(Under Transformation)MUSANDAM POWER COMPANY SAOG

www.musandampower.com

PROSPECTUS

Marketing Adviser

Al Busaidy, Mansoor Jamal & Co.Barristers and Legal Consultants

Collection AgentsFinancial Adviser &Issue Manager

Legal Adviser

MUSANDAM

ON

Phase I (book-building) Offer Opens: 3 November 2019Phase I (book-building) Offer Closes: 7 November 2019Dates for Phase II (fixed price) Offer Period would be announced after the completion of Phase I Offer

Initial Public Offering of 28,156,000 Offer Shares at a Price Range of Bzs 260 to Bzs 325 per Offer Share(including Offer expenses of Bzs 2 per Offer Share)

investment bankingأعمال بنوك ا�ستثمار

His Majesty Sultan Qaboos Bin Said

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PROSPECTUS

Musandam Power Company SAOG (under transformation)

P.O. Box 799 P.C. 118, Al Khuwair, Muscat, Sultanate of Oman Tel: +968 2446 6471 Fax: +968 2446 6900

URL: www.musandampower.com

PROSPECTUS

Initial Public Offering of 28,156,000 Offer Shares at a Price Range of Bzs 260 to Bzs 325 per Offer Share (including Offer Expenses of Bzs 2 per Offer Share)

OFFER PERIODPhase I (book-building) Offer Opens on: 3 November 2019Phase I (book-building) Offer Closes on: 7 November 2019

Dates for Phase II (fixed price) Offer Period subject to the completion of Phase I Offer Period would be announced after the completion of Phase I Offer

ISSUE MANAGER LEGAL ADVISOR

investment bankingأعمال بنوك ا�ستثمار

bank muscat SAOGP.O.Box 134, Postal Code 112, Ruwi, Sultanate of Oman

Tel: +968 2476 8888; Fax: +968 2479 8220URL: www.bankmuscat.com

Al Busaidy, Mansoor Jamal & Co.

Al Busaidy, Mansoor Jamal & Co.Barristers & Legal Consultants

P.O.Box 686, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 24829200; Fax: +968 24812256

URL: www.amjoman.com

COLLECTION AGENTS

The Capital Market Authority (the “CMA”) assumes no responsibility for the accuracy and adequacy of the statements and information contained in this Prospectus nor will it have any liability for any damage or loss resulting from the reliance upon or use of any part of the same by any person. This Prospectus has been prepared in accordance with the requirements as prescribed by the CMA. This is an unofficial English language translation of the original Prospectus prepared in the Arabic language and approved by the CMA in accordance with Administrative Decision no. KH/80/2019 dated 14 October 2019.

This Prospectus does not constitute an offer to sell or an invitation by or on behalf of the Company to subscribe to any of the Shares in any jurisdiction outside of Oman where such distribution is, or may be, unlawful.

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IMPORTANT NOTICE TO INVESTORS

The aim of this Prospectus is to present material information that may assist investors to make an appropriate decision as to whether or not to invest in the shares of Musandam Power Company SAOG (under transformation) (the “Company” or “MPC” or “Musandam Power”) offered hereunder (the “Offer Shares”).

This Prospectus includes all material information and data and does not contain any misleading information or omit any material information that would have a positive or negative impact on the decision of whether or not to invest in the Offer Shares.

The Musandam Power’s Board members are jointly and severally responsible for the integrity and adequacy of the information contained in this Prospectus and confirm that to their knowledge appropriate due diligence has been performed in the preparation of this Prospectus and further confirm that no material information has been omitted, the omission of which would render this Prospectus misleading.

All investors should examine and carefully review this Prospectus in order to decide whether it would be appropriate to invest in the Offer Shares by taking into consideration all the information contained in this Prospectus in its proper context. Investors should not consider this Prospectus a recommendation by Musandam Power to buy the Offer Shares. Every investor is responsible for obtaining his or her own independent professional advice on an investment in the Offer Shares and for conducting an independent valuation of the information and assumptions contained herein using appropriate analysis or projections.

No person has been authorised to make any statements or provide information in relation to Musandam Power or the Offer Shares other than the persons whose names are indicated in this Prospectus. Where any person makes any statement or provides information it should not be taken as authorised by Musandam Power or the Issue Manager.

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PROSPECTUS

ADDITIONAL POINTS TO BE NOTED

References to documents

All summaries of documents referred to in this Prospectus may not provide a complete summary of such documents, and statements in this Prospectus relating to such documents may not be exact reproductions of such documents or parts thereof and should not be relied upon as being comprehensive statements in respect of such documents.

Scope of information

The information contained in this Prospectus is intended to provide to a prospective Applicant with adequate information relating to the investment opportunity and background information on the IPO. However, this Prospectus does not necessarily contain all the information that a prospective Applicant may consider material. The content of this Prospectus is not to be construed as legal, business or tax advice. Each prospective Applicant should consult his own lawyer, financial adviser or tax adviser for legal, financial or tax advice in relation to any subscription, purchase or proposed subscription or purchase of the Offer Shares.

Investor due diligence

Prior to making any decision as to whether to subscribe for the Offer Shares, prospective Applicants should read this Prospectus in its entirety. In making an investment decision, prospective Applicants must rely upon their own examination of the terms of this Prospectus and the risks involved in making an investment.

Equity risk

All equity investments carry market risks to varying degrees. The value of any security can fall as well as rise depending on the market conditions. Potential investors should read “ Chapter XIII – Risk Factors and Methods of Mitigation” of this Prospectus for an outline of important risk factors impacting Musandam Power’s business and the industry it operates in.

Restrictions on distribution of this Prospectus

The distribution of this Prospectus and the Offer Shares may, in certain jurisdictions, be restricted by law or may be subject to prior regulatory approvals. This Prospectus does not constitute an offer or an invitation by or on behalf of Musandam Power to any person in any jurisdiction outside Oman to subscribe to any of the Offer Shares where such offer or invitation would be unlawful. This Prospectus may not be distributed in any jurisdiction where such distribution is, or may be, unlawful. Musandam Power, the Issue Manager and the Collection Agents require persons into whose possession this Prospectus comes, to inform themselves of and observe, all such restrictions. None of Musandam Power, the Issue Manager, or the Collection Agents accept any legal responsibility for any violation of any such restrictions on the sale, offer to sell or solicitation to subscribe for Offer Shares by any person, whether or not a prospective Applicant, in any jurisdiction outside Oman where such sale, offer to sell or solicitation to subscribe would be unlawful.

Restrictions on use of information contained in this Prospectus

The information contained in this Prospectus may not be published, duplicated, copied or disclosed in whole or in part or otherwise used for any purpose other than in connection with the Offer, without the prior written approval of Musandam Power and the Issue Manager.

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Disclaimer of implied warranties

Save and except as required under applicable law and regulations, no representation or warranty, express or implied, is given by Musandam Power, the Issue Manager, or the Collection Agents, or any of their respective directors, managers, accountants, advisers, lawyers, employees or any other person as to the completeness of the contents of this Prospectus; or of the projections included within; or of any other document or information supplied at any time in connection with the Offer; or that any such document has remained unchanged after the issue thereof.

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PROSPECTUS

SELLING RESTRICTIONS OUTSIDE OMAN

Kingdom of Bahrain

In relation to investors in the Kingdom of Bahrain, the securities, which are the subject of this Prospectus and related offering documents may only be offered in registered form to existing account holders and accredited investors as defined by the Central Bank of Bahrain in the Kingdom of Bahrain where such investors make a minimum investment of at least US$100,000, or any equivalent amount in other currency or such other amount as the Central Bank of Bahrain may determine.

This offer does not constitute an offer of securities in the Kingdom of Bahrain in terms of Article 81 of the Central Bank and Financial Institutions Law 2006 (Decree Law No. 64 of 2006). This Prospectus and related offering documents have not been and will not be registered as a prospectus with the Central Bank of Bahrain. Accordingly, no securities may be offered, sold or made the subject of an invitation for subscription or purchase nor will this Prospectus or any other related document or material be used in connection with any offer, sale or invitation to subscribe or purchase securities, whether directly or indirectly, to persons in the Kingdom of Bahrain, other than to accredited investors for an offer outside Bahrain.

The Central Bank of Bahrain has not reviewed, approved or registered this Prospectus or related offering documents and it has not in any way considered the merits of the securities to be offered for investment, whether in or outside the Kingdom of Bahrain. Therefore, the Central Bank of Bahrain assumes no responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the content of this document.

State of Kuwait

This Prospectus is provided on an exclusive basis to the specifically intended recipient thereof, upon that person’s request and initiative, and for the recipient’s personal use only and is not intended to be available to the public.

The Prospectus has not been licensed for offering, promotion, marketing, advertisement or sale in the State of Kuwait by the Capital Markets Authority or any other relevant Kuwaiti government agency. The offering, promotion, marketing, advertisement or sale of the Shares in the State of Kuwait on the basis of a private placement or public offering is, therefore, prohibited in accordance with Law No. 7 of 2010 and the Executive Bylaws for Law No. 7 of 2010, as amended, which govern the issue, offer, marketing and sale of securities in the State of Kuwait (“Kuwait Securities Laws”).

Hence, in accordance with the Kuwait Securities Laws, no private or public offering of the Shares is or will be made in the State of Kuwait, no agreement relating to the sale of the Shares will be concluded in the State of Kuwait and no marketing or solicitation or inducement activities are being used to offer or market the Interests in the State of Kuwait.”

Any distribution of this Prospectus shall be at the liability of the distributor.

State of Qatar

The Offer Shares have not been and will not be offered, sold or delivered, at any time, directly or indirectly in the State of Qatar in a manner that would constitute a public offering. No application has been or will be made for the Offer Shares to be listed or traded on the Qatar Exchange or the QE Venture Market. This Prospectus has not been, and will not be, reviewed or approved by or registered or filed with the Qatar Financial Markets Authority or Qatar Central Bank and may not be publicly

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distributed. This Prospectus is intended for the original recipient only and must not be provided to any other person. This Prospectus is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

Kingdom of Saudi Arabia

This Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the Board of the Capital Market Authority of the Kingdom of Saudi Arabia resolution number 2-11-2004 dated October 4, 2004 as amended by resolution number 1-28-2008 dated August 18, 2008 (the “KSA Regulations”).

This Prospectus is directed to “sophisticated investors”, as defined under Article 10 of the KSA Regulations (“Sophisticated Investors”), for information purposes only. This Prospectus is not intended for distribution to, or use by anyone who is not a Sophisticated Investor. Any person who is not a Sophisticated Investor should not act on this Prospectus or any of its contents. This Prospectus also is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation.

The Capital Market Authority of the Kingdom of Saudi Arabia does not make any representation as to the accuracy or completeness of this Prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this Prospectus, you should consult an authorised financial adviser.

United Arab Emirates (excluding the Dubai International Financial Centre)

This Prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose.

By receiving this Prospectus, the person or entity to whom it has been issued understands, acknowledges and agrees that neither the Offer Shares nor this Prospectus have been approved by the UAE Central Bank, the UAE Ministry of Economy and Planning, the UAE Securities and Commodities Authority or any other authorities in the United Arab Emirates. The Issue Manager has not received authorisation or licensing from the UAE Central Bank, the UAE Ministry of Economy and Planning, the UAE Securities and Commodities Authority or any other authorities in the United Arab Emirates to market or sell the Offer Shares within the United Arab Emirates. No marketing or offer of the Offer Shares has been or will be made from within the United Arab Emirates and no subscription to the Shares may or will be consummated within the United Arab Emirates. It should not be assumed that the Issue Manager is a licensed broker, dealer or investment adviser under the laws applicable in the United Arab Emirates, or that it advises individuals resident in the United Arab Emirates as to the appropriateness of investing in or purchasing or selling securities or other financial products. The Offer Shares may not be offered or sold directly or indirectly to the public in the United Arab Emirates. This Prospectus does not constitute a public offer of securities in the United Arab Emirates in accordance with the UAE Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise.

Nothing contained in this Prospectus is intended to constitute investment, legal, tax, accounting or other professional advice. This Prospectus is for your information only and nothing in this Prospectus is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

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PROSPECTUS

Dubai International Financial Centre

This Prospectus is not intended to, and does not, constitute a financial promotion, an offer, sale or delivery of shares or other securities under the Dubai International Financial Centre (the “DIFC”) Markets Law (DIFC Law 12 of 2004, as amended), Regulatory Law (DIFC Law 1 of 2004, as amended), under the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”) or otherwise. The Offer Shares are not intended for, are not being offered, distributed, sold or publicly promoted or advertised, directly or indirectly, to, or for the account or benefit of, any person in the DIFC. This Prospectus is not intended for distribution to any person in the DIFC and any such person that receives a copy of this Prospectus should not act or rely on this Prospectus and should ignore the same. The DFSA has not approved the offer of Offer Shares or this Prospectus nor taken steps to verify the information set out in it, and has no responsibility for it.

United States

The Offer Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “US Securities Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as such term is defined in Rule 902 under the US Securities Act (a “US Person”)) except in certain transactions exempt from the registration requirements of the US Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the US Securities Act.

The Issue Manager has agreed that it will not offer or sell the Offer Shares (i) as part of its distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offer and the closing date of the Offer, within the United States or to, or for the account or benefit of, US Persons, and it will have sent to each dealer to which it sells Shares during the distribution compliance period a confirmation or other notice setting out the restrictions on offers and sales of the Shares within the United States or to, or for the account or benefit of, US Persons. Terms used in this paragraph have the meanings given to them by Regulations.

The Offer Shares are being offered and sold outside of the United States to non US Persons in reliance on Regulations.

United Kingdom

Investment in Musandam Power is a controlled investment for the purposes of the financial promotion restriction under section 21 of the Financial Services and Markets Act 2000 (“FSMA”).

This Prospectus has not been approved under FSMA by an authorised person. This communication is exempt from the general restriction under section 21 of FSMA on the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to, or directed only at, the following persons (“Relevant Persons”):

(a) “investment professionals” within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FPO”); or

(b) “high net worth companies, unincorporated associations etc.” within the meaning of Article 49 of the FPO,

or any other person to whom this Prospectus may lawfully be communicated.

Persons who are not Relevant Persons must not act, or rely, on this communication. Musandam Power or the Issue Manager will deal in the investments described in this Prospectus only with Relevant Persons.

An “investment professional” for the purposes of Article 19 of the FPO is a person who has professional experience in matters relating to “investments”.

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A “high net worth company”, or “unincorporated association etc.” for the purposes of Article 49 of the FPO is: (i) a body corporate which has, or is a member of the same group as an undertaking which has, a called-up share capital or net assets of at least £5million (or where the body corporate has more than 20 members or is a subsidiary undertaking of a parent undertaking which has more than 20 members, at least £500,000); (ii) an unincorporated association or partnership which has net assets of not less than £5 million; (iii) the trustee of a high value trust which has, or has had in the 12 months before the date of this communication, an aggregate value of at least £10 million; or (iv) any person (“A”) whilst acting in the capacity of director, officer or employee of a person (“B”) falling within any of the above where A’s responsibilities when acting in that capacity, involve him in B’s engaging in investment activity.

European Economic Area

In relation to each Member State of the European Economic Area that has implemented Directive 2003/71/EC (as amended) (the “Prospectus Directive”) (each, a “Relevant Member State”), an offer to the public of Offer Shares may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of Offer Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(i) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(ii) to fewer than 150 natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive); subject to obtaining the prior consent of the Issue Manager; or

(iii) in any other circumstances which do not require the publication by Musandam Power of a prospectus within the meaning of the Prospectus Directive,

provided that no such offer of Offer Shares shall result in a requirement for the publication by Musandam Power or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State.

For the purposes of this provision, the expression “an offer to the public” in relation to Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offer and any Offer Shares to be offered so as to enable an investor to decide to acquire any Offer Shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state.

Other Jurisdictions

Should this Prospectus be received by any Person in any jurisdiction not mentioned in the foregoing, the receiving party should disregard this Prospectus in cases where the receipt of the Prospectus or its distribution is, or may be, unlawful. Musandam Power, the Issue Manager and the Collection Agents require persons into whose possession this Prospectus comes, to inform themselves of and observe, all relevant investing restrictions in their jurisdiction. None of Musandam Power, the Issue Manager, or the Collection Agents accept any legal responsibility for any violation of any such restrictions on the sale, offer to sell or solicitation to subscribe for Offer Shares by any person, whether or not a prospective Applicant, in any jurisdiction outside Oman where such sale, offer to sell or solicitation to subscribe would be unlawful.

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PROSPECTUS

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain “forward-looking statements”. These forward-looking statements generally can be identified by the use of forward-looking terminology, including terms such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “goal”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue”, their negative, or other words or phrases of similar import. Similarly, statements that describe Musandam Power’s strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual outcomes, including among other things, Musandam Power’s result of operations, financial condition, cash flows, liquidity, financial projections and growth to differ materially from those contemplated by the relevant forward-looking statement.

Important factors that could cause actual results to differ materially from Musandam Power’s expectations include but are not limited to:

• inability to estimate future performance;

• inability of Musandam Power to meet its debt service obligations under its Finance Documents;

• inability of Musandam Power to meet their payment obligations under the Project Documents;

• inability to realise revenue forecasts after the expiration of the off-take obligations contained in the Project Documents;

• unavailability of fuel for the Plant after the Project Documents have expired;

• certain financing and/or operational and maintenance risks, which are inherent to the Project;

• access to adequate insurance to cover all potential losses;

• change in monetary and/or interest policies of Oman, local and/or international inflation, local and/or international interest rates;

• fluctuations in foreign exchange rates, equity prices or other rates or prices;

• the performance of the financial markets in Oman;

• general political, economic and business conditions in Oman which may have an impact on Musandam Power’s business activities;

• changes in laws and/or regulation and/or conditions that may have a bearing on the position of Musandam Power’s client, and/or suppliers after the expiration of the PPA, or the power generation sector in Oman; and

• increased competition in the power generation sector in Oman after expiry of the Project Documents; changes in the economic and/or financial conditions of Musandam Power’s client, suppliers and the power generation sector after the expiration of the Project Documents.

By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could be materially different from those that have been estimated. None of Musandam Power or the Issue Manager or any of their respective affiliates has any obligation to update or otherwise revise any statements in this Prospectus to reflect circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition or differ in actuality.

The above list is not exhaustive and for a further discussion of factors that could cause actual results to differ, see “ Chapter XIII – Risk Factors and Methods of Mitigation” of this Prospectus. After listing on the MSM, Musandam Power will adhere to the disclosure rules and regulations issued by the CMA, which includes making timely disclosure regarding Musandam Power’s results of operation. Musandam Power advises Applicants to track any information or announcements made by it after listing through the MSM website at www.msm.gov.om in the event they subscribe for Offer Shares and become Shareholders.

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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

Financial Data

Unless stated otherwise, the financial data in this Prospectus is derived from Musandam Power’s audited financial statements or its unaudited interim financial statements, in each case prepared in accordance with IFRS. Copies of the 2015, 2016, 2017 and 2018 annual audited financial statements and June 2019 half-yearly audited financial statements, are set out in Chapter XXI – Historical Financial Statements” of this Prospectus. Musandam Power’s financial year commences on 1 January and ends on 31 December. In this Prospectus, any discrepancy in any table between the total and the sum of the relevant amounts listed is due to rounding.

Currency of Presentation

In this Prospectus, all references to “OMR” and/or “RO” and/or “Omani Rials” are to the legal currency for the time being of Oman, all references to “US$” and/or “US Dollars” are to the lawful currency for the time being of the United States of America. Conversions of amounts from Omani Rials to US Dollars in this Prospectus are solely for the convenience of the reader. The Omani Rial has been pegged to the US Dollar since June 1986. Unless otherwise specified, for all periods presented in “ Chapter X – Description of Musandam Power and Business Overview”, “ Chapter XII – Project Cost and Sources of Financing”, “Chapter XIV – Summary Future Financials” of this Prospectus, conversions of amounts between Omani Rials and US Dollars have been made at an exchange rate of US$1.00 = OMR 0.3845.

The financial model uses a conversion rate of US$1.00 = OMR 0.3845 and, accordingly, conversion of amounts from Omani Rials to US Dollars have been made at this exchange rate for all periods presented in this Prospectus.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Prospectus has been obtained from third-party industry publications and/or websites, including, without limitation OPWP. Although it is believed that industry data used in this Prospectus is reliable, it has not been independently verified and therefore its accuracy and completeness is not guaranteed and its reliability cannot be assured. Similarly, internal company reports, while believed to be reliable, have not been verified by any independent sources. The extent to which the market and industry data used in this Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

This Prospectus contains references to the electricity capacities of the independent power and water projects communicated by OPWP. Unless stated otherwise, the stated electricity capacities provided refer to the contracted capacity of such projects at the time of their full commercial operation date. Power plants suffer degradation of their capacity to produce electricity overtime, especially during the early years of operation, and as such, the contracted electricity capacity stated for the Project, pursuant to the PPA, will reduce slightly over time.

Presentation of Power Generation Data

This Prospectus contains references to MW capacities of the Plant. For the purposes of this Prospectus, all of the references to “MW” are to megawatts of electrical energy. All references to ‘‘GW’’ are to gigawatts of electrical energy, and all references to ‘‘kW’’ are to kilowatts of electrical energy. All references to ‘‘heat rate’’ or ‘‘gas consumption’’ refer to the measure of thermal efficiency of the Plant in the conversion of natural gas into electricity. All references to ‘‘backup fuel’’ are to Fuel Oil.

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PROSPECTUS

TABLE OF CONTENTS

Chapter I Abbreviations and Definitions 14

Chapter II Summary Information Relating to Musandam Power 25

Chapter III General Information on the Offer and the Company 27

Chapter IV Summary of Expenses in Connection with the Offer 31

Chapter V Purpose of the Offer and Use of Proceeds 32

Chapter VI Objects and Approvals 33

Chapter VII Shareholding Details 35

Chapter VIII Overview of the Omani Economy 41

Chapter IX Regulatory Framework and Industry Overview 45

Chapter X Description of Musandam Power and Business Overview 52

Chapter XI Contractual Framework 68

Chapter XII Project Cost and Sources of Financing 77

Chapter XIII Risk Factors and Methods of Mitigation 83

Chapter XIV Summary Future Financials 93

Chapter XV Dividend Policy 129

Chapter XVI Valuation and Price Justification 131

Chapter XVII Related Party Transactions and Material Contracts 139

Chapter XVIII Corporate Governance 141

Chapter XIX Rights and Liabilities of Shareholders 155

Chapter XX Subscription Conditions and Procedures 159

Chapter XXI Historical Financial Statements 176

Chapter XXII Undertakings 352

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Chapter I

Abbreviations and Definitions

AER The Authority for Electricity Regulation of Oman.

Additional Application Money Represents the difference between the Phase I Application Money for the each Application and the Application Revision Form where applicable, with the difference amount to be paid by each Phase I Applicant at the time of submission of their Application Revision Form.

Applicant A person or entity who applies for the purchase of Offer Shares pursuant to the terms of this Prospectus.

Application The application form used to apply for Offer Shares pursuant to the terms of this Prospectus.

Application Revision Form The application form used to revise the bids of the Application submitted for Phase I, pursuant to the terms of this Prospectus.

Application Money The amount to be paid by each Applicant at the time of submission of his/her Application as specified in reference to Chapter XX – Subscription Conditions and Procedures of this Prospectus.

Articles The articles of association of Musandam Power, as registered with the Ministry of Commerce & Industry.

Current Auditor Deloitte & Touche (M.E) & Co LLC.

Authorised Share Capital The authorised share capital of the Company, this being OMR 20,000,000 divided into 200,000,000 Shares with a value of Bzs 100.

Baizas/Bzs Omani Baizas (Bzs 1,000 = OMR 1).

Basis of Allotment The basis on which the Offer Shares will be allotted to Applicants under the Offer and which is described in reference to Chapter XX – Subscription Conditions and Procedures of this Prospectus.

Board/Board of Directors The board of directors of Musandam Power, elected and holding office in accordance with the Articles and the CCL.

Board Election Rules Rules and conditions for the Election of Directors of Public Joint Stock Companies and their Responsibilities and Rules of the Election of the Board of Directors (Ministerial Decision 137/2002 as amended).

BOO Build, own and operate.

BOOT Build, own, operate and transfer.

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PROSPECTUS

Capital Market Law/CML The Capital Market Law of Oman issued by Royal Decree 80/1998, as amended.

CBO The Central Bank of Oman.

CCL The Commercial Companies Law of Oman issued by Royal Decree 18/2019.

