORT

Units Sold 2006 - 2016(MWh)

Energy Billed 2016

Commercial Domestic Government others

Commercial Domestic Government others

MANAGEMENT REPORT AND ANALYSIS riod as “Leaders in Providing Electricity in Oman”.

Table 2: Application of Value Added

Retained profit )9,348( 16.7% )18,296( 30.77%

)55,897( 100.00% )59,476( 100.00%

2.2. Operations Efficiency

Operational Performance 2006 - 2016

Organization and Human Resources Human Resources

Table 4: Employee details

BOARD OF COMPANY Function 2016 2015

CHIEF CHIEF CHIEF

Development Health, Safety and Environment (HSE)

LTIFR 0 0 0 0 0 0.55 0.49 0.44 0.39 0.34 0.31 0.28 0.28

Our contribution to Society

Table7: MZEC & Contractors HSE Performance as on 31-12-2016

Projects Sl. Tender

Project cost Project cost

Construction of 33kV incomer KV network OH 0.433 Km 9875 9821

Customer Segments 2015

Customer Segments 2015 4,000,000

Customer Segments 2015 3,200,000

Commercial Domestic Government others

75% Commercial Domestic Government others

Authorized Area Wise Information

Unit of Company Philosophy

Chairman Mr. Abdull Aziz Bin

· Nominated by Electricity Holding Company.

(i) Board Executive Committee: Remuneration Matters

Table 20: Distribution of Shareholding

Electricity Holding Company SAOC 149,985,000 99.99

Mr. Omar Ahmed Salim Qatan

Total share capital 150,000,000 100

The Statutory Auditors

Mr. Mansoor AlHinai Mr. Abdull Aziz Al Kharusi

Statement of financial position 47

Statement of profit or loss and other

Statement of changes in equity 50

Statement of cash flows 51

Notes to the financial statements 53-91

Mazoon Electricity Company SAOC Mazoon Electricity Company SAOC (continued)

Independent auditor’s report to the shareholders of Statement of financial position

Auditor’s responsibilities for the audit of the financial statements (continued)

Total assets 687,187 591,530

March 2017 Total equity 250,954 239,793

Total non-current liabilities 250,407 228,841

Statement of financial position Statement of profit or loss and other comprehensive

2016 2015 Notes 2016 2015

_________________________ ______________________ ______________________

Chairman Director Chief Executive Officer

Statement of cash flows

Profit before tax 22,417 29,338

Provision for inventory obsolescence - net 2

Operating cash flows before changes in working capital 53,106 52,950

The accompanying notes form an integral part of these financial statements.

Other current assets (6,194) -

Trade and other receivables (4,324) (10,044)

Trade and other payables 9,338 43,827

Profit for the year and total comprehensive income

Other current liabilities (225) (5,022)

_