CCGT Combined cycle gas turbine.

Chairman The Chairman of the Board.

CMA The Capital Market Authority of Oman.

COD The commercial operation date of the Plant, being 17 June 2017.

Code The CMA Code of Corporate Governance for Public Joint Stock Companies which came into effect on 22 July 2016, as amended.

Collection Agents Either Collection Banks or Collection Brokers.

Collection Banks Ahli Bank S.A.O.G.P.O. Box 545, Postal Code 116, Mina Al Fahal,Sultanate of Oman.Tel: +968 2457 7082; Fax: +968 2456 7841www.ahlibank.om

Bank Dhofar S.A.O.G.P.O. Box 1507, Postal Code 112, Sultanate of OmanTel: +968 2479 0466; Fax: +968 2478 4428www.bankdhofar.com

bank muscat S.A.O.G.P.O. Box 134, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2476 8064; Fax: +968 2478 7764www.bankmuscat.com

National Bank of Oman S.A.O.G.P.O. Box 751, Postal Code 112, Ruwi, Sultanate of Oman.Tel: +968 2477 8757/8610; Fax: +968 2477 8993www.nbo.co.om

Collection Brokers Gulf Baader Capital Markets S.A.O.C.P.O. Box 974, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2479 0614; Fax: +968 2479 0612www.gbcmoman.net

Ubhar Capital S.A.O.C.P.O. Box 1137, Postal Code 111, Al Seeb, Sultanate of OmanTel: +968 2494 9009; Fax: +968 2494 9099www.u-capital.net

United Securities LLCP.O. Box 2566, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2476 3300; Fax: +968 2478 8671www.usoman.com

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Commercial Register The commercial register maintained by the MOCI pursuant to the Commercial Register Law issued by Royal Decree 3/1974.

Contract Year The first year of the term of the LTSA and each subsequent period of twelve (12) calendar months which:

(a) commences on 1 May in a year; and

(b)falls (whether in full or in part) within the term of the LTSA, (with the exception of Contract Year Fifteen); and Contract Year Fifteen.

Contract Year Fifteen The period commencing on the expiry of the fourteenth (14th) year of the term of the LTSA and ending on the fifteenth (15th) anniversary of the Scheduled Commercial Operation Date, as may be extended pursuant to ‘Buyer Risk Event’ and ‘Force Majeure’ extensions under the PPA.

CPI Omani Consumer Price Index.

DCF Discounted cash flows valuation methodology.

Deputy Chairman The Deputy Chairman of the Board.

DPS Dividend Per Share

DSCR Debt Service Coverage Ratio.

DSRA Debt Service Reserve Account.

E-IPO Application The Application pursuant to the E-IPO Mechanism

E-IPO Broker Platform The platform available to the brokers to create the E-IPO Application for Phase II

E-IPO Mechanism The mechanism to apply for the Offer Shares through one of the E-IPO channels offered by the Collection Agent

E-IPO Platform The platform available to the Applicants to create the E-IPO Application for Phase II

EBITDA Earnings before interest, taxes, depreciation and amortisation.

EBL The equity bridge loan agreement dated 23 December 2014 with bank muscat SAOG in favour of Musandam Power by Oman Oil Company SAOC and LGI.

ECA The Electrical Connection Agreement dated 14 May 2015 between RAECO and Musandam Power.

EGM An extraordinary general meeting of the Shareholders.

EHC Electricity Holding Company SAOC.

EPC Contract The turnkey Engineering, Procurement and Construction contract dated 25 November 2014, amended 24 June 2015 between Musandam Power and the EPC Contractor.

17

PROSPECTUS

EPC Guarantee This parent company guarantee provided by Wärtsilä Corporation in favour of Musandam Power, dated 30 January 2015 in order to guarantee the performance of WMU of its obligations under the EPC Contract. This guarantee was capped at US$ 177,539,265, which is equivalent to OMR 68,263,847 although this cap did not apply to any unlimited liabilities as provided for under the EPC Contract.

EPC Performance Bond The performance bond granted by Standard Chartered Bank on behalf of WMU, dated 3 December 2014, for the benefit of Musandam Power.

EPCC / EPC Contractor WMU.

EPS Earnings Per Share

ERH Equivalent running hours.

ESRA Equity Subscription and Retention Agreement.

ESA The Electrical Supply Agreement dated 6 April 2015 between RAECO and Musandam Power.

Executive Regulations Regulations issued by the CMA under the Commercial Companies Law and the Capital Market Law, including Decision 1/2009 – Issuing Executive Regulation of the Capital Market Law, as amended.

Facilities Agreement Facilities Agreement dated 1 July 2015 between Musandam Power Company SAOC and bank muscat SAOG.

Finance Documents Facilities Agreement, the ESRA and the Shareholders Loan agreement.

Issue Manager bank muscat SAOG.

Financial Close The date under the Facilities Agreement when all ‘Conditions Precedent’ were satisfied or waived.

Financial Year/FY The period of twelve months starting on 1 January and ending on 31 December of that particular calendar year.

Fuel Oil “Fuel Oil” as defined in the PPA means diesel oil which is to be used as ‘Pilot Fuel Oil’ during operation on ‘Natural Gas’, large load fluctuations on ‘Natural Gas’ and as back-up fuel for the Plant “or the Power Units or Power Unit Blocks” (as applicable) instead of natural gas.

GCC The Cooperation Council for the Arab States of the Gulf, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

GDP Gross Domestic Product.

Generation Licence The Electricity Generation Licence issued by AER to Musandam Power effective as of 5 January 2017.

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Government The Government of Oman.

Gross Power Capacity The total electrical energy of the power units /power unit blocks, which form part of the Plant, as applicable (expressed in MW) which is available at the electrical generator terminals of the power unit/ power unit blocks when the power units/ power unit blocks are operating on natural gas, on a continuous and reliable basis in conformity with the operating parameters and by reference to reference conditions.

ICR Interest Coverage Ratio is calculated as the ratio of Earning Before Interest and Tax and Finance cost paid.

IFRS International Financial Reporting Standards.

Independent Director As defined in the Code.

Investor Number The investor number issued by the MCDC to investors holding investor accounts with the MCDC.

Issued and Paid-Up Share Capital

The issued and paid-up share capital of the Company.

IPO The initial public offering of the Offer Shares pursuant to the Offer.

IPP Independent power project.

IRR Internal rate of return.

Issue Expenses The expenses incurred by Musandam Power in relation to the IPO, which are indicated in Chapter IV – Summary of Expenses in connection with the Offer.

Information Centre Information centre of the MSM.

IWP Independent water projects.

IWPP Independent water and power project.

kJ Kilojoules.

km Kilometres.

km2 Square kilometres.

kV Kilovolts.

kW Kilowatts.

kWh Kilowatt hours.

Legal Adviser Al Busaidy, Mansoor Jamal & Co.

LGI LG International Corp.

LIBOR London Interbank Offered Rate.

19

PROSPECTUS

Lower Heating Value/LHV The number of British Thermal Units produced by the combustion at constant pressure, of the quantity of gas which would occupy a volume of one (1) cubic foot at a temperature of fifteen degrees Celsius (15ºC), at a constant pressure of 101.325 kPa absolute with air at the same temperature as the gas when the products of combustion are cooled to the initial temperature of the gas and air and when the water formed by combustion remains in the vapour state.

LTSA Reciprocating Engine Long Term Services Agreement providing that the Company purchase parts relating to the Plant from WMU and WMU perform the services and variation work as more particularly described therein, dated 25 November 2014, amended 14 June 2015, between the Company and WMU and as further amended by the Settlement Agreement.

LTSA Guarantee The parent company guarantee provided by Wärtsilä Corporation in favour of Musandam Power dated 30 January 2015 to guarantee the performance of WMU’S obligations relation to the LTSA.

m Metres.

m2 Square metres.

m3 Cubic metres.

Management The senior management team of Musandam Power.

MCDC Muscat Clearing & Depository Company SAOC.

MECA The Ministry of Environment and Climate Affairs of Oman.

Memorandum The memorandum of association of Musandam Power, as registered with the MOCI.

Ministry of Housing Electricity and Water/MHEW

The Ministry of Housing, Electricity and Water.

Ministry of Commerce & Industry/MOCI

The Ministry of Commerce & Industry.

Ministry of Finance/MoF The Ministry of Finance.

Ministry of Housing/MoH The Ministry of Housing formerly known as the Ministry of Housing, Electricity and Water.

Ministry of National Economy/MONE

The Ministry of National Economy (abolished pursuant to Royal Decree 38/2011).

Ministry of Manpower/MoM The Ministry of Manpower.

Ministry of Oil & Gas/MoG The Ministry of Oil & Gas.

MENA The Middle East and North Africa.

MIS The Main Interconnected System.

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MMBTU Million British thermal units.

MPC/Musandam Power/Company Musandam Power Company SAOG (under transformation).

MSM The Muscat Securities Market.

MSM Index The Muscat Securities Market Index.

Musandam Power System Means the power system serving the Musandam Governorate as more particularly described in “Chapter IX – Regulatory Framework and Industry Overview”.

MW Megawatts.

NCSI National Centre for Statistics and Information of Oman.

NGSA The Natural Gas Sales Agreement dated 12 July 2015 between Musandam Power and the MoG.

O&M Agreement The Operation and Maintenance Agreement dated 16 June 2015 between Musandam Power and WMU.

O&M Performance Bond The performance bond granted by Skandinaviska Enskilsa Banken AB on behalf of WMU, dated 23 February 2017, for the benefit of Musandam Power.

OCCI Oman Chamber of Commerce & Industry.

OEM/Original Equipment Manufacturer/ Wärtsilä

Wärtsilä Corporation.

OETC Oman Electricity Transmission Company SAOC.

Offer The offer for sale of 28,156,000 (Twenty eight million one hundred and fifty six thousand) existing Shares by the Selling Shareholders, with a Price Range of Bzs 260 to Bzs 325, split into Phase I (book-building) Offer and Phase II (fixed price) Offer as described in this Prospectus.

Offer Expenses The expenses collected from each Applicant in connection with the Offer, as further described in ”Chapter IV – Summary of Expenses in connection with the Offer” of this Prospectus.

Offer Price The price from within the Price Range discovered under the Phase I Offer in accordance with Chapter XX – Subscription Conditions and Procedures which shall discover the price for the Phase II Offer (which shall include Offer Expenses of Bzs 2 per Offer Share).

Offer Proceeds The proceeds of the Offer that will be available to the Selling Shareholders.

Offer Shares The Shares that are offered for subscription in the Offer.

OGC Oman Gas Company SAOC.

OGM An ordinary general meeting of the Shareholders.

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PROSPECTUS

Oman The Sultanate of Oman.

OETCL Oman Energy Trading Company Limited.

Omani Rial/OMR Omani Rials, the lawful currency of Oman with OMR 1 divided into 1,000 Baiza (Bzs).

OOFDC Oman Oil Facilities Development Company LLC.

Operator WMU.

OPWP Oman Power and Water Procurement Company SAOC.

P/E Price to earnings.

PAEW Public Authority for Electricity & Water of Oman1.

Paid-Up Share Capital The paid-up share capital of the Company.

PAM System The trading platform of the MSM which is used for the book-building mechanism.

PFA The Project Founder’s Agreement dated 15 March 2015 between each of the Project Founders and EHC, and as further amended from time to time.

Phase I Application Money Represents the highest value single bids that is payable by the Phase I Applicant during the Phase I Offer Period.

Phase II Application Money The amount to be paid by each Phase II Applicant at the time of submission of his/her Application as specified in Chapter XX – Subscription Conditions and Procedures of this Prospectus

Phase I Applicants Omani and non-Omani individuals and juristic persons who apply for a minimum of 200,100 Offer Shares and in multiples of 100 Shares thereafter up to a maximum of 2,815,600 Offer Shares, or 10 per cent of the Offer.

Phase II Applicants Omani and non-Omani individuals and juristic persons who apply a minimum of 1,000 Offer Shares and in multiples of 100 Shares thereafter up to a maximum of 200,000 Offer Shares.

Phase I Offer Phase I of the Offer as set out in Chapter XX – Subscription Conditions and Procedures.

Phase II Offer Phase II of the Offer as set out in Chapter XX – Subscription Conditions and Procedures.

Phase I Offer Closing Date The closing date of the Phase I Offer, which is described in Chapter XX – Subscription Conditions and Procedures of this Prospectus.

Phase I Offer Opening Date The opening date with respect to the Phase I Offer, which is described in Chapter XX – Subscription Conditions and Procedures of this Prospectus.

1 Pursuant to the promulgation of RD40/2018, RD 41/2018, RD42/2018 and RD43/2018, the PAEW has been renamed the Public Authority for Water and its previous duties as relate to electricity have been transferred to the Ministry of Oil & Gas. However, as the references to the PAEW referred to in this Prospectus relate to historical consents, actions and information we have retained reference to the PAEW for the sake of clarity.

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Phase II Offer Closing Date The closing date of the Phase II Offer, which is described in Chapter XX – Subscription Conditions and Procedures of this Prospectus.

Phase II Offer Opening Date The opening date with respect to the Phase II Offer, which is described in Chapter XX – Subscription Conditions and Procedures of this Prospectus.

Phase I Offer Period The period between the Phase I Offer Opening Date and the Phase I Offer Closing Date inclusive of both days and during which an Applicant can submit an Application including any extension as permitted by the CMA

Phase II Offer Period The period between the Phase II Offer Opening Date and the Phase II Offer Closing Date inclusive of both days and during which an Applicant can submit an Application

Plant/Musandam IPP The independent power plant with c. 120.7 MW of contracted power capacity at COD located in Tibat, Musandam, Sultanate of Oman.

PPA Power Purchase Agreement dated 13 April 2015 between Musandam Power and OPWP.

PPA Effective Date The effective date under the PPA, being 12 July 2015.

PPA Term Means the term of the PPA, this being 15 years after the SCOD, however, due to delay in testing by RAECO, the PPA expiry has been extended to 23 January 2032.

PPI The US producer price index, Series ID: PCU333611 (turbine and turbine generator sets, unit manufacturing) as published from time to time by the Bureau of Labor Statistics, Washington, DC, or such other agreed index from time to time.

Price Range Bzs 260 to Bzs 325 per Offer Share.

Project The development, ownership, financing, design, construction, maintenance and operation of the Plant.

Project Documents As defined in the Facilities Agreement including, but not limited to, the PPA, the NGSA, the ECA, the EPC Contract (as amended), the EPC Guarantee, EPC Performance Bond, the ESA, the O&M Agreement, O&M Performance Bond, the LTSA, the LTSA Guarantee, the UAS, the PFA, and the SHA.

Project Founders/ Founders/ Founder Members

Oman Oil Company SAOC, OETCL and LGI.

RAECO Rural Areas Electricity Company SAOC.

RAEC Code The grid code applicable to RAECO issued pursuant to the Sector Law, the 2nd version of which was issued and dated April 2010.

Reporting Accountants KPMG Lower Gulf Limited.

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PROSPECTUS

Repayment Date As defined in the Facilities Agreement.

ROP The Royal Oman Police.

SAOC Société-Anonyme-Omanaise-Closed, an Omani closed joint stock company.

SAOG Société-Anonyme-Omanaise-Générale, an Omani general public stock company.

Scheduled COD / SCOD The Scheduled Commercial Operation Date of the Plant under the PPA, being 18 December 2016.

Sector Law Royal Decree 78/2004, issued on 1 August 2004, as amended.

Security Documents As defined in the Facilities Agreement.

Selling Shareholders OOFDC, OETCL, and LGI.

Settlement Agreement The formal binding agreement between the Company and the EPC Contractor, dated 20 December 2018, setting out the terms upon which a dispute in relation to the EPC Contract was resolved and settled.

SHA The Shareholders’ Agreement dated 5 March 2015 between Oman Oil Company SAOC, OETCL and LGI relating to the Project.

Share An ordinary share of Musandam Power with a value of Bzs 100.

Share Capital The share capital of the Company.

Shareholder A shareholder of Musandam Power.

Shareholders’ Loans Means the loans provided by the Selling Shareholders to the Company pursuant to the terms of the agreements dated 16 November 2017 and 27 November 2017 as amended.

Site The area comprising 74,318m2 and identified as the area outlined dark blue on the plan attached to the UAS and forming part of Krooki number 8-54-005-01-012.

ST Steam turbine.

TCF Trillion Cubic Feet.

Summer Period In accordance with the terms of the PPA and the O&M Agreement. The period commencing at 00:00 on 1 April in a Year and ending at 24:00 on 30 September in the same Year.

Transfer Scheme The scheme determined, implemented and modified by the MONE, in accordance with the provisions of the Sector Law, for the purposes of transfer of the relevant assets and liabilities of MHEW to the substitute/successor entities pursuant to the Sector Law.

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Transmission System The lines and electrical installations of RAECO, with voltage equal to or greater than 132kV used for transporting electricity from production facilities to substations, or from production facilities to other production facilities, or from substations to other substations, or to or from any interconnector, premises or Transmission System and any electricity plant used for the purposes of dispatch.

TWh Terawatt-hours.

UAE United Arab Emirates.

USA United States of America.

US$/USD US Dollars, the lawful currency of the United States of America.

UAS The Usufruct Agreement relating to the Site dated 9 February 2015 between Musandam Power and the MoH.

Winter Period In accordance with the terms of the PPA and the O&M Agreement the period which commences at 00:00 hours on 1 October in each year and ends at 24:00 hours on 31 March in the following year.

WMU Wärtsilä Muscat LLC, a 100% subsidiary of Wärtsilä Corporation.

25

PROSPECTUS

Chapter II

Summary Information Relating to Musandam Power

This summary highlights information contained elsewhere in this Prospectus. It does not contain all the information that Applicants should consider before investing in the Offer Shares. All Applicants should read the entire Prospectus carefully, including the financial statements of Musandam Power set out in “ Chapter XXI – Historical Financial Statements” of this Prospectus. In addition, all Applicants should specifically read “ Chapter XIII – Risk Factors and Methods of Mitigation” of this Prospectus for more information about important risk factors that should be considered before applying for Offer Shares.

Overview of Musandam Power

Musandam Power’s core business activities are to develop, own and operate the Plant, a dual fuel reciprocating engine based power generation facility with a contracted power capacity of c. 120.7 MW, located in Musandam in Oman. The Plant comprises of 15 Wärtsilä 34DF dual-fuel reciprocating engines, running primarily on gas but capable of switching to Fuel Oil if necessary, and has been in commercial operation since 17 June 2017. It was completed at a cost of OMR 90.3 million. Musandam Power currently generates its revenues pursuant to a 15-year term PPA with OPWP, which is indirectly wholly-owned by the Government of Oman. The power produced from the Plant is fully contracted to OPWP and used to meet the growing power demands of Musandam Governorate during the term of the PPA and beyond.

The dual fuel reciprocating engine based power generation facility in the Plant is a proven technology that has been implemented globally on numerous projects. The efficient 34DF engines can reliably operate in high humidity and ambient temperatures that can reach 50 degrees celsius in the region. The ‘Smart Power Generation’ plant also requires almost no water for cooling, which was an important consideration in the selection of the solution.

The PPA imposes an obligation on Musandam Power to develop, operate and maintain the Plant at an agreed level of availability in respect of the contracted power capacity. From the COD, Musandam Power is required to make available electricity generating capacity of c. 120.7 MW and sell the electrical energy output exclusively to OPWP. In return, Musandam Power receives a tariff covering capacity charges, electrical energy charges and fuel charges from OPWP. The capacity charge is payable for each hour during which the Plant is available, and OPWP is obliged to pay capacity charges, regardless of whether or not such capacity is dispatched. The capacity charge is subject to reductions due to forced outages and scheduled outages. It is to be noted that while setting the capacity charges in the tariff, the OPWP has already accounted for the expected level of scheduled and forced outages anticipated under both the LTSA and O&M Agreements. The capacity charges were calibrated so that they cover inter alia the debt service, fixed operating and maintenance costs, taxes, insurance costs and return on capital. In addition to these capacity payments, Musandam Power also receives the electrical energy charge for the electrical energy delivered under the PPA to cover the variable costs. The fuel charge is calculated based on the consumption of natural gas calculated by the Plant model for electrical energy delivered and is in effect a virtual pass-through cost factor, subject to achieving the guaranteed heat rate (or guaranteed gas consumption). The Plant’s contracted power capacity is sold exclusively to OPWP in accordance with the terms of the PPA. Natural gas, supplied by the MoG, is the primary fuel with Fuel Oil as back-up fuel. Musandam Power has a long-term agreement with the MoG securing supply of natural gas over the contracted PPA period. In case of short-supply of natural gas by the MoG, the Plant can automatically switch over to Fuel Oil operation and the differential costs subject to meeting guaranteed heat rate under Fuel Oil operation would be paid by the MoG under the NGSA without any maximum cap. Musandam Power has Fuel Oil storage facility for more than 10 days of operation of the Plant at full load. The power is evacuated to the Musandam Power System, operated by RAECO.

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The operator of the Plant (pursuant to the 5-year O&M Agreement with an option for further extension) is WMU.

The Plant has been established under a BOO scheme, which enables it to be operated beyond the PPA term of 15 years, either by extending the PPA (if agreed to by OPWP), or by selling the power into an electricity pool which may exist at that time and/or to eligible customers.

As at the date of this Prospectus, the Issued and Paid-Up Share Capital of Musandam Power is OMR 7,039,000. The Selling Shareholders of Musandam Power are OOFDC, which owns 69.9 per cent shareholding, LGI, which owns 30 per cent shareholding and OETCL, which owns 0.1 per cent shareholding. For a profile of each of these Shareholders, please see “ Chapter VII – Shareholding Details” of this Prospectus.

Competitive Strengths

Musandam Power’s competitive strengths include the following:

• The only permanent dual fuel plant in Musandam Governorate using natural gas to cater to the bulk of the current and future projected electricity demand of the region;

• Well-established contractual framework like other IPP’s in Oman with long term power purchase agreement, ensuring cash flow protection against adverse events such as buyer risk events, change in laws and force majeure;

• Stable and predictable cash flows with pass-through of gas prices, in case of short supply of gas, Fuel Oil prices, and power demand until 2032;

• State-of-the-art power plant with very competitive heat rate, and flexibility of start-up and shutdown and switch over between gas operation and Fuel Oil operation;

• Experienced Selling Shareholders with an established track record;

• Fully operational Project operated by an experienced operator and maintenance contractor, WMU which is an affiliate company of the Original Equipment Manufacturer (OEM) of the technology provider, comprising of experienced and skilled operational personnel;

• Comprehensive LTSA for a period of 15 years covering the guarantee of output and gross heat rate with the OEM, via WMU;

• Strong and consistent demand for electricity, ensuring opportunities after the expiration of the current off-take contract; and

• Mitigation of fuel risks in terms of price and quantity with the MoG which protects MPC under the NGSA.

For further details in relation to Musandam Power’s competitive strengths, please see “Chapter X – Description of Musandam Power and Business Overview” of this Prospectus.

27

PROSPECTUS

Chapter III

General Information on the Offer and the Company

Name Musandam Power Company SAOG (under transformation).

Commercial registration number 1206853.

Date of registration 18/11/2014.

Registered office P.O. Box 799, Postal Code 118, Al KhuwairSultanate of Oman.

Principal place of business Tibat, Bukha, Musandam Governorate, the Sultanate of Oman.

Duration Unlimited.

Financial Year Commences on 1 January and ends on 31 December each year.

Issued and paid-up share capital OMR 7,039,000 divided into 70,390,000 Shares with a value of Bzs 100 per Share.

Number of Shares offered for subscription (Offer Shares)

28,156,000 Shares, representing 40 per cent of Musandam Power’s total Issued and Paid-Up Share Capital.

Type of Shares offered for subscription All the Shares issued by Musandam Power and the entire equity capital of Musandam Power consist only of ordinary shares. Each single Share carries the right to one vote at any general meeting, including any OGM or EGM.

Offer Price The price from within the Price Range discovered under the Phase I Offer in accordance with “ Chapter XX – Subscription Conditions and Procedures” which shall discover the price for the Phase II Offer (which shall include Offer Expenses of Bzs 2 per Offer Share).

Percentage of the total issued and paid-up share capital on Offer

40 per cent of the Issued and Paid-Up Share Capital of Musandam Power.

Names of Selling Shareholders and number of Shares being sold

• OOFDC: 19,638,810 Shares, representing 69.75 per cent of the Offer Shares.

• LGI: 8,446,800 Shares, representing 30 per cent of the Offer Shares.

• OETCL: 70,390 Shares, representing 0.25 per cent of the Offer Shares.

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Purpose of the IPO Musandam Power is undertaking the IPO to comply with the obligations stipulated in the PFA.

Persons eligible for the Phase I Offer Shares

Phase I Applicants.

Persons eligible for the Phase II Offer Shares.

Phase II Applicants.

Persons prohibited from subscribing to the Offer

The following Applicants shall not be permitted to subscribe to the Offer:

• Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit Applications in their personal names.

• Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names.

• Multiple Applications: An Applicant may not submit more than one Application.

• Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs).

All such Applications will be rejected without contacting the Applicant.

Proposed allocation procedure In case of oversubscription, for the purpose of allocating the Phase I Offer Shares between the eligible investor groups, the allocation of the Offer Shares will be made as follows:

• Phase I Applicants: 14,078,000 Offer Shares, being 50 per cent of the Offer, on a pro-rata basis to investors who have bid at or above the Offer Price.

Minimum limit for subscription by each Applicant

• Phase I Applicants: 200,100 Offer Shares and in multiples of 100 Shares thereafter.

• Phase II Applicants: 1,000 Offer Shares and in multiples of 100 Shares thereafter.

Maximum limit for subscription by each Applicant

• Phase I Applicants: 2,815,600 Offer Shares, representing 10 per cent of the Offer.

• Phase II Applicants: 200,000 Offer Shares

Phase I Offer Opening Date 3 November 2019

Phase I Offer Closing Date 7 November 2019

Phase II Offer Opening Date To be announced after close of Phase I Offer

Phase II Offer Closing Date To be announced after close of Phase I Offer

Value of the Shares Bzs 100.

Offer Expenses Bzs 2.

29

PROSPECTUS

Date of EGM for approval of the IPO 28 May 2019.

Issue Manager bank muscat SAOGP.O. Box 134, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2476 8888; Fax: +968 2479 8220URL: www.bankmuscat.com

Collection Banks Ahli Bank S.A.O.G.P.O. Box 545, Postal Code 116, Mina Al Fahal, Sultanate of Oman.Tel: +968 2457 7082; Fax: +968 2456 7841www.ahlibank.om

Bank Dhofar S.A.O.G.P.O. Box 1507, Postal Code 112, Sultanate of OmanTel: +968 2479 0466; Fax: +968 2478 4428www.bankdhofar.com

bank muscat S.A.O.G.P.O. Box 134, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2476 8064; Fax: +968 2478 7764www.bankmuscat.com

National Bank of Oman S.A.O.G.P.O. Box 751, Postal Code 112, Ruwi, Sultanate of Oman.Tel: +968 2477 8757/8610; Fax: +968 2477 8993www.nbo.co.om

Collection Brokers Gulf Baader Capital Markets S.A.O.C.P.O. Box 974, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2235 0729; Fax: +968 2235 0745www.gbcmoman.net

Ubhar Capital S.A.O.C.P.O. Box 1137, Postal Code 111, Al Seeb, Sultanate of OmanTel: +968 2494 9009; Fax: +968 2494 9099www.u-capital.net

United Securities LLCP.O. Box 2566, Postal Code 112, Ruwi, Sultanate of OmanTel: +968 2476 3329; Fax: +968 2450 3750www.usoman.com

Reporting Accountants KPMG Lower Gulf LimitedCBD, HSBC Bank Building, 4th FloorP.O. Box 641, P.C. 112, Ruwi , Sultanate Of OmanTel: +968 24709181; Fax: +968 24700839URL: www.kpmg.com

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Auditors Deloitte & Touche (M.E) & Co LLCMinaret Al Qurum Building, 6th Floor Al Qurum Area, P.O. Box 258, Postal Code 112, Ruwi Sultanate of OmanTel: +968 22354300; Fax: +968 22354333URL: www.deloitte.com

Legal Adviser to Musandam Power Al Busaidy, Mansoor Jamal & Co Barristers & Legal Consultants P.O. Box 686, Postal Code 112, Ruwi, Sultanate of Oman Tel: +968 2481 4466; Fax: +968 2481 2256 URL: www.amjoman.com

Marketing adviser OHI Leo BurnettP.O. Box 889, Postal Code 100, Muscat Sultanate of Oman Tel: +968 2463 6673; Fax: +968 2448 2746URL: www.ohileoburnett.com

Independent power sector expert IPA Advisory Limited74 Wigmore Street London, W1U 2SQ, United Kingdom Tel: +44 (0) 20 7659 9888, Fax: +44 (0) 20 7935 3059 URL: www.ipaadvisory.co.uk

31

PROSPECTUS

Chapter IV Summary of Expenses in Connection with the Offer

The expenses incurred by Musandam Power in connection with the Offer are estimated at OMR 818,000. The breakdown of the estimated expenses incurred by Musandam Power in relation to the Offer is contained in the table below:

Estimated Expenses OMR

Issue Manager fees 457,000

Collection Agent(s) fees 44,000

CMA fees 7,000

MCDC fees 33,000

Independent power sector expert fees 12,000

Legal fees 145,000

Reporting Accountant fees 39,000

Communications, advertising and publicity 51,000

Other contingency expenses 30,000

Total expenses in connection with the Offer 818,000

Offer Expenses of Bzs 2 per Offer Share collected 56,312

Difference between estimated total expenses incurred and Offer Expenses of Bzs 2 per Offer Share collected

761,688

The above figures are indicative estimates only. The Offer Price includes an amount equal to the Offer Expenses of Bzs 2 per Offer Share, which will be used to meet part of the expenses incurred by Musandam Power in relation to the Offer and any excess shall be borne by the Selling Shareholders. If all 28,156,000 Offer Shares are sold, total Offer Expenses of Bzs 2 per Offer Share collected will equate to OMR 56,312. Should the actual offer expenses be less than OMR 56,312, the Company will transfer the remaining balance to the Company’s reserves.

For the summary projected financial statements, please see “Chapter XIV – Summary Future Financials” of this Prospectus.

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Chapter V

Purpose of the Offer and Use of Proceeds

Purpose of the Offer

The Selling Shareholders are undertaking the IPO to comply with their obligations under the PFA, which require them, amongst other things, to make at least 40 per cent of the Issued and Paid-Up Share Capital of Musandam Power available for public subscription and to list such Shares on the MSM.

The Government has embarked upon an extensive program to enable international investors to participate in infrastructure projects in Oman. It has also been the Government’s intention that Omani investors should be able to participate in strategic projects of this nature. The Project Founders entered into the PFA with EHC on 15 March 2015, which required them to provide certain warranties and undertakings to EHC in respect of Musandam Power, the project company formed by the Project Founders for the purposes of entering into the PPA and undertaking the development, ownership and operation of the Project.

The PFA requires the Project Founders, within four years from the incorporation of Musandam Power, to offer 40 per cent of the shares of Musandam Power to the public. Accordingly, the Selling Shareholders are offering 28,156,000 Shares, equivalent to 40 per cent of the Issued and Paid-Up Share Capital of Musandam Power. Musandam Power has the requisite approvals to offer 40 per cent of Issued and Paid-Up Share Capital, including approval from PAEW pursuant to Article 13 of the Sector Law. Musandam Power has advised AER of the sale of 40 per cent of the Issued and Paid-Up Share Capital through an IPO.

Use of the Proceeds of the Offer

The Offer Shares do not represent an issuance of new Shares. The Offer Shares represent the selling/divestment of a part of the Shares currently held by the Selling Shareholders. The proceeds of the Offer shall therefore accrue to the Selling Shareholders in the ratio of Shares offered. The Bzs 2 per Share collected towards the Issue Expenses will cover a portion of the expenses incurred in relation to the IPO.

33

PROSPECTUS

Chapter VI

Objects and Approvals

Overview

Musandam Power was incorporated and registered as an SAOC on the Commercial Register on 18 November 2014. At an EGM held on 28 May 2019, it was resolved to convert Musandam Power into an SAOG.

Musandam Power’s core business activity is to develop, finance, design, construct, operate, maintain, insure and own a gas fired power generating facility at Musandam in Oman. Musandam Power is 100 per cent owned by the Selling Shareholders and, following this Offer, should the Offer be fully subscribed, the public will own 40 per cent of Musandam Power’s Issued and Paid-Up Share Capital.

Musandam Power presently holds the following permits and licences which are material to the on-going operation of its business:

Ministry of Commerce & Industry: Commercial RegistrationCommercial Registration Number: 1206853Date of registration: 18 November 2014Expiry date: 17 November 2019

Oman Chamber of Commerce & Industry: MembershipNumber: 12068853Expiry date: 22 November 2019

AER: Generation LicenceEffective date: 5 January 2017Expiry date: 4 January 2042

MECA: Environmental LicenceFinal Environmental PermitGranted on: 13 February 2016Renewed on: 30 January 2019Expiry date: 29 January 2022

Articles of Association

The principal objects for which Musandam Power is established are to design, construct, own, finance, operate and maintain an independent generating facility and associated gas interconnection facilities and other relevant infrastructure at Tibat in Musandam in the Sultanate of Oman.

A copy of the Memorandum and Articles is available for perusal at the registered office of Musandam Power during business hours on any business day.

Resolutions Passed

At the AGM held on 28th May 2019, among other things, the following resolutions were unanimously passed:

(a) conversion of Musandam Power from an SAOC to a SAOG, in connection with which the Selling Shareholders will offer to sell the Offer Shares for public subscription;

(b) appointment of bank muscat SAOG as Issue Manager for the IPO;

(c) appointment of Al Busaidy Mansoor Jamal & Co. as Legal Advisers to the Company for the IPO;

34

(d) appointment of IPA Advisory Limited as Independent power sector expert for the IPO;

(e) approval of the Selling Shareholders offering 40 per cent of Musandam Power’s Issued and Paid-Up Share Capital to the public, in the manner detailed below:

Name of Shareholder Number of Shares held prior to the

Offer

Offer Shares Number of Shares held following the

Offer

OOFDC 49,202,610 19,638,810 29,563,800

LGI 21,117,000 8,446,800 12,670,200

OETCL 70,390 70,390 0

Total 70,390,000 28,156,000 42,234,000(f) authorise any two (2) members of the Board of Musandam Power acting jointly, to carry out the

following matters:

• to approve and sign on behalf of the Board of Directors and Musandam Power the Prospectus and other documents relating to the IPO; and

• to do all other acts, sign all documents and file and register any documents with any relevant authority and obtain consents and approvals on behalf of Musandam Power and the Selling Shareholders which may be deemed appropriate or necessary in connection with the IPO including listing of Musandam Power’s shares on the MSM.

(g) appointment of OHI Leo Burnett as communications consultants for the IPO;

(h) appointment of KPMG Lower Gulf Limited as the reporting accountants for the IPO;

(i) approval of the proposed amendments to the Articles in accordance with the regulations issued by the CMA and the provisions of laws of Oman with respect to the form and content of the articles of association of SAOG’s;

(j) approval of the split in the value of the shares of Musandam Power from RO 1 to Bzs 100;

(k) to approve that the expenses incurred by Musandam Power in connection with the Offer shall be met from the Offer Expenses of Bzs 2 per Offer Share paid by the Applicants, and any expenses incurred by Musandam Power in connection with the Offer in excess of the collected Offer Expenses of Bzs 2 per Offer Share shall be borne by the Selling Shareholders; and

(l) to ratify all actions taken or delegated by the Board in relation to the IPO prior to the date of the EGM.

Continuing Obligations

In accordance with the CCL, all existing obligations of Musandam Power, prior to its transformation in to an SAOG, shall continue in the transformed company.

35

PROSPECTUS

Chapter VII

Shareholding Details

Equity Structure of Musandam Power at Incorporation

The Company was incorporated with an initial Authorised Share Capital of OMR 20,000,000, divided into 20,000,000 ordinary shares with a share value of OMR 1 each, and an Issued and Paid-Up Share Capital of OMR 500,000, divided into 500,000 ordinary shares. The following table provides details of the Issued and Paid-up Share Capital of the Company, as at the date of incorporation of the Company:

Name of Shareholder Number of Shares (F.V. OMR 1) Held

% of Total Aggregate value of Shares held(OMR)

Oman Oil Company SAOC 349,500 69.9 349,500

LGI 150,000 30.0 150,000

OETCL 500 0.1 500

Total 500,000 100.00 500,000

Changes in equity structure subsequent to incorporation and details of Musandam Power before the Offer

The Board of Musandam Power by written circular resolution dated 30 July 2017, agreed to increase the Issued and Paid-Up Capital of Musandam Power from OMR 500,000 to OMR 7,039,000, divided into 7,039,000 shares of value OMR 1 each, which was within the limits of Authorised Share Capital of Musandam Power, by converting 50% of the amount of the EBL amounting to OMR 6,539,000, obtained from each of:

• Oman Oil Company SAOC, in the amount of OMR 4,570,761 under the EBL;

• LGI, in the amount of OMR 1,961,700 under the LGI EBL; and

• OETCL, in the amount of OMR 6,539 under the EBL.

The new shares resulting from the increase in Musandam Power’s issued share capital were allotted to the shareholders in proportion to their pre-existing shareholding.

The purpose of this share capital increase was to generate additional funding for: (i) repayment by Musandam Power of the EBL and for cancelation of the guarantees provided by Oman Oil Company SAOC and LGI in respect of the EBL; and (ii) Musandam Power’s operations generally.

The equity structure, after giving effect to the conversion of 50% of the EBL into equity, was as follows:

Name of Shareholder Number of Shares held

% of Total Aggregate value of Shares held (OMR)

Oman Oil Company SAOC 4,920,261 69.9 4,920,261

LGI 2,111,700 30.0 2,111,700

OETCL 7,039 0.1 7,039

Total 7,039,000 100.00 7,039,000

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In October 2018, as part of an internal reorganisation of the Oman Oil Company SAOC’s subsidiaries the Shares in the Company held by Oman Oil Company SAOC were transferred to OOFDC, which is a wholly owned subsidiary of Oman Gas Company SAOC, which itself is a wholly owned subsidiary of Oman Oil Company SAOC.

The equity structure, following the transfer of shares from Oman Oil Company SAOC to OOFDC, is as follows:

Name of Shareholder Number of Shares held

% of Total Aggregate value of Shares held (OMR)

OOFDC 4,920,261 69.9 4,920,261

LGI 2,111,700 30.0 2,111,700

OETCL 7,039 0.1 7,039

Total 7,039,000 100.00 7,039,000

The following diagram illustrates the shareholding structure of Musandam Power immediately prior to this IPO:

Oman Oil CompanySAOC(OOC)

Oman Gas Company(OGC)

Oman GasInternation

Oman Oil FacilitiesDevelopmentCompany LLC

Oman EnergyTrading CompanyLimited (OETCL)

LG InternationalCorp (LGI)

Oman EnergyTrading CompanyLimited (OETCL)

Musandam Power Company SAOG (Under Transformation) MPC

Oman OilServicesLimited

100.00%

100.00% 99.56%

99.00%

69.90%

0.218%

30.00% 0.10%

0.218%

1.00%

At an EGM held on 28th May 2019, the Shareholders resolved to split the value of each share of Musandam Power from OMR 1 per share to Bzs 100 per share, by making the necessary amendment to the Articles in accordance with the New Commercial Companies Law.

37

PROSPECTUS

Equity Structure after the Offer

After the completion of the Offer, and assuming that all of the Offer Shares are sold Musandam Power’s issued and Paid-Up Share Capital will remain OMR 7,039,000 and will be held as follows:

Name of Shareholder Number of Shares held

% of Total Aggregate value of Shares held (OMR)

OOFDC 29,563,800 42.00 2,956,380

LGI 12,670,200 18.00 1,267,020

OETCL 0.00 0.00 0.00

Public 28,156,000 40.00 2,815,600

Total 70,390,000 100% 7,039,000

The following diagram illustrates the shareholding structure of Musandam Power following the IPO:

Oman Oil CompanySAOC(OOC)

Oman Gas Company(OGC)

Oman GasInternation

Oman Oil FacilitiesDevelopmentCompany LLC

Oman EnergyTrading CompanyLimited (OETCL)

LG InternationalCorp (LGI) Public

Musandam Power Company SAOG (Under Transformation) MPC

Oman OilServicesLimited

100.00%

100.00% 99.56%

99.00%

42.00%

0.218%

18.00% 40.00%

0.218%

1.00%

Brief profile of the Selling Shareholders:

• OOFDC / Oman Oil Company SAOC

OOFDC is a 99% owned subsidiary of OGC (the other 1% is owned by Oman Gas International (a Cayman Island company wholly owned by Oman Oil Company SAOC). OGC in turn is a 98% owned subsidiary of Oman Oil Company SAOC. The balance of 2% is owned 1% by Oman Oil Services Limited and 1% by OETCL; both these companies are foreign nominee shareholders of Oman Oil Company SAOC and are wholly owned by it. As a part of Oman Oil Company SAOC’s strategic exercise to restructure its business and create a diversified vertical conglomerate “Energy Infrastructure Company”

38

in the energy infrastructure sector, OOFDC was established in February 2016 and transferred in 2017 to OGC with the main purpose of acting as a holding company for the energy infrastructure businesses of Oman Oil Company SAOC under management by OGC.

The transfer of Oman Oil Company SAOC’s shareholding in MPC to OOFDC was completed in October 2018. Oman Oil Company SAOC continues to control and own its stake in MPC through its indirect holding of OOFDC (through 100% ownership in OGC).

Oman Oil Company SAOC was incorporated in 1996 as the national flagship company to pursue investment opportunities in the energy sector both inside Oman and internationally and is wholly owned by the Government. Oman Oil Company SAOC was established to play a pivotal role in the country’s efforts to diversify the economy and to promote Omani and foreign private sector investments. Oman Oil Company SAOC makes a significant contribution to the Government’s aim of strategically diversifying the national economy by investing across a variety of industrial and commercial activities in both domestic and international markets. Oman Oil Company SAOC has investments across seven sectors namely: exploration and production, energy infrastructure, shipping, power, petrochemicals, refining & marketing and metals. Oman Oil Company SAOC’s power investment portfolio includes investment in a 225 MW natural gas based independent power plant in Pakistan, a 2.5 GW natural gas based power plant in South Korea in addition to its captive power plants in Oman, 325 MW natural gas based power plant in Duqm dedicated for Duqm Refinery (under construction, hold through Oman Oil Company SAOC’s wholly owned subsidiaries) and 100 MW solar PV power plant in Oman dedicated for Petroleum Development Oman (under construction, hold through OOFDC). Oman Oil Company directly / indirectly owns and operates captive power plants at its seven company sites in the Sultanate of Oman. Oman Oil Company’s complete/partial ownership in captive power plant for its projects includes; 27.1 MW for Musandam Gas Plant; 20.13 MW for GPP Block 60; 60.6 MW for Oman India Fertilizer Company; 1,000 MW for Sohar Aluminium Company; 232 MW for Sohar refinery; 40 MW for Mina Al Fahal and 21 MW for Salalah Methanol.

As at the end of 2018, local investments were 70% of Oman Oil Company SAOC’s investments. Oman Oil Company SAOC’s key hubs in Oman are presented in the figure below:

Khazzan

Safa

Abu Tubul

Muscat

Suhar

Sur

Duqm

Karim

Mukhaizna

RimaSalalah

Musandam

Refinery & Marketing

Shipping & Trading

Exploration & Production

Energy Infrastructure

Petrochemicals

Metals & Mining

Others

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PROSPECTUS

Further information about Oman Oil Company SAOC is available at https://www.oman-oil.com/

• LGI

LG International Corp. (“LGI”) was established in November 1953 as part of LG Group, a leading global corporation which manages business through a group of more than 70 companies in electronics, chemicals, telecommunications, and services. Since its establishment, LGI has been part of the driving force behind South Korea’s trade and economic development. In the 1990s, LGI expanded its business in the development of natural resources and the construction of plants. Since 2000, LGI has invested in related fields, and thus became a true specialist in the development of natural resources and infrastructure. LGI has currently secured 80 business hubs globally, including Asia, Europe, and North America.

LGI pursues businesses in resource development (oil & gas, coal and copper; both upstream and downstream), power and infrastructure business domains. Investment in Independent Power Projects (“IPP”) form LGI’s core business strategy in the infrastructure domain based on LGI’s global experience in project development, procuring project financing, as well as EPC and O&M coordination. LGI takes a role as a project leader for LG Group’s investments or development business in infrastructure domains, coordinating various companies within LG Group to provide integrated solutions. LGI’s power portfolio includes; 700 MW thermal power plant in China, 41 MW hydro power plant in Indonesia (under construction), solar power plant in the US and a 72 MW gas based power plant in Korea. LGI Corporation’s consolidated revenue amounted to approx. KRW 10 trillion (US$ 9.0 billion) in FY2018. LGI Corporation is listed on the Korea Stock Exchange with an estimated market cap of KRW 650 billion (US$580 million).

For more information in relation to LGI is available on www.lgicorp.com/en.

• OETCL

Oman Energy Trading Company Limited is a limited company organised and existing under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda (“OETCL”). OETCL is a wholly owned subsidiary of Oman Oil Company SAOC. It has been agreed between the Selling Shareholders that OETCL shall divest its entire shareholding in the Company via the IPO.

Restrictions imposed on the Selling Shareholders

The following restrictions apply to the Selling Shareholders under the terms of the PFA:

• on and from the PPA Effective Date up to but excluding the date on which the Founders complete the IPO, Oman Oil Company SAOC, is required to, directly or indirectly, hold and maintain at least 50.1% of the Shares in Musandam Power;

• on and from the date on which the Founders complete the IPO up to and including the third anniversary of the COD, Oman Oil Company SAOC is required to, directly or indirectly, hold and maintain at least 30.060% of the Shares in Musandam Power; and

• from the PPA Effective Date up to but excluding the date on which the Project Founders complete the IPO, the other founders, are committed under the PFA to retain directly or indirectly, hold and maintain at least the following amount of Shares:

a) OETCL, at least 0.1 %, and,

b) LGI, at least 30%.

Thereafter, no shareholding restrictions apply to the Founders under the PFA. The Founders may, subject to applicable law, dispose of Shares in excess of the above thresholds with the consent of EHC.

40

The following restrictions apply to the Selling Shareholders under the terms of the ESRA:

• Oman Oil Company SAOC (as managing member) undertakes at all times until the termination date of Facilities Agreement to own directly, or through a wholly-owned subsidiary, at least forty-two per cent. (42%) of the Shares, in Musandam Power;

• Subject to the managing member’s obligations of Oman Oil Company SAOC above prior to (and including) the third anniversary of the COD, Oman Oil Company SAOC, LGI and OETCL cannot sell, assign, transfer or otherwise dispose of any of the ownership interest in the Company other than:

o to a wholly-owned subsidiary;

o in relation to LGI or OETCL only, to Oman Oil Company SAOC or to a wholly-owned subsidiary of Oman Oil Company SAOC; and

o in complying with its IPO obligations under the PFA.

• on and from the third anniversary of the COD until the fifth anniversary of the COD, Oman Oil Company SAOC and LGI together cannot sale sell, assign, transfer or otherwise dispose of in aggregate more than forty nine per cent. (49%) of its ownership interest in the Company other than

o to a wholly-owned subsidiary;

o in relation to LGI or OETCL only, to Oman Oil Company SAOC or to a wholly-owned subsidiary of Oman Oil Company SAOC;

o in complying with its IPO obligations to sale Shares under the PFA

The Founders may, subject to the prior written consent of the Lender sell, assign, transfer or otherwise dispose of Shares in excess of the above thresholds.

41

PROSPECTUS

Chapter VIII

Overview of the Omani Economy

Location

Strategically positioned at the crossroads of Asia and Europe, Oman has historically been a centre of trade and commerce. With a population of approximately 4.66 million as at November 2018, spread over a land area of 309,500 km2, Oman is a country with stable political, economic and social systems. Oman is administratively divided into 11 governorates (Al Dakhiliyah, A’Dhahirah, Al Batinah North, Al Batinah South, Al Buraimi, Al Wusta, Al Sharqiyah North, Al Sharqiyah South, Dhofar, Muscat and Musandam), which are further divided into 61 provinces or wilayats. Oman’s capital city is Muscat (in the Muscat Governorate), which is situated on the north-east coast of the country.

Government

His Majesty Sultan Qaboos bin Said Al Said came to power in 1970 and as Head of State he presides over the Council of Ministers. The Council of Ministers assists His Majesty in framing and implementing the general policies of Oman. The Basic Law serves as the basis of a constitution governing state affairs. The Basic Law establishes a bicameral system of elected representatives with advisory powers and numerous civil liberties for the population. Members of each chamber serve in an advisory capacity, although members of the lower chamber may also propose legislation.

International Relations

Oman maintains strong relations with its neighbours, as well as a wide range of Western and other countries. Oman has enjoyed political and economic stability over the past 40 years and is a member of various prominent international organizations, including the United Nations, the International Monetary Fund, the International Bank for Reconstruction and Development, and the World Trade Organization.

Regionally, Oman is a founding member of the GCC (alongside five other Arab Gulf states: Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates). Oman is also a member of the GCC’s Permanent Petroleum Cooperation Committee which is charged with preparing the long-term petroleum strategy of the GCC in accordance with its sustainability goals.

Key Economic and Social Indicators

The following table shows a selection of key economic and social statistics for Oman for the periods indicated:

Particulars 2013 2014 2015 2016 2017* 2018#

GDP at market prices (OMR billions) 30.60 31.45 26.9 25.7 27.9* 30.5

Population (millions) 3.86 3.99 4.20 4.60 4.65 4.65

Per capita GDP at market prices (OMR) 7,935 7,882 6,493 5,774 6,021 6,557

Annual inflation 1.1% 1.0% 0.1% 1.1% 1.6% 0.9%

MSM market capitalization (OMR billions) 13.0 14.5 15.8 17.3 17.9 18.2

Sources: NCSI CBO Annual Reports MSM Annual Statistical Bulletin World Bank figures * Provisional # Preliminary

42

Economy

Oman has a credit rating of “BB” by Standard & Poor’s as on 19 April 2019, “Ba1” by Moody’s Investors Service as on 5 March 2019 and “BB+” by Fitch as on 22 July 2019. The Omani Rial is pegged to the US Dollar at a fixed exchange rate of US$1 = OMR 0.385.

Since the discovery of oil, its extraction and exportation has served as the backbone of Oman’s economy and is the principal contributor to the Government’s revenues, exports and gross domestic product (GDP). The Dubai Mercantile Exchange’s Oman Crude Oil Futures Contract is now the third of three global crude oil benchmarks and sets the benchmark export price for crude oil produced in Oman and Dubai. Oman is the world’s 19th largest producer of oil, as well as the 26th largest producer of gas, and held the world’s 21st largest proven oil reserves and 28th largest proven gas reserves, according to The World Factbook published by the US Central Intelligence Agency as on 06 December 2018 https://www.cia.gov/library/publications/the-world-factbook/geos/mu.html. The Government continues to focus on diversification of the economy in order to gradually reduce its dependence on oil and hydrocarbon revenues, which still represents 31% of Oman’s GDP. The Government is committed to further non-oil industry growth into the future.

The graph below displays annual oil production in Oman during the period from 2011 to 2018:

380

360

340

320

300

mill

ion

barr

els

per a

nnum

2011 2012 2013 2014 2015 2016 2017 2018

323336

344 344358

368

354 357

(Source: Statistical Yearbook 2018 and February 2019 Monthly Statistical Bulletin, NCSI)

Public Finance

The data in this section is based on information gathered from publications of the NCSI, the Central Bank of Oman and other public sources

The Financial Affairs and Energy Resources Council (FAERC) are responsible for Oman’s fiscal policy, including the endorsement of the annual general state budget. A net fiscal deficit of OMR 2.9 billion was recorded in 2018 (provisional), compared with a net fiscal deficit of OMR 3.8 billion in 2017. The lower deficit in 2018 was primarily driven by recovery in oil prices which led to higher revenues and decline in expenditure due to cost rationalization initiatives of the Government.

In 2018, the Government recorded total revenues of OMR 10.3 billion (provisional) compared with total revenues of OMR 8.5 billion in 2017; an increase of 21.2%.The increase in revenue was primarily due to recovery in average oil prices from US$ 51.3/barrel in 2017 to c. US$ 68.0/barrel in 2018.

In 2018, the Government recorded total public expenditure of OMR 13.2 billion (provisional) compared to total public expenditure of OMR 12.3 billion in 2017; an increase of 5.7%. The increase in expenditure was on account of excess spending on development projects, expenses for some government units, electricity subsidies and debt servicing.

The Government’s total revenues have been budgeted at OMR 10.1 billion in 2019 on account of the increase in oil and gas revenue driven by production at the Khazzan field, and increase in non-oil & gas revenue driven by higher corporate taxes. The Government intends to continue to focus on cost rationalization across ongoing and investment expenditure as well as subsidies and has budgeted for

43

PROSPECTUS

total expenses of OMR 12.9 billion. The projected deficit for 2019 is OMR 2.8 billion proposed to be financed by a mix of domestic borrowing, international borrowing and financing from reserves.

Development Plans

National programme for enhancing economic diversification (Tanfeedh)

The National Programme for Enhancing Economic Diversification (Tanfeedh) is an action-orientated programme derived from the 9th Five Year Development Plan (2016-2020). The Programme aimed to contribute to the achievement of the Sultanate’s vision of economic diversification by addressing the challenged and difficulties faced by public, private and civil institutions in achieving their development objectives.

The methodology adopted in this programme depended on involving decision-makers in open discussions where all concerned sectors (government and private) took part in identifying the feasible solutions and initiatives to consolidate the national efforts. The methodology focused on creating a flexible and practical work environment, ensuring sustainable dialogue among stakeholders, setting comprehensive implementation frameworks (detailed action steps, timelines, KPI’s and entities responsible of implementation) in addition to ensuring transparency and accountability through publishing periodic updates.

The programme was tailored based on previously developed strategies, plans and relevant policies. It aimed at accelerating the pace of economic diversification for the sectors included in the 9th Five Year Development Plan through installing mechanisms geared towards the execution of specific projects and initiatives were developed by representatives from the public sector, private sector and civil society. By the end of the programme, each project/initiative had identified the authorities responsible for implementation, financing requirements, timeline and KPI’s to measure performance. Further, in order to support the concerned stakeholders and efficiently implement the outcomes of such national projects, the Implementation Support and Follow Up Unit (ISFU) was established on 17 October 2016 by Royal Decree No. 50/2016.

Privatization

In order to reduce reliance on borrowing by the Government, the Government is continuing its plan to divest or privatise certain assets. The initial steps being undertaken are to rationalize the holding of target assets, by transferring investments to a number of newly formed, sector-specific holding companies, or by transferring them to the ownership of the sovereign wealth funds. With the privatization programme, the Government is looking to maintain good levels of private investment to spur economic growth.

Currency and Financial System

The Oman Rial is the official currency of Oman. It is divided into 1,000 Baizas. From 1973 to 1986, the OMR was pegged to US$ at 1 Rial = 2.895 dollars. In 1986, the rate was changed to 1 Rial = 2.6008 dollars, which translates to approximately 1 US$ = 0.384497 Rial. The CBO buys US$ at 0.384 Rial, and sells US$ at 0.385 Rial.

The CBO was established in December 1974 by the Banking Law which sets out its functions and responsibilities. The CBO sets monetary policy independently after consulting with the Government about its fiscal policy objectives. The CBO also provides advice to the Government on economic policy. In addition to the formulation and implementation of monetary policy, these include regulation and supervision of the banking system and the execution of foreign currency transactions on behalf of the Government. The financial sector comprises commercial banks, Islamic banks, specialized banks, non-bank finance and leasing companies, and money exchange houses.

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The CMA commenced its duties on 9 January 1999. The CMA is a Government entity with financial and administrative independence. The principal role of the CMA is to supervise the capital market and insurance sectors in Oman and to develop the legal framework governing the same (for example, promulgating the Code. A number of entities are regulated by the CMA, including the MSM and MCDC. The CMA also aims to promote market efficiency for investors and raise awareness of investor rights and the importance of the capital market.

45

PROSPECTUS

Chapter IX

Regulatory Framework and Industry Overview

The information in this section has been derived from AER’s website, OPWP’s 7-year statement (2018-2024) issued in May 2018, OPWP’s website and other public sources.

Sector Overview

Until 1999, the power and related water activities were solely run by the Government through MHEW. In December 1999, the Council of Ministers approved the introduction of Government policy designed to facilitate the wholesale restructuring of and private sector participation in the electricity and related water sector in Oman. The Government began the process of preparing a new law to facilitate the restructuring and regulation of the electricity and related water sector in Oman. As a result, a new law for the sector, the Sector Law, came into force on 1 August 2004. The Sector Law provides the framework for the industry structure of electricity and related water in Oman. It provides the outline for the transfer of relevant assets and liabilities of the MHEW (subsequently split into the MoH and the PAEW) to a number of successor companies (“Transfer Scheme”).

The distribution of all the electricity and related water activities as per the “Transfer Scheme” involves the setting up of the OPWP and the EHC as well as the transfer of:

• Generation assets to RPC and Wadi Al-Jizzi Power Company SAOC;

• Generation and desalination assets to Al Ghubrah Power and Desalination Company SAOC;

• Transmission assets to OETC;

• Distribution and supply assets transferred to Majan Electricity Company SAOC, Mazoon Electricity Company SAOC and Muscat Electricity Distribution Company SAOC;

• Certain generation, distribution and supply assets to Rural Areas Company SAOC; and

• Establishing a single procurement company, OPWP as well as a holding company, EHC.

The Oman power system is divided into four regional systems partially connected via interconnectors:

• the MIS, which is the largest part of the system and covers the northern area of Oman;

• the Dhofar Power System, located in the Dhofar Governorate;

• Ad Duqm Power System, serving Al Wusta Governorate; and

• Musandam Power System, which serves the Musandam Governorate.

In December 2018, pursuant to the promulgation of RD40/2018, RD 41/2018, RD42/2018 and RD43/2018, the Public Authority for Electricity & Water of Oman has been renamed the Public Authority for Water and its previous duties as related to electricity have been transferred to the Ministry of Oil & Gas.

Oman Power and Water Procurement Company

OPWP is the single buyer of power and water for all IPP/IWPP projects within Oman. OPWP is responsible for ensuring that there is sufficient electricity and water production capacity available at the lowest cost to meet growing demands in Oman. OPWP undertakes long-term generation planning and publishes an annual seven-year statement, which identifies new IPP/IWPP projects to be competitively tendered and developed by private sector entities, in order to meet the future power generation and water desalination requirements of Oman. These projects are critical to the reliable and sustainable development of the power sector and the economic development of Oman.

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OPWP was established under the Sector Law, Article 74 which specifies its functions and duties including but not limited to:

• Securing production capacity and output to meet demand for electricity in the MIS and the Rural Areas Electricity System, in coordination with RAECO;

• Securing production capacity and output to meet demand for desalinated water in Oman;

• Meeting requirements for new electricity and desalinated water capacity in Oman, with new projects to be designed, constructed, financed, owned and operated by local and foreign investors; and

• the purchase, procurement, and management of production capacity and output, ancillary services and all goods and other services on the basis of economic purchase.

Electricity & Water Sector Ownership

The Omani electricity and water sector is partly government-owned and partly privatised. The chart below displays the ownership structure of the electricity and water sector in Oman:

Ministry of Finance Private Investors Public Shareholding

Oman Power and Water Procurement Company SAOC

Ghubrah Power andDesalination Company

ACWA Power SAOG

Al Kamil Power Company SAOG

United Power Company SAOG

Sohar Power Company SAOG

Rusail Power Company SAOG

SMN Barka Power Company SAOG

Dhofar Generation Company SAOG

Musandam Power Company SAOG

Sembcorp Salalah SAOG

Al Batinah Power Company SAOG

Al Suwadi Power Company SAOG

Phoenix Power Company SAOG

Sharqiya Desalination Company SAOG

Muscat City Desalination Company SAOG

Ad’dhahirah Generation Company (Under Construction)

Shinas Power Company (Under Construction)

Rural Area ElectricityCompany SAOC

Oman Elec. TransmissionCompany SAOC

Mazoon ElectricityDistribution Company

Muscat ElectricityDistribution Company

Dhofar Power Company

Majan Electricity Distribution Company

Wadi Jizzi Power Company

Nama Group

100%0.01%

65%

99.99%

35%

35%

35%

40%

35%

35%

35%

35%

35%

35%

35%35%

40%

65%

65%

60%

65%

65%

65%

65%

65%

65%

65%

65%

60%

100%

100%

100%

Contracted Capacity

OPWP’s portfolio of contracted power capacity in the Oman comprises of long-term contracts with 3 plants under construction, 12 operational plants of which 9 are in the MIS, 2 are in the Dhofar Power System, and 1 in Musandam Power System. Total contracted capacity is c. 11,133 MW.

Summary details of these plants and contractual arrangements are provided in the table below:

47

PROSPECTUS

ProjectContract

TypeContracted

CapacityPlant Type Plant Owner

Lead Developer

Contract Expiry

Rusail IPP PPA 694 MW

OCGTAl Rusail Power

Co. SAOC(2)

GDF SUEZ

2022Natural gas-fired

Manah IPP PPA 264 MW

OCGTUnited Power Co. SAOG(1) GDF SUEZ* 2020Natural gas-

fired

Al Kamil IPP PPA 291 MW

OCGTAl Kamil Power

Co. SAOG(1) GDF SUEZ 2021Natural gas-fired

Barka IWPP PWPA

397 MW CCGT/Steam

ACWA Power Barka SAOG(1)

AES Corporation

202191,200 m3/dMSF

Desalination

Natural gas-fired

Sohar IWPP PWPA

597 MW CCGT/Steam

Sohar Power Co. SAOG(1)

GDF SUEZ*

2022150,000

m3/dMSF

Desalination

Natural gas-fired

Barka II IWPP PWPA

688 MW CCGT/Steam

SMN Barka Power Co.

SAOC(2)

GDF SUEZ

2024120,000

m3/dRO

Desalination

Natural gas-fired

Sohar II IPP PPA 766 MW

CCGT/Steam Al Batinah Power Co. SAOG (1)

GDF SUEZ

2028Natural gas-fired

Barka III IPP PPA 766 MW

CCGT/Steam Al Suwadi Power Co. SAOG (1)

GDF SUEZ 2028

Natural gas-fired

Sur IPP PPA 2,018 MW

CCGT/SteamPhoenix Power

Co. SAOG (1)

Marubeni 2029

Natural gas-fired

Sohar IV IPP# PPA 1,744 MW

CCGT/SteamShinas Power

Company SAOCACWA 2034Natural gas-

fired

Ibri IPP# PPA 1,539 MW CCGT/Steam AD’Dhahirah Generation

Company SAOCACWA 2034Natural gas-

fired

48

ProjectContract

TypeContracted

CapacityPlant Type Plant Owner

Lead Developer

Contract Expiry

Raysut IPP PPA 276 MW

OCGT

Dhofar Generation Co.

SAOCACWA 2033

Natural gas fired

(fuel oil as back-up)

Salalah II IPP PPA 445 MW

CCGT

Dhofar Generation Co.

SAOCACWA 2033

Natural gas fired

(fuel oil as secondary fuel and back-up)

Salalah IWPP PWPA

445 MW CCGT

Sembcorp Salalah Power & Water Co.

SAOG(1)

Sembcorp 202768,000 m3/d

Natural gas fired

(fuel oil as secondary fuel and back-up)

Dhofar I Wind IPP# PPA 50 MW Wind turbine RAECO Masdar 2033

Musandam IPP

PPA 120.7MW

Reciprocating engine

Musandam Power Company

SAOC

Oman Oil Company

SAOC & LGI2032

Natural gas fired

(fuel oil as secondary fuel and back-up)

Note 1: Denotes a company listed on the MSM.

Note 2: Denotes a company whose holding company is listed on the MSM.

* Sold its stake to MENA Infrastructure Fund

# Under construction

Main Interconnected System

The transmission grid in Oman is partitioned into 3 geographical regions (north, central and south). The MIS covers the majority of Oman, serving approximately 999,825 electricity customers. The MIS comprises:

• a number of power generation facilities owned and operated by various companies and connected by a single 220/132 kV transmission grid owned by OETC; and

• Three distribution networks owned and operated by Muscat Electricity Distribution Company SAOC, Mazoon Electricity Company SAOC and Majan Electricity Company SAOC, respectively.

The MIS is connected to Abu Dhabi via a 220kV link at Mahadha. In addition, several of the power generation facilities connected to the MIS produce desalinated water in conjunction with electricity to meet the water requirements of erstwhile PAEW (renamed as Public Authority for Water. All electricity related matters under the purview of PAEW has been transferred to Ministry of Oil & Gas) and Majis Industrial Services Company SAOC, the entities responsible for water services in the MIS.

49

PROSPECTUS

Dhofar Power System

The Dhofar Power System covers the city of Salalah and surrounding areas in the Governorate of Dhofar. The Dhofar Power System serves approximately 110,063 electricity customers. The Dhofar Power System comprises of transmission and distribution of power and the water desalination capabilities of:

• Salalah IWPP, contracted for 445 MW electricity generation capacity and 15 MIGD desalinated water capacity;

• Power station located in Raysut, operated by Dhofar Generating Company SAOG pursuant to a concession agreement with the Government and contracted for a capacity of 718 MW; and

• the transmission and distribution system owned and operated by Dhofar Power Company SAOC pursuant to a concession agreement signed with the Government in 2001.

The Dhofar Power System also has contingency reserves via the interconnection with the 132 kV link between Thumrait and Harweel, owned by PDO and completed in 2012. Its purpose is to support reserve-sharing between the two systems, providing improved reliability by allowing each system access to unused reserves in contingency scenarios.

Ad Duqm Power System

Historically, all requirements to the growing demand for electricity in Ad Duqm have been within the jurisdiction of RAECO. Considering the relatively small energy requirements of these areas, and the distance from the MIS and Dhofar Power System, they have been met most economically by utilizing diesel-fired generators, located close to the areas of consumption.

Demand in this region has been largely dominated by residential and small commercial consumers. This, however, is expected to change rapidly due to the recent and continuing development of large commercial, tourism, and industrial projects.

Musandam Power System

Historically, power demand in Musandam Governorate has been serviced by small diesel fuelled power plants operated by RAECO. As per OPWP 7 year statement (2019-2025) released in July 2019, the electricity demand in the Musandam Governorate is expected to increase driven by future developments aimed to boost touristic, economic, and commercial activities. As per the demand projections provided by RAECO, peak demand is expected to grow from 83 MW in 2018 to 128 MW in 2025, an average increase of 6.4% per year.

OPWP has also prepared electricity demand projections for the Musandam Governorate on the basis of alternate assumptions of annual growth rates for underlying demand, materialization of identified bulk consumers, and expectations for the coincidence of bulk consumers’ peak demand with the peak demand on the Musandam Power System. OPWP has provided two scenarios of power demand based on its assumptions, Low Case and High case.

The Low Case scenario assumes a growth rate of 6% for peak demand, increasing to 121 MW by 2025. The High Case scenario assumes a quicker materialization of bulk consumers, as well as increased tourism and fishery activities. Peak demand is projected to grow by an average of 7% per year, from 83 MW in 2018 to 132 MW in 2025.

50

The three demand scenarios are shown in the table below:

140

130

120

110

100

90

80

in M

W

83

2018 2019 2020 2021 2022 2023 2024 2025Actual

RAECO Expected Case OPWP Low Case OPWP High Case

132128

121

Actual 2018

2019 2020 2021 2022 2023 2024 2025 Average %

Growth

MW

RAECO expected demand:

83 90 94 98 102 108 122 128 6

OPWP Low Case demand: 83 85 87 92 96 101 115 121 6

OPWP High Case Scenario:

83 93 97 101 105 111 126 132 7

Sources of Power

RAECO owns and operates six power stations distributed near to load centres in the Musandam Governorate. They are all diesel-fired generators, with combined installed capacity of about 83 MW. With the exception of three diesel generator units with a total capacity of around 27 MW, the majority of units are nearly the end of their technical life and are expected to be decommissioned once other sources of capacity are made available.

The Plant is now the primary source of electricity in the region and is the only plant with a fixed capacity in the Musandam Governorate is expected to supply bulk of the electricity demand in the near future.

Future Procurement of OPWP and Market Development Activities • MIS: Three potential procurement activities may be anticipated in MIS over the period from 2019 to

2025. This includes:

i. Manah IPP sale / New PPA: Manah IPP originally procured under BOOT contract is expected to be transferred to the Government in April 2020. Government has instructed OPWP to conduct a sale of the plant including a new PPA.

51

PROSPECTUS

ii. Power 2022: OPWP has initiated the process of 2022 procurement initiative which includes a competitive tender for long-term PPA’s commencing in 2022. The tendering process would include a number of existing P(W)PAs which are scheduled to expire by 2022 namely Al Kamil IPP, ACWA Power Barka IWPP, Rusail IPP, and Sohar IWPP. OPWP has announced that the contracts with the government owned 325MW Wadi Jizzi and 475MW Ghubrah power projects will not be extended after 2018.

iii. Power 2024: In 2020, OPWP plans to initiate the procurement process of long term PPA’s commencing in 2024.

• Dhofar Power System: The Salalah II IPP is expected to provide sufficient capacity to meet the generation security standard until around 2023. Procurement activities to meet the next plant, nominally the Salalah III IPP (or potentially IWPP), are expected to begin around 2019, subject to demand requirements. A 50 MW wind farm (Harweel Wind Farm) is being developed as a joint project of RAECO and MASDAR. OPWP’s involvement has been to develop the PPA under which the project would sell power to OPWP. The EPC contract for the project has been tendered, and award is pending a decision by the developers. OPWP plans to develop a second wind energy farm for COD in 2022, with capacity of 150 MW.

Development of electricity spot market is progressing as per schedule. AER has approved the market rules in 2017 and OPWP has commenced the procurement of Market Management System, and is staffing the Market Operator organization, which will be within OPWP. The market is scheduled to begin operational trials in MIS in 2019 and commercial operation in 2020.

Government of Oman has been focusing on increasing the contribution of electricity generation through renewable energy developments in various forms. OPWP’s renewable energy development plan currently comprises solar, wind, and waste-to-energy (WTE) projects. OPWP plans to procure more than 2,600 MW of renewable energy (RE) IPPs by 2025. In December 2017, OPWP announced a tender for a 500 MW solar PV project to be located at Ibri. This is the first in a series of RE IPP tenders that are planned to achieve the Government’s target of 10% RE share of electricity generation by 2025.

52

Chapter X

Description of Musandam Power and Business Overview

Overview

Musandam Power is the first independent power plant in the Musandam Governorate. The Company’s core business activity is to develop, own and operate the Musandam Independent Power Plant. The Plant is a dual fuel powered (natural gas as primary fuel and Fuel Oil as alternative fuel) reciprocating engine power generation plant with a contracted power capacity of c. 120.7 MW and is located on a coastal site within Musandam Governorate, approximately 500km from Muscat in Oman. It has been in full commercial operation since 17 June 2017.

The Company currently generates its revenues pursuant to a 15-year term PPA with OPWP, which is indirectly wholly-owned by the Government. The power produced from the Plant is fully contracted to OPWP and used to meet the growing power demand of the Musandam Governorate during the term of the PPA and beyond. The Plant has the capability to supply majority of the peak demand of 132 MW (Under OPWP High Case) estimated by 2025 as per OPWP’s 7 year statement (2019-2025). Natural gas is the primary fuel with Fuel Oil as back-up fuel. The Company has signed a long-term NGSA with the MoG to secure supply of the fuel over the contracted PPA period. The Plant’s output is connected to RAECO grid through 132 kV line built by RAECO and serves the Musandam Power System. WMU, a leading global corporation which manufactures and services power sources and other equipment in the energy and marine markets is the EPC Contractor and O&M contractor (pursuant to a 5 year O&M Agreement). Further, the Company has also signed a 15 year LTSA with WMU to ensure successful long term operating performance of the Plant.

The following diagram displays the approximate location of the Plant:

MusandamPower Company

Suhar

Muscat

Sur

Hayma Ad Duqm

SalalahRaysut

Mirbat

Sultanateof Oman

Capital .............................

Willayah / Town ............

Area ................................

This map is not an authority on Administrative Boundaries.

Al KhaburahMatrah

SamailJabal Shams

Shinas

Al Huwaysah

Fuhud

MasirahAl Khaluf

Thumrayt

Marmul

Sawqrah

JuzurAl Hallaniyyat

JuzurAd Dimaniyyat

Qurayyat

Musandam(Sultanate of Oman)

Khasab

Madha(Sultanate of Oman)

53

PROSPECTUS

The Company was incorporated with the commercial registration number 1206853 and registered as an SAOC on 18 November 2014. At an EGM held on 28th May 2019, it was resolved to transform the Company into an SAOG. The legal and commercial name is Musandam Power Company SAOG. (under transformation) and its registered office is located at P.O. Box 799, Postal Code 118, Muscat, Sultanate of Oman.

As at the date of this Prospectus, the Issued and Paid-Up Share Capital of the Company is OMR 7,039,000 divided into 70,390,000 Shares of Bzs 100 each. The Selling Shareholders of the Company are OOFDC, which owns 69.9 per cent, OETCL, which owns 0.1 per cent, and LGI, which owns 30 per cent, for a profile of each of the Selling Shareholders and their contribution, please see “ Chapter VII – Shareholding Details” and “ Chapter XII – Project Cost and Sources of Financing” of this Prospectus.

History and Background

Historically electricity demand of the Musandam Governorate was met through small diesel powered plants operated by RAECO. In 2011, OPWP appointed advisors to conduct a feasibility study to develop a new gas-fired power plant. A special high power committee was constituted, comprising of representatives from the Tender Board, MoF, AER, and PAEW, to oversee the IPP procurement process. Oman Oil Company SAOC was selected as the lead developer for the Plant in a ‘closed’ procurement process. Oman Oil Company SAOC signed the SHA with LGI dated 5 March 2015 for the purpose of building and operating the Plant.

The pre-qualification process for EPC Contractors was concluded in April 2013. The PPA was signed with OPWP and the NGSA was approved with the MoG, and ratified by the MoF in July 2015. The Plant has been established under a BOO scheme, which enables it to be operated beyond the PPA term of 15 years by extending the PPA (if agreed to by OPWP) or by selling power to potential customers should a merchant market exist at that time. The expected useful life of the Plant is up to 40 years, provided the Plant is operated and maintained in accordance with good utility practice.

The PFA requires the Project Founders to float 40% of the Shares in Musandam Power on the MSM through an IPO. The Plant’s total project cost was OMR 90.3 million. For more details please refer to “ Chapter XII – Project Cost and Sources of Financing” of this Prospectus.

The table below summarises the main events of the Project’s implementation:

Date Event

5 July 2011 Memorandum of Understanding signed between Oman Oil Company SAOC and LGI

25 November 2014 Signing of the EPC Contract and LTSA and Notice to Proceed issued to EPC Contract

15 March 2015 Signing of the PFA

13 April 2015 Signing of the PPA

15 July 2015 Agreement on Financing Documents and Financial Close Date

17 June 2017 COD

23 January 20321 Expiry of the PPA

On 25 November 2014, WMU was appointed as the EPC Contractor and Long Term Service Provider for the Project under an EPC Contract and LTSA respectively. Subsequently, WMU was also appointed as the Operator on 16 June 2015 under an O&M Agreement, to operate the Plant and comply with all the commitments of the Company under the PPA to OPWP as well as follow other regulatory requirements.

1 The OPWP by letter, dated, 16 January 2018, confirmed to extend the term of the PPA to 23 January 2032 due to occurrence

of a 37 day delay by RAECO in testing the Plant and the non-availability of RAECO’s grid connection on the scheduled date.

54

The Plant’s 120.7 MW capacity comprises of 15 Wärtsilä 34DF reciprocating engines. These dual-fuel units use natural gas as the main fuel and Fuel Oil as back-up fuel. The Plant is capable of meeting the dynamic load demand in the rapidly developing Musandam Governorate, responding to load variations between 10 MW and 120.7 MW. It has the capability to operate in high humidity and extreme temperatures of up to 50 degrees celsius (50°C).

The reciprocating engines technology is well suited for flexible peaking and intermediate generation of Musandam Governorate. This technology offers competitive heat rates, multi-shaft reliability, industry leading ramp rates and start up times to compete in ancillary services markets. The Plant’s ability to run in different load demand with reliable performance enabled it to be the most flexible power plant that can handle island mode in the Musandam 132kV grid.

Select Financial Data

The table below shows select financial data of the Company for the periods indicated:

Select Financial Data (OMR ‘000): As at, and for the year ended, 31 December

2016 2017 (Restated)

2018

Revenue for the period - 9,292 16,496

Profit (loss) after tax for the period (74) 697 3,721

Total assets at the end of the period 67,072 94,432 89,162

Total liabilities at the end of the period 66,751 86,875 77,884

Cash and cash equivalents at the end of the period 720 5,046 7,056

For the complete financial statements of the Company, please see “ Chapter XXI – Historical Financial Statements” of this Prospectus.

Competitive strengths

The Company’s competitive strengths include:

The only independent power plant in Musandam Governorate catering to the bulk of the current and future projected electricity demand of the region

The Plant with contracted capacity of c. 120.7 MW is the only independent power plant using natural gas as primary fuel servicing the electricity demand of the Musandam Governorate. Until the COD of the Plant, electricity demand in the Musandam Governorate was serviced through six small diesel fired generators owned and operated by RAECO with total installed capacity of c. 83 MW. With the exception of three units with capacity of c. 27 MW, rest of the units are at the end of their technical life. These plants are expected to be decommissioned as the Plant reaches its peak capacity and substitutes the supply.

As per OPWP 7 year statement (2019-2025), demand in Musandam Governorate is expected to reach to c. 132 MW by 2025, implying a CAGR of c. 7% (2018-2025) under OPWP “High Case” and up to c. 128 MW, implied CAGR of c. 6% (2018-2025) under “RAECO Expected Case”. The demand is expected to be driven by future developments aimed to boost touristic, economic, and commercial activities. The Plant being the only permanent power plant in Musandam is expected to meet most of the demand in the region.

55

PROSPECTUS

Well-established contractual framework with long term power purchase agreement, ensuring cash flow protection against adverse events such as buyer risk events, change in law and force majeure

The Project represents one of the twelve (12) operational independent and government owned or government majority owned power production projects in Oman. It benefits from a well-established contractual framework.

Oman has an outstanding track record of tendering of IPPs and IWPPs in the private sector dating back more than 20 years. Oman is a pioneer of private power in the GCC and the proven contractual framework, enshrined in the Sector Law, is well established. The first IPP in Oman began generating electricity in 1996 and the track record of execution of a compliance with power (and water) purchase agreements since 1993/1994 makes Oman a preferred destination for IPP/IWPP developers. The procurement, ownership and contractual framework template being adopted for the Project is similar to those adopted with the other IPP/IWPPs in Oman predating the Project.

The entire power output from the Company’s installed capacity is contracted with OPWP, through a single long-term PPA which expires on 23 January 2032. Beyond the PPA period, the Company shall either extend its PPA with OPWP or sell its output in a liberalized market in a power pool or to eligible customers. Its decision to do so will depend, amongst other factors, on the evolution of the market regulations set by the AER.

The PPA provides for various buyer risk, force majeure events and change in law protection which outline the relief that the Company may be entitled to receive should certain specified events occur that hinder the Company from performing its obligations under the PPA, in accordance with and subject to the terms of the PPA. For a more detailed summary on the conditions required to be fulfilled by the Company in order to receive relief from buyer risk and force majeure events, please refer to the “ Chapter XI - Contractual Framework” of this Prospectus.

Stable and predictable cash flows resilient to potential shocks in gas prices and power demand until 2032

The Company has signed a 15 year PPA with OPWP on similar terms as the other IPP’s in Oman. Under the PPA, the Company receives capacity charges from OPWP for the contracted power capacity of the Plant, which are periodically tested. Such capacity charge comprised approximately 78 per cent of the total revenues of the Company in FY 2018 (excluding variable energy charges and fuel revenue, which is virtually a pass-through). These capacity charges are payable by OPWP regardless of whether the actual output of the Plant is dispatched by OPWP through licensed system operator RAECO, and regardless of whether the Company is instructed by OPWP through RAECO to generate and deliver power. This means that, subject to certain limited exceptions, OPWP is obliged to pay capacity charges to the Company for 100 per cent of the available power capacity of the Plant, irrespective of whether or not power is actually dispatched. The Company’s capacity charges are calculated so that they cover its debt service and other fixed costs, including fixed operating and maintenance costs, insurance costs, taxes and capital returns. Fuel revenues and charges are calculated based on the consumption of natural gas calculated by the Plant model for electrical energy output delivered and therefore the gas price and volume is in effect a virtual pass-through cost, subject to achieving the guaranteed heat rate (or guaranteed gas consumption). In addition, for the power that is made available, OPWP also pays the Company a variable output charge to cover variable operating costs. OPWP, a Government owned entity, as the off-taker and the contractual counterparty responsible to pay, is an entity with a high credit rating and an excellent track record of timely payments.

Accordingly, the Company has strong predictability of stable (albeit seasonal) cash flows that are sheltered from volatility of demand for power, given that the Company is partly paid on an availability basis.

56

State-of-the-art Plant with competitive heat rate and flexibility

The Plant comprises of 15 Wärtsilä 34DF dual-fuel reciprocating engines running primarily on gas but capable of switching to Fuel Oil if necessary. Unlike other power plants in Oman which are based on gas turbines, the Plant is based on reciprocating engine technology. Musandam electrical grid is independent from the Oman national grid and the load capacity can range widely from 10 MW to the nominal capacity of 120.7 MW, moreover the remote location of the Plant and unfavourable climate presents additional challenges for the Plant. Wärtsilä’s reciprocating engines are optimally designed to operate with natural gas and Fuel Oil, operate at extreme temperatures of up to 50°C and deliver superior performance in highly humid conditions, very competitive heat rate, and flexibility of start-up and shutdown and switch over between natural gas operation and Fuel Oil operation. The Plant design is also suited to island mode of operations and has low water requirement for cooling. Moreover, the Plant is designed to provide high flexibility to effectively handle the load variation which results in cost saving for the Company.

Experienced Selling Shareholders with an established track record

The Company has the backing of Selling Shareholders with a proven track record of implementing large and complex projects in Oman, GCC and globally. It should be noted that the Selling Shareholders will remain major shareholders in the Company immediately after the IPO, with a collective holding of 60%.

Oman Oil Company SAOC, the ultimate parent company of OGC and OOFDC, is the national flagship company established to pursue investment opportunities in the energy sector both inside Oman and internationally and is wholly owned by the Government. Oman Oil Company SAOC has investments across seven sectors namely: exploration and production, energy infrastructure, shipping, power, petrochemicals, refining & marketing and metals. Oman Oil Company SAOC’s power investment portfolio includes investment in 225 MW natural gas based independent power plants in Pakistan and a 2.5 GW gas based power plant in South Korea in addition to its captive power plants in Oman. Oman Oil Company directly / indirectly owns and operates captive power plants at its seven project company sites in the Sultanate of Oman. Oman Oil Company’s complete / partial ownership in captive power plant for its projects includes; 27.1 MW for Musandam Gas Plant; 20.13 MW for GPP Block 60; 60.6 MW for Oman India Fertilizer Company; 1,000 MW for Sohar Aluminium Company; 232 MW for Sohar refinery; 40 MW for Mina Al Fahal; and 21 MW for Salalah Methanol. Oman Oil Company SAOC’s partial ownership (indirectly held through subsidiaries) of the power projects under construction in Oman includes 325 MW natural gas based power for Duqm Power Company and 100 MW Solar PV power plant for Amin Renewable Energy Company. Oman Oil Company SAOC has a strong track-record of owning and successfully managing investments and projects in Oman and globally. Some of the marquee projects and investments of Oman Oil Company SAOC include Salalah LPG, Musandam Gas Plant, Khazzan Gas Field and Duqm Refinery.

LG International Corp. (LGI) is part of LG group, one of the global leading corporations with a portfolio of companies operating in diversified fields such as electronics, chemicals, telecommunications and services, and operates worldwide through more than 70 companies combined. LGI pursues businesses in resource development (oil & gas, coal and copper; both upstream and downstream) and infrastructure business domains, including investment in power projects. LGI possesses global experience in project development, procuring project financing, as well as EPC and O&M coordination. When LG Group invests or develops business in infrastructure domains, LGI takes a role as a project leader, coordinating various companies within LG Group to provide integrated solutions.

LGI has a proven track-record of both investing in and developing large and complex projects as an EPC contractor across the world and in various fields including, oil & gas, cement, power, metals and mining, commodities and logistics. LGI has extensive experience of executing the role of project developer that manages the overall business as an investor, project financing, materials supplier,

57

PROSPECTUS

construction and maintenance company while carrying out various industrial infrastructure projects LGI’s power portfolio includes, 700 MW thermal power plant in China, 41 MW hydro power plant in Indonesia (under construction), solar power plant in the US and a 72 MW gas based power plant in Korea. LGI Corporation’s consolidated revenue amounted to approx. KRW 10.0 trillion in FY2018. LGI Corporation is listed on the Korea stock exchange with an estimated market cap of c. KRW 650 billion.

For further information in relation to the Selling Shareholders, please see “Chapter VII – Shareholding Details” of this Prospectus.

Fully operational Project operated by an experienced Operator comprising of experienced and skilled operational personnel

The Plant is completed and has been in full commercial operation since 17 June 2017, thereby eliminating any construction risk. The existing operational Plant has achieved excellent performance parameters in 2018 with a commercial reliability of 99.9% which evidences efficient plant operation.

The Company has selected WMU, 100% owned subsidiary of Wärtsilä Corporation, a global leader in smart technologies and complete lifecycle solutions for the energy and marine markets as the Operator. Through the O&M Agreement and LTSA Agreement the Company has largely insulated itself from major operating and maintenance risks for the duration of the PPA. Wärtsilä with a history of c. 180 years and a global market share of c. 13% in market for gas and liquid fuel power plants (<500 MW) brings rich experience and best in class global capabilities, which is important for the present and future success of the Project. Wärtsilä Corporation has delivered over 4,800 power plants ranging from 10 to over 600 MW in 177 countries worldwide with a total installed capacity of 70 GW as of 2018. Wärtsilä Corporation is listed on Nasdaq Helsinki with a market capitalisation of c. US$ 9.0 bn and FY18 revenue of c. US$ 5.8 bn.

The Company also benefits from an experienced Management team in addition to the experienced personnel employed by WMU. Collectively, the Plant benefits from extensive management expertise and operational knowledge accumulated through decades of collective experience. The presence of such experienced professionals, management and founders also contributes to the pursuit of good corporate governance and ensures that the Company benefits from the senior management expertise of the Project Founders’ organizations. The Management is strongly supported by:

• A highly-trained Plant staff of approximately 50 employed by WMU;

• The O&M Agreement entered into with WMU; and

• LTSA with WMU.

The presence of such experienced professionals and Management is important for present and future success and achievement of business strategies. For further details relating to the Management team of the Company, please see Chapter XVIII – Corporate Governance of this Prospectus.

Strong and consistent demand for electricity, ensuring opportunities after the expiration of the current off-take contract

Overall demand for electricity in the Musandam Governorate is expected by RAECO and OPWP to increase significantly over the coming years, driven by developments aimed to boost tourism, economic and commercial activities. As per IPA’s report, annual and peak demand for electricity are expected to grow from 438 GWh and 96 MW respectively in 2018 to 852 GWh and 186 MW in 2032, when the Project’s PPA is due to expire. IPA anticipates that the capacity of existing plants and firm new builds in Musandam Governorate will not be sufficient to cover demand thereafter. Therefore, based on the results of IPA’s market analysis, the Plant is expected to remain economically valuable after the expiration of PPA term. Based on the results of the load forecast and the environment-friendly technology of the Plant, the Company is expected to remain economically useful in the post-PPA period.

58

Mitigation of fuel risks

The Plant’s primary fuel is natural gas. A long term NGSA entered into by the Company secures the supply of natural gas over the contracted PPA period. Under the NGSA, the MoG is responsible for the procurement and delivery to the Plant of all of its natural gas requirements. All natural gas delivered to the Plant by the MoG must meet minimum quality standards. Any increase in the price of natural gas charged by the MoG is directly passed through to OPWP under the PPA. Also, the Company is not responsible for and is shielded against failures of the MoG to deliver natural gas in accordance with the provisions set out in the NGSA. Therefore, the Plant’s gas procurement risk is largely mitigated in terms of quality, quantity and price. In the event that natural gas is not available, the Plant operation will automatically change over to Fuel Oil operation and the Company is entitled to receive capacity charges as well as variable fuel cost from OPWP assuming that the Plant is operated as gas mode and provided that the Company is not in breach of its obligations regarding the operations of the Plant. The Plant can be made operational using Fuel Oil, and any incremental costs for the use of Fuel Oil is borne by the MoG.

In the event, among others, of the non-availability of natural gas or a disruption in the natural gas supply system, the Company has an obligation under the PPA to maintain a backup Fuel Oil supply and storage for ten (10) days of full load at the Plant site, which it complies with at all times. Fuel Oil supply agreements are also in place with Oman Oil Marketing Company and Al Maha Petroleum Products Marketing Company to supply Fuel Oil at the Plant site as and when required. A barge unloading facility is also available at the jetty which is directly connected to the Fuel Oil storage tank at the Plant in case of emergency requirement.

Technology and Processes

Description of the Plant

The Plant owned by Musandam Power is located at Tibat, Wilayat Bukha, Sultanate of Oman. The area is surrounded by the Musandam Gas Plant on the North, Oman-UAE border on the South, Arabian Gulf on the West and Mountains on the East. Musandam IPP has been in commercial operation since 17 June 2017. It has a guaranteed capacity of c. 120.7 MW at 50 degrees celsius.

The following pictures display the Plant’s facility in operation:

The Plant comprises of 15 units of Wärtsilä W20V34DF Dual Fuel generating sets grouped into 5 power unit block, operating on natural gas as the primary fuel and Fuel Oil as back up. The selection of the reciprocating engine (Wärtsilä solution) technology was based on many challenges that were indicated during the project development in RAECO grid (132KV system). The Plant’s generation is at 15KV, stepped up to 132KV for transmission to RAECO 132 KV Musandam grid.

59

PROSPECTUS

Generation process

The power generation process followed by the Plant is shown below:

The Plant includes engines, generators and the auxiliary equipment needed for power production. The engine and the generator constitute a generating set. The auxiliary equipment is largely mounted on modular units. The Plant also includes a control system and a power distribution system. The power production is mainly controlled from the central control panel and from the operator’s workstation.

The gas engine generator converts heat energy into mechanical energy which is then converted to electrical energy. The engine works on the internal combustion principle where the combustion of compressed fuel-air mix generates heat which in turn generates mechanical energy which is converted to electrical energy.

Engine

The Wärtsilä 34DF engine is a four stroke, dual fuel engine. The engine is designed for operation either on natural gas with 1% of the input being light Fuel Oil as pilot fuel, on natural gas operation, or on Fuel Oil only, in back-up fuel operation mode. The engine can be started in gas mode, or in back-up fuel mode. In fuel gas mode, 1% of the input is light Fuel Oil used as pilot fuel. The engine has a closed-circuit cooling water system. The engine is equipped with turbochargers and intercoolers designed to improve the engine efficiency by pushing extra air in the cylinders. A small part of the auxiliary equipment is built on the engine. This includes the lubricating oil circulation system and the engine-driven cooling water pumps.

Generator

The engine drives a synchronous three-phase generator. The air-cooled generator has a shaft-mounted cooling fan and air filters. The generator is also equipped with an anti-condensation heater. The excitation of the generator is controlled by an automatic voltage regulator, installed in the control cabinet of the generating set.

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Auxiliary systems

The auxiliary equipment is essential for the function of the engine and must be in full operation when the engine is running or on standby. The auxiliary systems provide the engine with fuel, lubricating oil, compressed air, cooling water and charge air. The auxiliary systems include both engine-specific equipment and equipment that is shared by several engines.

Fuel gas system

The purpose of the fuel gas system is to ensure an uninterrupted and reliable supply of fuel gas to the engine. The components in the system clean the gas and regulate the fuel pressure according to the load of the engine. Before entering the engine, the fuel gas is first passed through a gas pressure reduction unit, which is located inside the Plant boundary. Then it is passed through a compact gas ramp located in the power house. Each of the engine-specific fuel lines is equipped with main gas shut-off valves and an automatic gas venting valve before the compact gas ramp. The valves are located outside the power house.

Fuel Oil supply system

The components in the Fuel Oil supply system pressurize the fuel and feed it to the engine. The fuel feeder, which is shared by the engines, transfers fuel from the storage system to the fuel circulation system. The fuel is cleaned in an automatic filter before entering the fuel circulation system. The main part of the engine-specific fuel circulation system is located in the booster unit.

Compressed air system

Compressed air is used for starting the engine. The operation of pneumatic valves and air driven pumps also requires a reliable supply of compressed air. The compressed air system includes two subsystems with separate compressor units. The high-pressure air needed for starting the engine is provided by the starting air units, while the instrument air units supply air at lower pressure to pneumatically operated devices on the engine and in the auxiliary systems. The other starting air unit is connected to the instrument air system through pressure reducing lines. This enables the starting air unit to be used as backup for the instrument air compressors. Air vessels for storage of compressed air are installed in both the starting air system and the instrument air system. The engine is started by letting compressed air directly into the cylinders. The compressor units and the air vessels are shared by the engines. The compressed air system pipes are equipped with drain valves, located at low spots, for draining condensate from the system.

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Cooling water system

The cooling system of the engine uses chemically treated fresh water. The system is divided into a low-temperature (LT) and a high-temperature (HT) cooling water circuit. The cooling water is circulated in the system by directly driven centrifugal pumps mounted on the engine. The LT cooling water circuit removes heat from the charge air, the lubricating oil and the Fuel Oil. The HT water cools the engine jacket. The temperature in the LT and HT circuits is controlled by three-way valves. The temperature control valves direct the water to the cooling radiators or back to the engine, depending on the temperature of the water. A preheating unit is connected in parallel with the engine-driven HT water pump. The unit takes water from the outlet line of the engine and pumps the heated water back to the HT water circuit. The cooling water circuits include equipment for monitoring the pressure and temperature in the system.

Charge air system

The charge air system supplies the engine with clean combustion air. The charge air to the engine is taken from outside the power house. The air passes through the filter and silencer units into the turbochargers installed on the engine. Before entering the charge air receiver of the engine, the compressed charge air flows through the charge air coolers, where it is cooled in two stages by water from the cooling water system of the engine.

Exhaust gas system

The exhaust gas system leads the exhaust gases out of the power house and reduces the noise. The exhaust gases from the engine pass through the turbochargers to the silencer and the stack. The exhaust gas system includes a ventilation unit.

Technical Parameters

Capacity: The Guaranteed Contracted Power Capacity (GCPC) of the Plant is defined as the total electrical energy generating capacity of the Plant in relation to each year (expressed in MW) which is available at the electrical delivery point and which Musandam Power commits to provide when the Plant is operating on natural gas, without considering any constraint due to the inability to operate all the power units at their maximum capacity due to the limitations of the maximum daily quality (MDQ) under the NGSA, on a continuous and reliable basis in conformity with the “Operating Parameters” and by reference to “Reference Conditions”, both of which are defined within the NGSA. The GCPC of the Plant under the PPA is c. 120.7 MW. The demonstrated power capacity of the Plant at the plant acceptance test at reference conditions was c.124.58 MW on natural gas mode. Due to the nature of the reciprocating engines technology, the capacity is expected to remain same level over the period of PPA as capacity degradation is very little for reciprocating engines plant. Moreover, the LTSA provider has guaranteed throughout the terms of the PPA to maintain the GCPC of the Plant to meet contractual requirements under the PPA.

Availability: Availability is the amount of time the Plant is technically capable of generating power as per specifications. As per the project agreements, the Plant has been guaranteed to be available at 98% of time in Summer Period and in Winter Period excluding scheduled unavailability. The PPA allows for scheduled unavailability during the Winter Period (a maximum of 15%). Projections assume conservatively that the Plant will have forced outages of not more than 2% of the operating time. However, since the Plant COD, the availability recorded has been 99.9%.

Plant Efficiency (Heat Rate): The efficiency of the Plant is measured in terms of the amount of energy required to produce one unit of power. Plant achieved ‘Contracted Heat Rate’ at the plant acceptance test as 8,202 KJ/KWh on natural gas mode. This was better than the guaranteed contractual requirements under the PPA of 8,597 KJ/KWh on natural gas mode, thus giving a higher assurance of securing sufficient comfort in terms of fuel efficiency. Moreover, the LTSA provider and O&M contractor have guaranteed

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to achieve the same level of heat rate, with provision for penalties if they are not able to meet those conditions. The heat rate variable and degradation due to plant load and equivalent running hours are also covered under the PPA through the guaranteed curves implemented in the Plant model.

Operation and Maintenance

The Plant is operated and maintained by its OEM, Wärtsilä, through its 100% owned subsidiary WMU. The Operator is primarily responsible for Operation & Maintenance, HSE compliances, Plant Reliability and efficiency, meeting full compliances of both the AER regulatory requirements, contractual obligations to MPC stakeholders. In order to ensure the reliability, integrity and full life span of the plant engines, MPC has signed a Long Term Agreement (LTSA) with OEM, Wärtsilä. The LTSA contractor is fully responsible to maintain the set scheduled preventive maintenance in timely manner, without impacting the guaranteed availability to the buyer, and to ensure that all the required spares for the scheduled maintenances are available on time to avoid any business continuity impact due to any extended maintenance time. The plant is under 99.9% reliability since the COD on 17 June 2017.

Revenue Overview

During the term of the PPA

The PPA sets out the terms of generation and supply of power to OPWP until 23 January 2032. The PPA imposes an obligation on the Company to operate and maintain the Plant at an agreed level of availability with respect to the guaranteed contracted power capacity following the COD. The PPA also imposes an obligation to operate the Plant in a safe manner and within its design parameters.

Since the COD, the Plant has a contracted net electricity generating capacity of c. 120.7 MW and sells the electrical energy output to OPWP through RAECO’s Musandam Power System transmission grid to serve Musandam Governorate. In return, the Company receives a tariff covering power capacity charges, electrical energy charges and fuel charges from OPWP, described as follows:

• The power capacity charge is payable for each hour during which the Plant is available, irrespective of how much power is actually dispatched, and is designed to cover fixed costs, including fixed operating and maintenance costs, debt service, insurance costs, taxes, spare parts, connection fees and return on capital.

• The electrical energy charge is designed to cover variable operating costs of generation, excluding fuel costs, and is payable according to the electrical energy delivered under the PPA.

• The fuel charge is calculated based on the consumption of natural gas calculated by the Plant model for electrical energy and water output delivered and is in effect a virtual pass-through cost. The natural gas, lube oil, and liquid Fuel Oil used due to OPWP/RAECO instruction costs are payable by the buyer (OPWP). In case of any interruption of the natural gas supply and/or the natural gas quality, the differential costs of Fuel Oil are payable by the gas supplier (the MoG).

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Due to higher electricity demand in the Summer Period in Oman and the tariff structure under the PPA, where seasonality factors are applied to the capacity charges, higher revenues and operating profits are observed and expected during the Summer Period (from April to September), corresponding to the second and third quarters of the year, compared to the first and fourth quarters. Scheduled Maintenance of the Plant is also conducted in the Winter Period due to lower electricity demand, further accentuating the seasonality of the Company’s revenues. Under the terms of the PPA, there is no allowance for planned outages during the Summer Period, resulting in higher capacity payments during that period. Payments are denominated in Omani Rials. The investment charge element of the capacity charge is mostly linked to the OMR and a small portion linked with OMR-US$ exchange rate. The fixed and variable operation and maintenance charges are linked to the OMR-US$ exchange rate, the prescribed US inflation rate, and the Omani inflation rate for a portion of the total charge. The PPA defines the OMR-US$ exchange rate as the mid-rate of the OMR-US$ spot rate as published by the CBO in the foreign exchange rates indications of the relevant billing period.

Beyond the term of the PPA

The Management of the Company expects that the Plant will operate well beyond the term of the PPA, and the Plant will be well-placed to meet the forecast long-term demand for power in Musandam Governorate. After the expiry of the term of the PPA, the PPA will either be extended or, if the power market in Oman is liberalised during this period (as planned for the Main Interconnected System), the power produced by the Plant will be sold into a merchant market (into a power pool and/or to eligible customers). An internationally reputed consultant, IPA, calculated the post PPA asset value, on the basis of continuation of “single buyer” approach and merchant market approach.

As per the independent study conducted by IPA, for the Issue Manager on behalf of the investors, under various scenarios after the expiry of the PPA, annual and peak demand for electricity are expected to grow at CAGR of c. 5% to 852 GWh and 186 MW in 2032, when the Project’s PPA is due to expire. On the aspect of, whether the Project stays online or closes after the expiry of the PPA, IPA’s analysis anticipates that the capacity of existing plants and firm new builds in Musandam Governorate will not be sufficient to cover demand thereafter. There is thus a potential value opportunity to be captured after the expiry of the contract.

Under the single buyer approach, which has served Oman well in procuring numerous IPP’s financed by both regional and international banks, OPWP can be expected to use an “avoided cost” methodology when assessing the merits of extending offtake agreements, leaving it indifferent between procuring capacity and services from new or existing operators. There is potential evolution towards a liberalised market as is being introduced in the Main Interconnected System in 2020. However, given the size of the Musandam market and the strategic importance of Musandam Power Company, continuation of the single buyer approach by OPWP, is the most likely option for the Musandam Governorate.

IPA Musandam Power System Modelling

IPA used a bespoke version of its proprietary ECLIPSE™ modelling platform to forecast the dispatch and capacity developments in the market for electricity in the Musandam Power System. This was used to establish market and contract pricing for electricity and the dispatch profile for the Plant under the base case outlook.

The key assumptions for the power modelling are shown in the table below. IPA believes the case outlined below provides a reasonable central outcome that can be used to assess the post-PPA value of the Project.

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Parameter Assumption

Annual Demand 468 GWh in 2019, growing at 6.6% on average in 2019-2023, 4% in 2024-2030, and 3.5% thereafter

Peak Demand 102 MW in 2019, growing at 6.6% on average in 2019-2023, 4% in 2024-2030, and 3.5% thereafter

Cost of New Build and Efficiency Total investment cost of US$1,625/kW, thermal efficiency 42.0% (net LHV)

Technical Lifetime for all new RE 40 years

Fuel costs Natural gas: US$3.00/MMBtu (gross HHV) escalating at 3% annually on a nominal basis

Long-term US Inflation 2.0% per year

IPA expects the long-term supply for the Musandam Power System to be met by similar natural gas-fired reciprocating engines as the Plant, supplemented by diesel-fired internal combustion plants.

The financial outcome for the Project in the post-PPA period to the end of its technical lifetime was calculated, and is shown (in nominal terms) in the table below:

Year Cost Saving to Single Buyer EBITDA (nominal in US$mn)

2032 26.17

2037 28.89

2042 31.90

2047 35.22

2052 38.88

Total 838.13

Average 33.52Source: IPA Advisory Market Report

Note: Totals and averages shown are based on results for all years 2032-2056, inclusive.

A copy of the IPA Advisory Market Report is available at the Company’s website www.musandampower.com

Health, Safety and the Environment

The HSE policy at the Company commits to excellence in health and safety performance and lays down the rules and regulations for enforcement of the policies. The Company has HSE policies in place to promote compliance with all legal health and safety requirements, and to provide a safe work place for its employees, visitors, contractors and members of the public. To get an external accreditation for its HSE policy is a strategic goal of the Company. To the extent possible, it aims to prevent accidents, injuries, occupational illnesses and pollution as well as to conserve natural resources.

The Plant is designed to comply in all respects with all applicable environmental regulations. Environmental regulations in Oman specify the performance requirements of an industrial plant with

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reference to air, water, hazardous materials, waste, dredging and noise. Air emission standards in Oman are based on the National Ambient Air Quality Standards of the USA. Since the COD, the Plant has not suffered any material environmental incidents, nor has the Company been required to report any such incidents to the MECA. Wärtsilä sends out quarterly environmental monitoring reports to MECA for the Plant.

Insurance

The Company maintains comprehensive insurance policies as per the normal market standard for this type of project. The following table sets out the insurance policies currently in effect in relation to the Project:

Policy Cover Level of cover

Operational All Risks Insurance

Covers all risks during the indemnity period if at any time during the period the property insured or any part thereof suffers damage covered under Operational All Risks.

USD 180.150 million being the total insurable project value

Business Interruption Insurance

(Covered in single policy with Operational All Risks Insurance)

Covers interruption and/or interference with the insured business upon the occurrence of any damage to the property insured against damage occurring during the period of this policy. The indemnity period is 18 months.

USD 58.0 million

War Terrorism and Political Violence Insurance – Material Damage

Covers the property insured or any part thereof if it suffers damage as a result of terrorism and/or sabotage, riots, strikes, civil commotion, invasion, acts of foreign enemies or war.

USD 180.150 million being the total insurable project value

War Terrorism and Political Violence Insurance – Business Interruption

(Covered in single policy with Operational All Risks Insurance)

Covers the property insured or any part thereof if it suffers damage covered under Material Damage section, thereby causing interruption and/or interference with the insured business The indemnity period is 18 months.

USD 58.0 million

Operational Third Party Liability Insurance

Provides cover to the insured parties if the insured parties should become liable to any third party for any loss related to bodily injury, property damage or interference with rights (subject to exclusions).

USD 50.0 million per occurrence

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Property

The site used for the Plant is owned by MoH, which has granted the Company a usufruct right over the Site for a term of 25 years. The UAS has tenure of 25 years for a term commencing on 12 July 2015 which may be renewed for a further term of 25 years.

Contractually, MoH is obliged to give the right to possession of the Site, free and clear of any right adverse to the usufruct right and to ensure that the Company has undisturbed use of the Site. In turn, the Company must use and exploit the Site only for the purposes of the Project. The office premises of the Company in Muscat, Oman are held by the Company on a lease basis, with OGC being the lessor.

Risk Management and Control

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has delegated the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them to the Management.

Employees

The Company along with the O&M contractor employ a total of 49 employees, of which 28 employees are Omani citizens. The Project has achieved an overall Omanisation ratio of c. 60% as of 2018.

Litigation and Regulatory Proceedings

The Plant was scheduled to achieve Plant COD by 18 December 2016 but due to delay by the EPC Contractor and delay in RAECO grid readiness, the COD was delayed by 6 months, and the actual Plant COD was achieved on 17 June 2017.

As per the PPA, OPWP imposed on the Company delay liquidated damages in the amount of OMR 4.525 million for the period covering 18 December 2016 until 16 June 2017. In 2017, OPWP deducted an amount of OMR 4.525 million from invoices submitted to it by the Company in respect of these liquidated damages. The Company had contested the amount of the delay liquidated damages deducted by the OPWP and submitted that 37 days of delay was caused by a Buyer Risk Event under the PPA and that liquidated damages should not have been deducted for that period. OPWP has agreed to give relief for this 37 day period and to reduce the liquidated damages deducted by an amount of OMR 0.925 million and to reimburse the Company for that period by that amount. MPC has received an amount of OMR 0.925 million on 30 December 2018 for the 37 days delay relief and OMR 0.355 million with respect to consequential losses, was also received on 30 December 2018, total OMR 1.28 million. The reimbursement of OMR 0.925 million for the 37 days delay relief resulted in the amount of the liquidated damages payable to OPWP being reduced accordingly.

In turn, the Company withheld a milestone payment to the EPC Contractor totalling USD 26.63 million (equivalent to OMR 10.23 million) which is equal to its maximum entitlement for delay liquidated damages under the EPC Contract (15% of the contract price), to compensate for the delay liquidated damages under the PPA and any incurred losses. The Company’s claim to levy liquidated damages was contested by the EPC Contractor, who by a letter dated 16 June 2017 and again by a formal notification on 18 December 2017, submitted an initial claim based on six heads of claim for alleged prolongation costs of USD 3.6 million (OMR 1.38 million) together with a request for a scheduled extension of 206 days due to the alleged delays, under the EPC Contract. Subsequently the EPC Contractor issued a request for arbitration as permitted under the terms of the EPC Contract on 31 October 2018.

However, following further negotiations on the matter the Company and the EPC Contractor entered in to a Settlement Agreement dated 20th December 2018. Under the terms of this Settlement Agreement the EPC Contractor agreed to compensate the Company an amount of USD 11.1 million (equivalent to

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OMR 4.27 million) for the delay liquidated damages and incurred losses due to delay in commissioning of the Project. In addition, WMU also agreed to reduce the fixed payment under the LTSA by USD 2.1 million (equivalent to OMR 0.807 million) by way of a pro-rata reduction to the monthly fee payable over three years from 1 January 2019.

Pursuant to the Settlement Agreement, the EPC Contractor agreed to settle all claims relating to the Delay Liquidated Damages and the EPC Contractor’s arbitration application has been formally withdrawn. The Company confirmed that pursuant to the Settlement Agreement it received a notification that the request for arbitration by the EPC Contractor was withdrawn on 3 January 2019.

As of the date of this prospectus there is no pending litigation or regulatory proceedings against the Company.

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Chapter XI

Contractual Framework

Summary of Contractual Framework

The following diagram illustrates the key contracts relating to the Project and the relevant counterparties thereto:

Key Project Agreements:

Electricity HoldingCompany SAOC

Oman Power and Water Procurement Company

Lender

WMU

WMU

WMU

Oman Oil CompanySAOC

(Transferred interest to OOCDC)

OCTEL LGI

Standard CharteredBank

OGC

RAECO

RAECO

Ministry of Housing

Ministry of Gas

SkandinaviskaEnskilsa Banken AB

Wãrtsilã Corporation

MusandamPower Company

SAOG(Under

transformation)

Project Founder’s Agreement

Shareholders’ Agreement

Power PurchaseAgreement

Electricity ConnectionAgreement

Electricity SupplyAgreement

Usufruct Agreement

Natural GasAgreement

O&M PerformanceBond

LTSA Guarantee

Finance Agreement

EPC Contract

O&M Agreement

LTSA

SLA

EPC PerformanceBond

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Project Document

Executing Parties Date of Execution Date of Expiry

PFA Oman Oil Company SAOC, LGI, OETCL and EHC

15 March 2015 18 December 2032 (15 years following SCOD).

PPA OPWP and Musandam Power

13 April 2015 23 January 2032.1

NGSA Musandam Power and MoG 12 July 2015 23 January 2032 (Same date as PPA termination date).

ECA Musandam Power and RAECO

12 May 2015 12 July 2040 (25 years from PPA effective date).

ESA Musandam Power and RAECO

6 April 2015 Ongoing until termination.

UAS Musandam Power Company and MoH

9 February 2015 12 July 2040 (25 years from PPA effective date) subject to extension.

O&M Agreement Musandam Power and WMU

16 June 2015 17 June 2022 (5 years after COD).

O&M Performance Bond

Skandinaviska Enskilsa Banken AB and Musandam Power

23 February 2017 31 July 2022 or upon payment under the terms of the Bond.

EPC Contract Musandam Power and WMU

25 November 2014 and amended 24 June 2015

Warranty Period expired two years from each ‘power unit blocks’ completion of acceptance testing or their SCOD dates with limited scope for further extension following repairs of defects.

EPC Performance Bond

Standard Chartered Bank and Musandam Power

2014 31 March 2017 or upon payment under the terms of the Bond.

SHA Oman Oil Company SAOC, LGI and OETCL

5 March 2015 The SHA shall terminate automatically on the conclusion of the Offer.

LTSA. Musandam Power and WMU

25 November 2014 and amended 24 June 2015 and further amended by the Settlement Agreement.

The earlier of 17 June 2030 (15 years from COD) or 70,000 Engine Running Hours on the applicable Power Unit (Each reciprocating engine unit and all ancillary components and generator equipment).

LTSA Guarantee Musandam Power and Wärtsilä Corporation

30 January 2015 Expires concurrently with the expiry of the LTSA.

SLA Musandam Power and OGC

1 January 2018 Ongoing until terminated by either OGC or MPC.

1 The OPWP by letter, dated, 16 January 2018, have offered to extend the term of the PPA to 23 January 2032 due to occurrence of a 37 days delay by RAECO in testing the Plant and the non-availability of RAECO’s grid connection on the scheduled date.

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Details of Key Documentation

• Project Founders’ Agreement

The PFA was executed between the Project Founders and EHC on 15 March 2015. The PFA sets out various warranties and undertakings given by the Project Founders to EHC in respect of, amongst other items, listing pursuant to a public offering and disposal of the Shares. The PFA contains restrictions on share disposals and provides for the procurement of the conversion of Musandam Power to an SAOG from an SAOC, and the public offering of 40 per cent of the Shares of Musandam Power on the MSM. The PFA states that the listing of the Offer Shares must occur during a period of four years from the date of the incorporation of Musandam Power. As this listing obligation is a contractual obligation between the Project Founders and the EHC, missing this deadline may place the Project Founders in breach of their obligations under the PFA, but this in itself should have no adverse effect on the Company. However, the terms of the Facilities Agreement require that the Company comply with all of the material obligations under the ‘Project Documents’, as defined therein, of which the PFA is one. If the listing date obligation under the PFA is deemed a material obligation missing this date may result in the Company being non-compliant with their obligations under the Facilities Agreement. Furthermore, the PPA provides that where a party to the PFA repudiates the terms of the PFA the PPA may be terminated, however in this case as the Selling Shareholder shall seek a waiver of this provision it is unlikely this situation could arise.

If all of the Offer Shares are not fully subscribed in the Offer, the Project Founders are required to continue offering the remaining (i.e. unsold) Offer Shares for sale on an annual basis for a three year period following the initial listing on the MSM. During this three year period, EHC will have an option to acquire the unsubscribed Offer Shares according to the pricing mechanism set out in the PFA.

The PFA contains various undertakings given by the Project Founders, including, but not limited to: (i) compliance with the listing and offer obligations contained in the PFA in relation to the IPO; (ii) adherence to the disposal of Shares in Musandam Power; (iii) Share retention obligations which require Oman Oil Company SAOC to, directly or indirectly, hold and maintain at least: (a) 50.1% of the Issued and Paid-up Shares of Musandam Power until completion of the IPO; and (b) 30.060% of the Issued and Paid-up Share Capital of Musandam Power after completion of the IPO and up to the third anniversary of COD.

• Power Purchase Agreement (PPA)

The PPA was executed between Musandam Power and OPWP on 13 April 2015. The PPA details the terms agreed between Musandam Power and OPWP pursuant to which Musandam Power shall undertake the Project.

The PPA sets out a number of obligations which Musandam Power must adhere to during the operation period of the Plant. Amongst other things, Musandam Power must, acting as a reasonable and prudent operator, operate and maintain the Plant in such a manner so as to ensure that the Plant is capable of operating and maintaining power production on a continuous and reliable basis.

Under the PPA, Musandam Power is obliged to exclusively sell electrical energy output to OPWP and in return, receive from OPWP capacity charges, electrical energy charges and fuel charges. Capacity charges are designed to cover fixed costs (including debt service and return on capital); electrical energy charges are designed to cover variable operating costs of generation (excluding fuel costs). The fuel charge is amount payable to compensate Musandam Power for the total fuel demand required for the production of electrical energy to be delivered in accordance with the terms of the PPA.

The PPA sets out standard representations and warranties that Musandam Power is required to provide. Amongst others, Musandam Power has represented and warranted that it will not engage in any business or activity other than that permitted by its Generation Licence.

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The PPA provides for various buyer risk events and the relief that Musandam Power will receive should the specified events occur that hinder Musandam Power from performing its obligations under the PPA. If a relevant buyer risk event is established in accordance with the terms set out in the PPA, Musandam Power will not be liable for any failure to perform or any delay in its performance and will continue to be entitled to be paid capacity charges during the relevant period. In the event that it is determined that a material adverse change has occurred and such material adverse change was caused by a buyer risk event or events constituting a material adverse change, OPWP shall propose a mechanism to Musandam Power in order to adjust the power capacity charge and/or the electrical energy charge, as appropriate, or reimburse Musandam Power by some other agreed reimbursement mechanism.

The PPA also provides for various force majeure events that may hinder Musandam Power from performing its obligations under the PPA. If it can be established that a force majeure event has occurred, or will occur, and that it could not have been mitigated by Musandam Power, acting as a reasonable and prudent operator, Musandam Power will be relieved from liability for any failure to perform its obligations under the PPA for the duration of the force majeure event and the term of the PPA will be extended by the period for which the force majeure event hindered Musandam Power from performing its obligations. Furthermore, Musandam Power shall be entitled to continued receipt of power capacity charges to the extent of its availability during the force majeure delay period.

Subject to certain force majeure, OPWP risk events and termination provisions contained therein, the term of the PPA commenced on 26 July 2015 and original expiry date as per the PPA was 17 December 2031, (the date which falls 15 years after the SCOD). Due to delay in testing by RAECO, the PPA expiry has been extended to 23 January 2032.

• Natural Gas Sales Agreement (NGSA)

The NGSA was entered into between the MoG and Musandam Power on 12 July 2015. It establishes the terms upon which Musandam Power purchases natural gas as feedstock for the Plant from the MoG. The NGSA term is linked to the PPA term and, therefore expires on 23 January 2032 (Same date as PPA termination date). In certain circumstances the NGSA term will automatically be extended to reflect any extensions to the term of the PPA.

In accordance with the NGSA, natural gas will be supplied up to the gas delivery point of the Plant. Musandam Power has no obligation to pay the MoG for any natural gas delivered and accepted until Musandam Power has received the amount of the PPA payment from OPWP.

According to the NGSA, the price payable by Musandam Power for natural gas delivered to and accepted by Musandam Power shall be equal to the OMR equivalent of USD 3.00 per MMBTU, inclusive of all transportation costs of natural gas to the gas delivery point, and all taxes, duties and other imposts applicable to the sale of natural gas to or the purchase of natural gas by Musandam Power. The natural gas price shall be escalated on each anniversary from the day of 1st January 2016, on a compounded basis, using (i) a three percent (3%) annual rate, or (ii) the per cent change in the average US Consumer Price Index for the prior calendar year, whichever is higher.

Should the MoG fail to deliver natural gas in accordance with the terms of the NGSA, and the Plant therefore be operated using Fuel Oil, the MoG shall be liable and shall compensate Musandam Power the incremental amount by which the cost of Fuel Oil is more than the cost of natural gas without any cap. Moreover, for the cost differential the MoG is also obliged to compensate Musandam Power under the NGSA for the additional incremental operating costs incurred as a result of operating the Plant (or any power unit thereof) using Fuel Oil as a result of the MoG’s failure to deliver all or part of the properly nominated quantity, provided such costs exceed Rials Omani 20,000 in any year of the PPA’s term. The MoG’s liability for increased incremental operating costs is capped at Rials Omani 7.5 mn per annum.

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The MoG shall also be liable to pay to Musandam Power the difference in the costs of the Fuel Oil that needs to be purchased to operate the Plant, even in the case of force majeure provided that where the Fuel Oil is cheaper than the corresponding natural gas Musandam Power is required to pay the difference to the MoG. The amount to be paid in relation to the Fuel Oil shall be calculated in accordance with the formula set out in the NGSA. This formula is based on the difference in costs of the Fuel Oil when compared to natural gas, the hours that the Plant is operating on this, and the fuel demand.

• Electrical Connection Agreement (ECA)

The ECA was entered into between RAECO, a wholly owned Government company which commenced operations on 1st of May 2005, and Musandam Power on 14 May 2015. The ECA sets out the terms and conditions upon and subject to which RAECO and Musandam Power have agreed that Musandam Power shall connect to the Transmission System. It establishes a framework between RAECO and Musandam Power to provide for, amongst other things:

a. the payment by Musandam Power to RAECO of the connection fee; and

b. enforcement of the RAEC Code as between RAECO and Musandam Power.

The ECA became effective from the date of its execution and shall remain in force for an initial period of 25 years (the “Initial Term”) and will continue in force beyond the expiry of the Initial Term unless and until either party terminates the ECA on twelve months prior written notice to the other, provided that no such notice shall take effect before the expiry of the Initial Term.

• Usufruct Agreement

The UAS was executed between the MoH and the Company on 9 February 2015. The UAS constitute the usufruct agreement in relation to the Site. The UAS has a term of 25 years from the date of ratification of the UAS by the Government, subject to a further extension of 25 years at the option of the Company. Musandam Power is under an obligation to only use the Site for the stated purpose as described in the UAS.

• Operation and Maintenance Agreement (O&M Agreement)

The O&M Agreement was entered into between WMU and Musandam Power on 16 June 2015. It sets out the provision of O&M services by WMU in relation to the Plant. The O&M Agreement requires WMU to operate and maintain the Plant until 17 June 2022 (5 years after the COD), provided that the term of the O&M Agreement may be extended by agreement.

Under the O&M Agreement, WMU is responsible for:

• all operation and planned maintenance and repair services necessary or advisable to safely, dependably and efficiently operate, maintain and repair the Plant, as contemplated by the O&M Agreement;

• assist Musandam Power in agreeing with OPWP in accordance with the PPA such procedures as shall be necessary in accordance with good practice for the dispatch of the Plant and operational communications;

• operate the Plant or relevant part thereof in compliance with the Generation Licence, the RAEC Code (except to the extent that Musandam Power has been exempted from compliance with certain provisions of the RACEC Code by AER or RAECO)

• develop operating procedures on behalf of Musandam Power for operation of the Plant;

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• the generation of electricity for supply to RAECO 132 kV transmission grid (Musandam Power System) as per RAECO requirement;

• managing spare parts, tools, materials and consumables required for the operation and maintenance of the Plant;

• the direction and supervision of staff at the Plant and ensuring safety of the Plant, Musandam Power staff and visitors of the Plant; and

• mobilisation and training of human resources.

The fees payable under the O&M Agreement consist of a fixed ‘Mobilisation Fee’ and fixed ‘Operational Fee’ subject to indexation, based on Omani inflation rates, and spot fees for additional work or for costs associated with certain events.

WMU will be liable to the Company if the Plant does not meet the following targets:

• Balance of Plant Reliability of 98% both in Summer Period and Winter Period;

• Not meeting Guaranteed Contracted Power Capacity following adjustment of LTSA “Contractor’s Gross Power Capacity Guarantee” during a performance test; or

• Scheduled maintenance outage duration guarantee for ERH of 1000 hrs and 2000 hrs.

Additionally the O&M Performance Bond was granted by Skandinaviska Enskilsa Banken AB and will permit Musandam Power to seek payments from the bond up to a maximum of OMR 270,776.700, upon:

(i) the termination of the O&M Agreement;

(ii) the failure of WMU to perform and observe the terms of the O&M Agreement; or

(iii) WMU entering administration, liquidation or receivership.

• EPC Contract

The EPC Contract was executed between Musandam Power and WMU on 25 November 2014 and amended on 24 June 2015. It establishes the terms upon which WMU was to design, engineer, manufacture, supply, procure, transport, erect, construct, install, test and commission the Plant and to warrant such works and remedy any defects or non-compliances therein.

In consideration of these works, Musandam Power was to pay WMU the contract price in accordance with the milestone payment schedule.

The EPC Contract sets out a number of obligations which WMU was obliged to comply with. Amongst other things, WMU must, acting as a reasonable and prudent contractor, ensure that the works and materials used in construction were free from charges or liens and defects in title, design or workmanship and that the works would meet all environmental requirements and all applicable laws. The EPC Contract contains provisions for warranties as well as punch list items of the Works (as defined under the EPC Contract) noted by the Company as requiring rectification by WMU within twenty-four months from taking over date. As a result, WMU is responsible for carrying out at its cost all works of redesign, repair, reconstruction, rectification, renewal and replacement for the purpose of making good of Defects (as defined under the EPC Contract) or damage to the Plant or any part of the Works which may appear as a result of a Defect and for which WMU is responsible pursuant to the terms of the EPC Contract.

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The EPC Contract entitles the Company to deduct delay liquidated damages in the event that the date of taking over of the Plant would not be achieved on or before time for Completion due to causes attributable to the EPC Contractor.

The performance of WMU under the EPC was guaranteed by WMU’s parent company, Wärtsilä Corporation, under the terms of the EPC Guarantee. Additionally, the EPC Performance Bond was granted by Standard Chartered Bank which permitted Musandam Power to seek payments from the bond up to a maximum of US$44,384,816, which is equivalent to OMR 17,065,962, as at September 2019, upon:

(i) the termination of the EPC Contract;

(ii) the failure of WMU to perform its obligations under the EPC Contract; or

(iii) WMU entering administration, liquidation of receivership.

• LTSA

The LTSA was entered into by the Company and WMU on the 25 November 2014 and was amended on 24 June 2015. It provides that the Company shall purchase parts, including strategic spares and maintenance parts, from WMU and WMU will perform certain services and ‘variation work’ such as upgrades and scheduled maintenance to the Plant.

The LTSA provided for services prior to the COD of the Plant and services to be provided during the Plant’s operation. Under the LTSA during the Plant’s operation WMU is required to undertake periodic visits to the Plant, provide general advice on the operation and maintenance of the Plant to the Company, undertake scheduled maintenance of the Plant and provide staff, expertise and tools needed to carry out such works. The LTSA also provides that WMU will provide additional repair services as required, subject to additional payments being made.

The LTSA contains two warranties for the benefit of the Company relating to the supply of parts and the provision of the services under the LTSA. Firstly the “Scheduled Maintenance Parts Term Warranty” provides that for the term of the LTSA any parts provided in relation to ‘Scheduled Maintenance’ shall be free from defect and not require replacement as a result of normal wear and tear and WMU will be required to repair or replace such parts should they fail to comply with this. Secondly the “Parts and Services Warranty” provides that for the term of the LTSA, and for a period of 6 months after the termination of the LTSA, that any parts provided under the LTSA shall be free from defect and the services provided under the LTSA shall be carried out in accordance with good engineering and operating practices. In the case of a defective part or service WMU is required to repair and replace the part or rectify the service deficiency.

WMU will also be liable to the Company if the Plant does not meet the following targets, as detailed in the LTSA:

• Emergency Response Plan for Emergency Services;

• Guaranteed Scheduled Maintenance Period;

• Unscheduled Maintenance Services Activity Duration Guarantee;

• Gross Power Capacity Guarantee during at Annual Performance Test;

• Gross Heat Rate Guarantee during at Annual Performance Test;

• Guaranteed Reliability ;

• Gross Power Capacity Guarantee during at Periodic Performance Test; and

• Gross Heat Rate Guarantee during at Periodic Performance Test.

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The performance of WMU under the LTSA is protected by the provision of the LTSA Guarantee.

The LTSA will terminate upon the earlier of the 15th anniversary of the COD or upon the reaching of 70,000 ERH (Engine Running Hours) on the applicable ‘power unit’ (each reciprocating engine unit and all ancillary components and generator equipment).

The parties to the LTSA and the guarantor under the LTSA Guarantee mentioned below have also entered into a direct agreement, dated 1 July 2015, in favour of the lender under the Facilities Agreement. This direct agreement assigns beneficial interest in the LTSA and associated LTSA Guarantee to the lender. The Company has the right to benefit from the LTSA and the LTSA Guarantee unless it defaults under the Facilities Agreement at which time the benefit and interest falls to the lender. The direct agreement is intended to protect the interest of the lender in a default situation under the Facilities Agreement.

The fees payable under the LTSA have been reduced under the terms of the Settlement Agreement.

LTSA Guarantee

The parent company guarantee, LTSA Guarantee, which has been granted by Wärtsilä Corporation, dated 30 January 2015, “absolutely, unconditionally and irrevocably” guarantees to the Company the performance of WMU’s duties, obligations and undertakings under the LTSA promptly when due. The guarantee also provides that if WMU were to fail to perform their duties the guarantor will perform them in WMU’s place upon written request and that the guarantor will indemnify the Company against all losses arising from a failure of WMU to perform their obligations under the LSTA.

SHA (Shareholders’ Agreement)

The SHA was entered into amongst the Project Founders on 5 March 2015. The SHA sets out the arrangements amongst the Shareholders with respect to the Management and the process relating to the Offer.

The SHA provides that the Shareholders must offer the Offer Shares to investors via a public offering on the MSM within a period of four years from the date of incorporation of Musandam Power, or otherwise be obliged to sell 40 per cent of Musandam Power’s Share Capital to EHC in accordance with the terms set out in the PFA. The SHA also sets out certain provisions relating to appointment, composition, quorum and voting requirements in respect of the Board.

The SHA shall terminate automatically on the conclusion of the Offer.

SLA (Service Level Agreement)

The SLA was entered into between OGC, the parent company of OOFDC and a wholly owned Subsidiary of Oman Oil Company SAOC, and Musandam Power on 1 January 2018. Under this agreement in exchange; for a fixed fee, in addition to a 5% mark-up to be charged on all the variable and consumables costs, OGC have undertaken to provide various services to Musandam Power, including but not limited to IT support services, legal and consultancy support services, provision of office space and provision of payment facilities.

OGC is under an obligation to perform the services in a manner exercising reasonable skill, care and diligence in line with good industry practice. OGC shall bear all the risk in the performance of the services, except where such loss is caused by Musandam Power, and OGC shall indemnify Musandam Power against all loss, damage and claims which arise in connection with the provision of the services.

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The SLA shall continue in force until the agreement is terminated in accordance with its terms by either OGC or MPC.

ESA (Electricity Supply Agreement)

The Electrical supply Agreement was entered into between RAECO and MPC on 6 April 2015.

This agreement sets out the terms upon which RAECO undertakes to supply electricity to the site for use by MPC. Under the terms of the ESA MPC is required to pay for and install suitable metering equipment and pay the “Permitted Tariffs” for the electricity used as defined therein. The ESA also provides that RAECO may disconnect the supply where, among other things, MPC fails to pay sums due, the installation or use of the electricity interferes with RAECO’s system or MPC fails to comply with any condition of the ECA. Either party may terminate the agreement upon the provision of 30 days prior written notice. However, this agreement is only intended to act as a back up to compliment the other power generation and emergency power generation facilities located on the Site.

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Chapter XII

Project Cost and Sources of Financing

Project Costs

The total Project cost was approximately OMR 90.3 million as summarised below:

OMR (mn)

Uses:

Construction costs (EPC) 69.3

Non-EPC costs 21.0

Total 90.3

Sources:

Share Capital 7.0

Shareholders subordinated loans 6.6

Term Loans 76.7

Total 90.3

Equity Contributions

The Selling Shareholders initially provided equity for the Project, as shown below:

OMR

Selling Shareholder:

Oman Oil Company SAOC (shares now owned by OOFDC) 349,500

OETCL 500

LGI 150,000

Total 500,000

Equity Bridge Loans

The Company, Oman Oil Company SAOC and LGI entered into an Equity Bridge Loan Agreement dated 23 December 2014 (“EBL”) and secured an equity bridge loan from bank muscat for an amount of OMR 17,000,000 with Equity Bridge Guarantees from Oman Oil Company SAOC (70%) and LGI (30%) on a several basis with a repayment dated on/or before 31 December 2016. Out of this total amount, the Company has drawn the Base Equity commitment of OMR 13,077,777 and cancelled the balance amount of the EBL in August 2015. The distribution of the EBL guarantee and Shareholders final contribution as per the financing agreement is presented in the table below:

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OMR

EBL Guarantors:

At the time of EBL signing (23 December 2014)

Oman Oil Company SAOC 11,900,000

OETCL n/a

LGI 5,100,000

Total 17,000,000

W.e.f 24 August 2015

Oman Oil Company SAOC (including OETCL contribution) 9,154,444

OETCL n/a

LGI 3,923,333

Total 13,077,777

As per the provisions of the ESRA, in December 2016, each of Oman Oil Company SAOC (including equity contribution of OETCL) and LGI has contributed OMR 9,154,444 and OMR 3,923,333, respectively to the Company, as the repayment of the EBL (the “Base Equity”) by the Company to bank muscat. The Company has repaid the entire outstanding EBL amount to bank muscat on 28 December 2016.

Further, as per the provision of the ESRA, on 29 November 2017, 50% of the Shareholders’ contribution amounting to OMR 6,538,777 was converted into interest bearing Shareholder loans and the balance 50% of OMR 6,539,000 was converted into additional Share Capital of the Company, increasing the Issued and Paid-Up Share Capital from OMR 500,000 to OMR 7,039,000 and number of Shares to 7,039,000.

Shareholders’ Loans

The Shareholders of the Company have approved with effect from 29 November 2017 the conversion of OMR 6,538,777 (representing c. 50% of the Shareholders’ contribution of OMR 13,077,777 made in December 2016 for the repayment of Equity Bridge Loan by the Company) into Shareholders’ Loans.

An amount of OMR 3.5 mn available following the release of the DSRA Account was repaid towards the Shareholders Loans on 18 November 2018 with respect to LGI, and on 29 November 2018 with respect to OOFDC and OETCL, and the amount of each shareholder Loan currently outstanding as at the 31st

of July 2019 is as follows:

Shareholder: OMR

OOFDC (To whom a loan originally provided by Oman Oil Company SAOC was novated to on 26 June 2019).

2,136,120

OETCL (Loan subsequently novated to OOFDC) 3,056

LGI 916,790

Total 3,055,966

The Shareholders’ Loans bear an interest rate of 4.6% per annum.

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The Shareholder Loans agreements were amended on 28 November 2018 wherein amongst others, the maturity date was extended to 29 November 2019. The Company intends to pay the outstanding shareholder loans of OMR 3.056 mn by 29 November 2019 from cash already received from EPC Contractor and OPWP settlement payments.

Debt Financing

The Company has entered into financing agreements with bank muscat SAOG, for an aggregate amount of approximately OMR 84.25 million (US$ 219.04 million) subject to the terms of the Facilities Agreement, dated 1 July 2015. The Term Facility has a tenor of 15 years which is extendable by a period of up to 5 years. The following table shows the currently outstanding financing arrangements of the Company, with the amount outstanding after the repayments made up to 30 June 2019:

Type of Loan Lender(s) Currency Interest rate Total Base Facility

Available

Total Amount Drawn as at 30June 2019(OMR mn)

Total Outstanding

as at 30 June 2019 (OMR mn)

Term Facility (provided under the Facilities

Agreement)

bank muscat OMR Fixed coupon of 4.6% for first 7 years

from effective date and thereafter

bank muscat 5 yrs deposit rate +margin

of 2%

76.9 76.7 68.9

Working Capital Facility

bank muscat OMR 3% 5.0 - -

As the facilities are all OMR denominated, the Company does not have any hedging requirements to protect against the exchange rate movements which improves the cash flows of the Company.

No cash sweep mechanism for the Facilities

The Facilities Agreement does not impose any mandatory cash sweep mechanism in respect of the repayment of the Facilities. This is unlike many of the listed power and water companies in Oman, which are subject to a mandatory cash sweep mechanism under their financing arrangements which constrains their ability to pay dividends in the latter part of the PPA period for the relevant project company or the requirement to refinance existing debt in order to seek the removal of this requirement.

The absence of a mandatory cash sweep mechanism in the Company’s financing arrangements means that the Company’s ability to pay dividends will not be constrained in the same manner as if a cash sweep was imposed; consequently the Company is able to pay stable dividends throughout the period of PPA. For further details of the Company’s dividend policy, please see “ Chapter XV – Dividend Policy” of this Prospectus.

Debt Service Reserve Account details

Under the terms of the Facilities Agreement, starting from COD, the Company is required to maintain a cash balance (or DSRA LC or credit support facility) equivalent to six months’ of future debt service and interest payment for the Term Facility and Standby Facility in a separate bank account pledged in favour of its lender.

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The lender is entitled to withdraw amounts from this account if the Company does not meet its obligations as defined under the Facilities Agreement or in other events resulting in a situation of default on its obligations. The Company has provided the entire DSRA amount through cash.

By letters, dated 15th October 2018 and 2nd November 2018, Oman Oil Company SAOC and LGI respectively undertook to the lender under the Facilities Agreement that they would make payments equivalent to those payable under the DSRA should the Company not meet its obligations under the Facilities Agreement. Thereafter, as permitted under the terms of the Facilities Agreement, an amount of OMR 3,482,811, which was held in cash in the DSRA, was released to the Company and the obligation to maintain the cash DSRA was suspended for so long as the undertakings from Oman Oil Company SAOC and LGI remain in place.

Repayment Schedule (Senior Facilities)

Payable during FY

2019

Payable during FY

2020

Payable during FY

2021

Payable during FY

2022

Payable during FY

2023

Payable after FY

2023

In OMR (000s) 3,407 3,569 3,731 3,618 3,248 53,191

The Term Facility’s repayment schedule includes a balloon component of 27.8% of the principal drawn down under the Term Facility. The balloon component must be repaid by 17 December 2031, subject to any deferral permitted under the terms of the Facilities Agreement.

As at the date of this Prospectus, the Company has paid both principal and interest in accordance with the terms and conditions of the Facilities Agreement.

Sources of financing

Statement Value as on 30 June 2019 Value in case of cover of all shares

(Before the Offer) (After the Offer)

Amount (OMR 000s)

Ratio Amount (OMR 000s)

Ratio

Working capital facility - - - -

Shareholder Loans 3,056 3.75% 3,056 3.75%

Total short term debt (1) 3,056 3.75% 3,056 3.75%

Term Loan 68,902 84.50% 68,902 84.50%

Total long term debt (2) 68,902 84.50% 68,902 84.50%

Total debt (1+2) 71,958 88.25% 71,958 88.25%

Share capital 7,039 8.63% 7,039 8.63%

Legal reserves(1) 511 0.63% 511 0.63%

Retained earnings(1) 2,034 2.49% 2,034 2.49%

Total equity (3) 9,584 11.75% 9,584 11.75%

Total financing sources (1+2+3) 81,542 100.00% 81,542 100.00%

Debt/equity ratio (times) 7.51 7.51

(1): As on June 30, 2019.

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Key Financing Covenants

The key covenants under the Facilities Agreement are summarised below:

Positive Covenants: The Facilities Agreement contains frequently adopted positive covenants in relation to financing arrangements of this type, including, but not limited to: compliance with the project documents, construction and operation of the Plant; corporate existence; consents; compliance with environment impact assessments; compliance with applicable laws; further assurances; payment of taxes; pari-passu ranking; application of revenue and proceeds; working capital facility agreement; insurance; maintenance of accounts; intellectual property; interest and title and notices.

Negative Covenants: The Facilities Agreement contains frequently adopted negative covenants in relation to financing arrangements of this type, including, but not limited to: amendments to the Project Documents; limitations on security creation; sale of assets; amendment to the EPC contract; establishment or acquisition of any subsidiary; termination of the PFA, liquidation or merger; entry into new agreements in relation to the Project; disposals (other than as permitted under the Facilities Agreement or required by any provision of the project documents or the PFA); further indebtedness (other than as permitted under the Finance Documents); negative pledge; change of business; capital assets; loans and guarantees; change in Contract Capacity (as agreed with OPWP); change in EPC and O&M contractor; change in LTSA terms; sanctions; alter rights attached to shares; amendment to constitutional documents; additional obligations; incur operating costs (other than approved costs); changes in design; compromise, adjustments or settlements; transaction with affiliates; winding up; suspension or abandonment; immunity; and environment management plan.

Events of Default: The Facilities Agreement contains frequently adopted events of default in relation to financing arrangements of this type, including, but not limited to, non-payment, non-compliance with the Finance Documents and the Project Documents; failure to comply with negative pledge under Equity Subscription and Retention Agreement and Equity Bridge Subordination Agreement; misrepresentation; insolvency events; judgments; delay; Government intervention; expropriation event; cessation of major insurance and reinsurance; cessation of EPC Performance Bond; cross-default; revocation of consents; illegality; ownership; DSCR ratio (see below); material adverse effect; environmental claims; immunity; failure of security interests; Shareholder obligations; loss or damage to the Project; forecast funding shortfall and O&M contractor and long term maintenance arrangements.

Debt Service Coverage Ratio: Any fall in the DSCR, at any calculation date, below the ratio of 1.05:1 will constitute an event of default under the Facilities Agreement. The DSCR threshold for distribution of dividends has been set at 1.10:1.

In certain specified cases, where a default is capable of remedy, the Facilities Agreement permits a cure period. As at the date of this Prospectus, the Company is not in default under any of the Facilities Agreement or any other material financing arrangements.

Security Package

The term loan has been secured in favour of the lenders by a package of share and asset security granted by the Company and the Project Founders. It includes the following agreements, which have each been duly registered where necessary:

• a Commercial Mortgage secured on the Company’s moveable assets, governed by Omani law;

• a legal mortgage secured on the Company’s rights, title and interest in the UAS and the related movable and immovable property, governed by Omani law ;

• Conditional Sale and Purchase Agreement in respect of the assets secured pursuant to the commercial mortgage and the legal mortgage (both as described above), governed by Omani Law;

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• Reinsurance Assignment Agreement in favor of the Lender to secure the prompt payment of any monies due under insurances obtained by MPC to the Lender where required, governed by Omani Law;

• Shareholders Share Pledge Agreement, a share charge over all of the Shares, governed by Omani law.

• Offshore Deed of Charge and Assignment, a floating charge over (i) any assets, properties, revenues or rights effectively secured in favor of the Lender under the laws of the Sultanate of Oman; (ii) any assets, properties, revenues or rights effectively secured to the Lender by way of fixed mortgage, charge or assignment (whether at law or in equity); and (iii) the Distributions Account (as defined in the Facilities Agreement), governed by English Law; and

• direct agreements on the PPA, NGSA, EPC Contract, ECA, LTSA and O&M Agreement.

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Chapter XIII

Risk Factors and Methods of Mitigation

Prior to investing in Offer Shares, prospective Applicants should carefully consider the risk factors relating to Musandam Power’s business and industry described below together with all other information contained in this Prospectus, including the financial statements set out in “Error! Reference source not found. – Historical Financial Statements” of this Prospectus, before making any investment decision relating to the Offer Shares. These risks and uncertainties are not the only issues that Musandam Power faces; additional risks and uncertainties not presently known to Musandam Power or that Musandam Power currently believes to be immaterial may also have a material adverse or beneficial effect on its financial condition or business success. The occurrence of any or a combination of the following events could have a material adverse or beneficial effect on Musandam Power’s business, results of operations, financial condition and prospects and cause the market price of the Shares to fall significantly and investors to lose all or part of their investment. Unless otherwise stated in the relevant risk factors set out below, Musandam Power is not in a position to specify or quantify the financial or other risks mentioned herein.

Risks Relating to the Project

Limited operating history

The Plant commenced full commercial operation on 17 June 2017 and, consequently, the Plant has operated for approximately 26 months as at the date of this Prospectus. Accordingly, prospective investors have limited information with which to evaluate the operating performance of the Plant and its current or future prospects or financial results and performance.

The business prospects and financial performance of Musandam Power must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by the projects with a limited operating history, including challenges in planning and forecasting accurately due to limited historical data, which means the past results of Musandam Power cannot be relied on as an indication of future performance. Accordingly, the inability to successfully identify and address risks and difficulties could have a material adverse effect on the business, results of operations and financial condition of Musandam Power, including the market price of the Offer Shares.

The Shareholders Oman Oil Company SAOC and LGI have a proven track-record of owning and operating complex projects including power plants in the region and across the world. Moreover, the Operator and LTSA provider WMU is one of the global leaders in operating and maintenance of power projects using RE technology, bringing significant experience and track-record of managing similar projects.

Operational and technological risks

The operational risks may prevent Musandam Power from performing its obligations under the PPA, which is its source of revenue and, in certain extreme situations such failure to perform could result in OPWP terminating the PPA. Additionally, Musandam Power’s current financial covenants prohibit it from diversifying its operations in the future and it is unlikely that Musandam Power will be able to generate revenue or cash flow, except through the PPA during the PPA period. However, the business plan of Musandam Power accounts for reasonable average outage rates to cover the risk of forced outages for power production. In certain years, depending on the number of forced outages, there could be positive or negative variances. The business plan also account for degradation of the technical performance. The plant outage risk is minimized by the utilization of multiple units to produce power.

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Technological advances in the power and utilities sector are constantly evolving and newer technologies may evolve in future which may make the current technology of the Plant obsolete or uneconomical in future.

The Company believes that the technological risk for the Company is low as the Plant uses proven technology from renowned international suppliers like WMU. WMU is the operator for the Plant and the LTSA provider. A substantive portion of the O&M risk is transferred by Musandam Power to WMU under the O&M Agreement and LTSA to ensure maximum availability of power systems and to prevent any performance degradation throughout the Plant’s PPA period. Further operational risks are mitigated by the following risk mitigation factors:

i. A sufficient number of spare parts are available to guarantee swift repairs;

ii. A strategic stock of back-up Fuel Oil is available on site to cover more than ten days of operations at full capacity;

iii. Major overhauls are contractually permitted and the allowed planned outage rates are higher than what is actually used (during the winter period); and

iv. Effective forced outage and annual maintenance rates scheme were introduced in the contractual terms with WMU in order to ensure the availability of the plant’s generation capacity as set in the PPA are met:

• Scheduled unavailability (mainly the scheduled maintenance). April to September : 0% , October and March is 12.5%, November to February only 25% is allowed; and

• Unscheduled maintenance/force outages: only 2% is allowed.

Change in Omani Tax Law

The projected financial statements for the Company have been based on the prevalent tax laws in Oman. The Omani Tax Law was recently amended in 2017 to expand the scope of withholding tax to dividends, interest payments and services fees and the Government may adjust the tax laws from time to time in the future. The change in tax laws may increase the tax burden for the Company, thereby adversely affecting the Company’s, financial position, results of operations and dividend distribution capabilities.

A change in the Omani Tax Law is mitigated by the fact that the PPA provides that any change of law shall constitute a buyer risk event, and change of law has been defined under the PPA to include any amendment to or modification of applicable laws in force at the date on which the PPA came into effect, which was 13 April 2015. The PPA further provides that if it is determined that a material adverse change has occurred and such material adverse change was caused by a buyer risk event (in this case due to a change of law), OPWP shall propose a mechanism to the Company in order to adjust the Power Capacity Charges and/or the Power Output Charges, as appropriate, or reimburse the Company by some other agreed reimbursement mechanism. This, in turn, will result in passing-through the effect of the changes in the Tax Law to OPWP under the PPA.

Performance Risk

The Company is required to carry out annual, and if required periodic, as well as additional performance tests to demonstrate the available capacity. If the Plant is unable to achieve the required targets, then the Company may no longer be eligible to receive the Power Capacity Charges until such time as the Plant successfully achieves the targets in a subsequent performance test.

The Plant has successfully passed all the Performance tests required under the PPA prior to COD and all of the performance tests since COD to date. The Plant has been operated at an excellent reliability of 99.9% since the most recent test.

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A further mitigation of this risk is provided by the terms of the O&M Agreement and the LTSA which should help to ensure the Plant is well maintained by experienced technical specialists, thereby ensuring it can achieve its required performance levels.

Post PPA risk

The 15-year term of the PPA expires well before the Plant reaches the end of its expected useful life of 40 years. Consequently, a substantial part of the value is expected to be realized beyond the PPA. However, at that point of time, the Plant, as any other plant with an expiring off-take agreement, will face risks such as:

• Gas supply and price risk;

• Market risk (price and capacity);

• Competition from recent, more efficient technologies;

• Regulatory risk;

• Operational risk;

• Customer credit risk; and

• Macro-economic risk.

Further, loan repayment of the Company under the Facilities Agreement includes a balloon component at the end of its PPA period. The above mentioned post PPA risks might affect the Company’s cash flows and impact the Company’s ability to service the balloon portion of the loan repayment.

With the exception of three existing power units, with capacity of c. 27 MW, the rest of the power units located in Musandam Governorate are expected to be at the end of their technical life. These plants are expected to be decommissioned as the Plant reaches its peak capacity and substitutes the supply to the Governorate. Musandam Power is the only IPP currently servicing and expected to service the growing electricity demand of Musandam Governorate. Musandam Power is considered as an asset of strategic importance for the region and the absence of an alternative gas based generator to service the demand in Musandam Governorate mitigates the risks faced by the Company post PPA.

An independent study was conducted by IPA, for the Company on behalf of the investors, to assess the evolution of market structure and the value of the Company under various scenarios after the expiry of the PPA. On the aspect of, whether the Project stays online or closes after the expiry of the PPA, IPA’s analysis anticipates that the capacity of existing plants and firm new builds in the Musandam Power System will not be sufficient to cover demand thereafter. Therefore, IPA forecasts that the Plant will have value after the PPA expires. Refer to section titled Revenue Overview in “Chapter X – Description of Musandam Power and Business Overview” for summary of the IPA report.

Increased operating and maintenance costs or capital expenditure may not be recovered under the PPA

Operating the Plant involves, among other things, general technical, legal, regulatory and other factors that may be beyond Musandam Power’s control. Although there are provisions within the PPA to protect the Company from changes in law, changes in some factors could make it more expensive for Musandam Power to operate the Plant than projected, and could require additional capital expenditures or could reduce revenues. Additionally, similarly to any industrial installation, complications with engineering design and implementation or technology or equipment failure could result in reduced plant availability or production and/or higher-than-anticipated capital expenditures and/or operating and maintenance costs.

The rates at which the capacity charges under the PPA were calculated and fixed for its 15-year term, subject to specified escalations, and cost increases higher than those projected at the outset may not be recovered. The Project could be subject to changes in the operating cost structure over the 15-year

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term of the PPA, including on account of reasons relating to (i) operations; (ii) maintenance, repair and overhaul of plant and equipment; (iii) procurement of backup fuel; (iv) backup fuel transportation; (v) environmental compliance; (vi) ground rent; (vii) utility services; and (viii) insurance.

The risks faced by the Company in this respect are reduced as the majority of the Plant’s maintenance is being covered under the LTSA for 15 years with WMU, and hence the risk of increased costs for the Plant remains limited.

Dependence on Major Shareholder

The Company is reliant on OGC, which is the parent company of OOFDC and a wholly owned subsidiary of Oman Oil Company SAOC, in matters related to the provision of certain services under a SLA. Please see “Chapter XVII –Related Party Transactions & Material Contracts” of this Prospectus. The Company is reliant on the support it is provided under the SLA including but not limited to the provision of payroll support, legal support, office accommodation, office equipment supply and IT support services. The termination of the SLA or the loss of OGC’s support for any other reason or failure to obtain the services mentioned above on comparable terms could have an adverse effect on the Company’s business operations, financial condition, cash-flows, operating results and/or prospects. Furthermore, the loss of the connection to OGC and the association with the group or damage to the reputation of OGC’s group brand may have an adverse impact on the perception of the Company in the market.

Post IPO the Company will be subject to the requirements of the Code of Corporate Governance which is a binding framework for corporate governance through a series of specific and defined policies, processes and procedures. This Code includes a requirement to disclose related party transactions such as the SLA and subject such transactions to scrutiny of the Audit Committee and approval of the Board and in some cases the shareholders.

By virtue of their ownership of OOFDC, OGC will continue to remain the largest shareholder in the Company. The Company believes it is unlikely that would be such a sudden cessation of the support services, outlined above, without an alternative arrangement having first been put in place.

Dependence on OPWP as the sole customer

OPWP is the sole purchaser of all electricity output from the Plant and also from the other licensed generation and production operators in Oman. As such, OPWP does not currently face any competition. If OPWP were to cease fulfilling its obligations under the PPA, Musandam Power would not be able to sell the Plant’s capacity and output to another purchaser. However, there can be no assurance that the Government will not open the electricity markets to competitors or allow bypass sales of power by providers of generation or production capacity to persons other than OPWP in the future. In addition, no assurance can be made that OPWP’s role in the sector will not change in the future. The introduction of competition in Oman or the change of OPWP’s role in the sector could have a material effect (adverse or beneficial) on the business, results of operations and financial condition of Musandam Power, including the market price of the Shares.

Musandam Power earns its revenues under the long term PPA. Impairment of revenues is mitigated by the following risk mitigation factors:

a. Capacity charge earned in relation to the Project’s availability are designed to cover all: (i) investment costs, (ii) fixed operation and maintenance costs, (iii) variable operation and maintenance costs defined as Electrical Energy Charges in the PPA) and (iii) financing costs and taxes.

b. OPWP (as the off-taker and the contractual counterparty responsible to pay, inter alia capacity charge), is an entity with a high credit rating and a good track record of timely payments. Musandam Power is dependent on OPWP’s creditworthiness and the on-going financial support it receives from EHC and the Government from time to time. If OPWP’s creditworthiness materially deteriorates and/or if EHC or the Government ceases to provide the requisite financial support to OPWP, OPWP may

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no longer be able to fulfil its obligations under the PPA and its ability to make payments under the PPA may be impaired and accordingly, Musandam Power’s revenue may be adversely affected. This is considered as unlikely.

c. The obligation of Musandam Power to make payments to MoG for fuel delivered under the NGSA is subject to fuel payments being received from OPWP under the PPA. Hence, there is no payment risk related to fuel.

d. Capacity revenues are based on availability and are not dependent on actual energy dispatched.

OPWP is entitled to terminate the PPA for default by Musandam Power which, if not cured within the agreed cure periods by Musandam Power, will give rise to such termination right. In such a case, Musandam Power will lose its sole source of revenue. The extension of the PPA at the expiry of its term is also dependent on the agreement of OPWP. The longer-term view (post-PPA) of the Project depends greatly on the demand for electricity in Musandam. Any termination of the PPA, failure to extend the PPA at the expiry of its term, or failure to realise the forecasted revenues following termination or expiry of the PPA could have a material adverse effect on the business, results of operations and financial condition of Musandam Power, including the market price of the Shares.

Musandam Power is the only IPP servicing the electricity demand of the Musandam Governorate. The Plant is efficient with established operating history and contracted gas supply (key raw material for the power plant) which is available from next door Musandam Gas Plant. Due to the strategic importance of the Plant for the Musandam Governorate and lack of commercially viable alternatives, the Company believes that there is a low probability of OPWP terminating the PPA. Further, an independent study was conducted by IPA, for the Issue Manager on behalf of the investors anticipates that the capacity of existing plants and firm new builds in the Musandam Power System will not be sufficient to cover demand after the end of PPA for the Company. Therefore, IPA forecasts that the Plant will have value after the PPA expires.

No ownership of the land on which the Plant is situated

The site used for the Plant is owned by the MoH which, under the terms of the UAS, has granted a usufruct right over the Site to Musandam Power with a term of 25 years from the effective date, which may be renewed for a further term of 25 years. The MoH may, at its option, elect to terminate the UAS, evict Musandam Power from, and repossess the Site at any time following the termination of the PPA. The MoH may terminate the UAS if Musandam Power’s Generation Licence is revoked and not reissued/replaced within 18 months or Musandam Power ceases to operate the Plat for a period of two years. A termination of the UAS would have a material adverse effect on the business, results of operations and financial condition of Musandam Power, including the market price of the Offer Shares. The UAS suggests that at least 6 months’ notice is required prior to the termination.

If the MoH were to serve a notice of breach of the terms of the UAS to the Company, the Company will have a period of six months to remedy such breach failing which the MoH can require the Company to suspend activities on the site until the breach is remedied. The Company believes this time period is a sufficient time period for it to remedy any breach. Consequently, the risk of suspension of the Company’s activities by the MoH, as a result of breach of the UAS, remains significantly mitigated.

Availability of skilled personnel

The Company depends to a significant degree on the continued services of key personnel, both employed by it and those employed by WMU. Their skills and experience are crucial elements to the success of the Company’s business. The Company has a limited number of employees, as the labour-intensive operation and maintenance is outsourced to the Operator.

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The loss of any member of the Board or Management or the loss of any other key employees may result in a loss of organisational focus, poor execution of operations, or an inability to identify and execute potential strategic initiatives such as expansion of capacity. The occurrence of any of these events may have a material adverse effect on the business, results of operations and financial condition of the Company, including the market price of the Shares. However, if the Company was exposed to a loss of senior executives and employees, it would be able to pool resources from and rely on the support of the Project Founders, and this serves to significant mitigate the risk faced by the company in this respect.

Transactions with certain related parties

The Company has also engaged in transactions with certain related parties, and it may continue to do so in the future. See Chapter XVII – Related Party Transactions and Material Contracts of this Prospectus. Conflicts of interest may arise between the Company and such related parties, potentially resulting in the conclusion of transactions on terms not determined by market forces.

The Company has put in place certain policies for dealing with conflicts of interest and intends to abide by applicable laws and regulations relating to transactions with related parties and mitigate any risk related to related party transactions.

Risk associated with fuel supply and fuel price risks within the PPA period

Natural gas is the primary fuel for the Plant. Natural gas is supplied by the neighbouring Musandam Gas Plant through a pipeline built and commissioned by the Company during the Plant construction and subsequently handed over to MoG for operation and maintenance of the pipeline as per the provision of NGSA. The Plant therefore completely relies on the natural gas supply from Musandam Gas Plant. In addition, Musandam Power is subject to all of the usual operating risks associated with gas supply, which may cause a delay or interruption in the supply of natural gas to the Plant, which, in turn, could have an adverse effect on the business, results of operations and financial condition of Musandam Power, including the market price of the Shares.

However, the terms of the NGSA with the MoG goes hand in hand with the PPA mitigating fuel supply risk. Musandam Power is not exposed to a fuel price risk as the fuel cost is passed through to OPWP under the PPA. Further, the technology employed by the Plant allows the Plant to be operated on secondary fuel (Fuel Oil) in absence of natural gas supply which mitigates the fuel supply risk. The NGSA provides protection against cost escalation due to the use of Fuel Oil in the event of disruption of natural gas supply by assuring payment to the Company for the incremental fuel costs without any maximum limit and operating cost up to OMR 7.5 million per annum. These arrangements serve to mitigate the risks faced by the Company in this respect.

Government risk

The PPA provides protection against various political and economic risks including but not limited to war, hostilities, belligerence, blockade, occurring in Oman; expropriation, requisition, confiscation, nationalisation, import restrictions or closure of harbours, docks, facilities for the use of, or services to, shipping or navigation by any competent authority; rationing or allocation (other than any such existing or applied as at the effective date of the PPA) where imposed by law or otherwise by any competent authority and any Change of Law (as defined in the PPA).

Operations are subject to government regulation and licences

Regulations that apply to Musandam Power’s business generally cover four areas: (i) corporate existence, and power and authority to conduct its business; (ii) the conduct of power generation; (iii) environmental regulation; and (iv) regulation of health and safety. Musandam Power is subject to a varied and complex body of laws and regulations that both public officials and private parties may

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seek to enforce. Musandam Power conducts its power generation operation under several licences, leases and permits and the UAS. Such licences, permits and usufruct may be suspended, terminated or revoked if Musandam Power does not comply with the licence, permit or usufruct requirements, does not comply with any applicable emissions and other environmental requirements, fails to provide required information, becomes insolvent, fails to fulfil any capital expenditure or production obligations or does not comply with any other applicable licence, permit or usufruct conditions. In addition, the laws and regulations to which Musandam Power is subject to, impose requirements on the modification, ownership and operation of the Plant. If Musandam Power fails to comply with these requirements, this may prevent it from modifying or operating the Plant, and Musandam Power could be subject to civil or criminal liability, fines and the imposition of clean-up obligations, including liens, to secure those obligations. Musandam Power’s business could also be materially adversely or beneficially affected by changes in existing law, the interpretation of existing laws or the adoption of new laws applicable to Musandam Power. The imposition of fines or penalties, or the revocation or suspension of licences, permits or usufruct arrangements could have a material adverse or beneficial effect on the business, results of operations and financial condition of Musandam Power, including the market price of the Shares.

The Project Documents contain provisions which are expected to provide flexibility and protection in the event of an adverse change in the applicable law, thus mitigating the risk associated with these matters.

Adequate insurance may not be available to cover all potential losses

Musandam Power is obligated under the Project Documents and the Finance Documents to maintain a certain minimum level of insurance against certain risks. However, as a result of certain operating risks and other potential hazards associated with the power generation industry, Musandam Power may from time to time become exposed to significant liabilities for which it may not have adequate insurance coverage.

Musandam Power maintains insurance for the Project, including all risks property and machinery insurance, general third-party liability insurance, and business interruption insurance, in amounts and with deductibles that Musandam Power considers appropriate. There can be no assurance that such insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which Musandam Power may be subject.

Further, if there are changes in the insurance markets or increases in insurance costs, Musandam Power cannot provide assurance that it will be able to pass through to OPWP for reimbursement under the PPA any insurance costs in excess of those projected when Musandam Power entered into the PPA. Moreover, the occurrence of a significant event that is uninsured, such as a substantial business interruption could have a material adverse effect on Musandam Power’s financial position, results of operations and cash flows. In the event there is a total or partial loss of Musandam Power’s assets, there can be no assurances that the insurance proceeds received by Musandam Power would not have an adverse effect on the financial condition of Musandam Power, including the market price of the Shares.

Depegging or adjustment in Omani Rial/US Dollar peg

Musandam Power, as part of its operation makes certain payments to its vendors in US Dollars. As at the date of this Prospectus, the Omani Rial remains pegged to the US Dollar. Any such de-pegging could have an adverse or beneficial effect on the financial condition of Musandam Power, including the market price of the Shares. However, there can be no assurance that the Omani Rial will not be de-pegged in the future or that the existing peg will not be adjusted in a manner that adversely or beneficially affects Musandam Power.

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In the event that the Omani Rial is unpegged, the PPA provides for adjustment of the tariff linked to the USD – OMR exchange rate for certain portions of its cost base (Current peg being OMR 0.3845 / USD 1). The risks of any depegging event are somewhat mitigated by the “Buyer Risk Event” provisions contained in clause 24 of the PPA. Under clause 24 a depegging is a “Change of Law”, and as such should the depegging prevent Musandam Power from performing its obligations under the PPA their liability would be limited.

Inflation could increase Musandam Power’s costs and adversely affect its results of operations

Pursuant to the terms of the PPA, Musandam Power revenues are compensated for indexation in respect of both USD and OMR cost inflation. Hence, the risks of variation of USD/OMR cost inflation are largely mitigated by the revenues being partially tied to an escalation formula based on a mix of US Dollar PPI and Omani Rial CPI indices.

Adverse changes in interest rate movements

Musandam Power is funded substantially through long term loans therefore any changes in the interest rates could impact its profitability. As per the current financing agreement, Musandam Power’s interest cost on the term loan is fixed for a certain period and is expected to be reset after the period. Depending on the interest rate scenario prevailing at the time of the reset Musandam Power is exposed to the risk of rising interest cost consequently curtailing its ability to pay dividend. Further, Musandam Power has not utilized any hedging arrangement to mitigate this risk.

Musandam Power’s Term Facility and other facilities are OMR denominated which negates the requirement for using any hedging instrument. The Facilities Agreement provides for protection against unfavourable movement in interest rate by capping the interest rate at a certain rate (subject to market disruption clause) for the term of the debt facility.

Limited experience complying with listed company obligations

Musandam Power has operated historically as a SAOC and, accordingly, some of its Management have limited experience managing a publicly traded company and complying with laws pertaining to public companies. In particular, the significant regulatory oversight and reporting obligations imposed on public companies will require substantial attention from the Management and may divert its attention away from the day-to-day management of the business, which could have an adverse effect on Musandam Power’s business, financial condition and results of operations, including the market price of the Shares.

The Company has the support of marquee founders and can utilize the experience of the management team of the Shareholders to comply with listed company obligations. Further, the Company intends to appoint appropriate advisors to assist them in complying with the rules applicable to SAOG’s.

No existing market for the Shares

Prior to the Offer, there has not been a public market for the Shares. The Selling Shareholders cannot predict whether investor interest in Musandam Power will lead to the development of an active trading market on the MSM, or otherwise, or how liquid any market that does develop might be. The Offer Price for the Offer Shares may not be indicative of prices that will prevail in the open market following the Offer.

The market price of the Shares may fluctuate widely in response to different factors

Following the Offer, the market price of the Shares could be subject to significant fluctuations due to a change in sentiment in the stock market regarding the Shares or securities similar to them or in response to various facts and events, including any regulatory changes affecting Musandam Power’s operations, variations in its half yearly or yearly operating results and its business developments or those of its competitors.

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In addition, stock markets have from time to time experienced price and volume volatility, which, in addition to general economic and political conditions, could adversely or beneficially affect the market price for the Shares. The value of the Shares may go down as well as up, and the market price of the Shares may not reflect the underlying value of Musandam Power’s business.

Dividend policy may not be fulfilled

Any payment of future dividends will be made taking into account the sufficiency of distributable reserves and liquidity in order to ensure Musandam Power’s operational needs and/or business growth are not limited by the unavailability of funds, as well as Musandam Power’s known contingencies and compliance with any funding facility covenants.

Dividend payments are not guaranteed and the Board may decide, in their absolute discretion, at any time and for any reason, not to recommend dividends. Further, any dividend policy, to the extent implemented, will significantly restrict Musandam Power’s cash reserves and may adversely affect its ability to fund unexpected capital expenditures, as well as the ability to make interest and principal repayments on its outstanding term loan facilities. As a result, Musandam Power may be required to borrow additional money or raise capital by issuing equity securities, which may not be possible on attractive terms or at all.

Changes in policy and IFRS

Any change in the accounting policies followed by the Company, which arises internally or as a result of any changes to IFRS, could have a material impact on the financial results of the Company and its ability to declare and pay dividends. The management of the Company will consider what impact these may have on the Company’s financial statements as they arise.

Dilution risk and Founders exit risk

This risk mitigated by contractual provisions set out in the PFA, which are as follows:

• From the PPA Effective Date up to but excluding the date on which the Project Founders complete the IPO, the lead founder, Oman Oil Company SAOC, is committed under the PFA to retain directly or indirectly, hold and maintain at least 50.1% per cent of the Shares;’

• On and from the date on which the Project Founders complete the IPO up to and including the third anniversary of the COD, the lead founder is required to, directly or indirectly, hold and maintain at least 30.060% per cent of the Shares;

• From the PPA Effective Date up to but excluding the date on which the Project Founders complete the IPO, the other founders, are committed under the PFA to retain directly or indirectly, hold and maintain at least the following amount of Shares:

– OETCL, at least 0.1 %, and,

– LGI, at least 30%;

• Pursuant to the SHA, if any of the Founders transfer the whole (or any part) of their respective Shares to a third party, such third party would be required to execute a deed of adherence pursuant to which such third party shall be obligated to observe and perform the provisions and obligations of the SHA; and

• The Shares held by the Founders are also pledged in favour of the Finance Parties making them less liquid and such pledge can only be lifted in accordance with the Facilities Agreement and with the approval the lenders thereunder.

OETCL’s proposal to divest its entire shareholding in MPC has been approved by the other Project Founders and such other parties as are required to allow such a divestment. The exit of OETCL from the Company will not adversely affect MPC due to its small shareholding and the fact that its parent company, Oman Oil Company SAOC, through its subsidiary OGC and in turn its subsidiary OOFDC,

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will continue to retain a significant shareholding. As such the value that Oman Oil Company SAOC and its subsidiaries and affiliates bring to MPC will be preserved.

Non Compliance with Deadline for Listing under PFA

The PFA states that the listing of the Offer Shares must occur within a period of four years commencing from the date of incorporation of the Company, i.e. on or before 19 November 2018. The Selling Shareholders have by their letter, reference MPC-MIPP-GEN-EHC-002 dated 6 November 2018, notified EHC of the delay that has occurred in listing the Company’s shares and it has requested EHC to postpone the IPO until all procedures, including CMA approval, required for the IPO are complete. EHC responded its letter, reference NH/CEO/185/2018 dated 2 December 2018, to the Selling Shareholder by noting the content of the Selling Shareholders letter and reminding the Selling Shareholders of the their obligations under the PFA. In addition the Selling Shareholders have confirmed their ongoing obligations under the PFA to complete process of undertaking the IPO. Notwithstanding the general provisions of Omani Law being applicable, the PFA does not however, provide for potential adverse action against, or penalties to be levied on, the Company for failure to meet the deadline specified in the PFA.

Under the PPA, there are no consequences for failure to meet the deadline in the PFA, except that OPWP is entitled to terminate the PPA if there is a repudiation by the Project Founders (or any of them) of the PFA. However, none of the Project Founders have repudiated or expressed their intention to repudiate the PFA and all the Project Founders are committed to undertake the IPO.

The PFA also provides that in the event that if all of the Offer Shares are not fully subscribed in the Offer, the EHC will have an option to acquire the unsubscribed Offer Shares according to the pricing mechanism set out in the PFA. Should the EHC not wish to exercise its option the Project Founders are required to continue offering the remaining (i.e. unsold) Offer Shares for sale to the public on an annual basis for a three year period following the initial listing on the MSM. Notwithstanding MPC’s contractual obligations under the PFA, MPC has been informed by the CMA that in the event of an undersubscription, the next steps will be undertaken as advised by the CMA in consultation and agreed with the Issue Manager on behalf of MPC and this may prevent MPC from complyinng with its contractual obligations under the PFA. In order to mitigate the risk of non-compliance MPC shall write to the EHC informing them of the CMA’s position and seek the EHC’s consent to the arrangement.

Compliance with the Facilities Agreement

Under the terms of the Facilities Agreement, the Company is under obligations to both do, and refrain from doing, certain things. Failure to comply with these obligations and or prohibitions and other covenants may allow the Lender to terminate the Facilities Agreement and demand repayment of the sums provided by them to the Company.

A summary of the “Positive Covenants”, those obligations the Company must actively pursue, and the “Negative Covenants”, those prohibitions the Company must abide by, are summarised in Chapter XII – Project Costs and Sources of Financing. In addition, Chapter XII also summaries the “Events of Default”, these being the occurrences upon which the Lender may terminate the Facilities Agreement and seek repayment of the loans.

In order to mitigate the risks associated with this matter the Company will take steps to ensure that it is always compliant with the terms of the Facilities Agreement and the covenants set out therein in order to avoid an “Event of Default”. The Company shall also establish such reasonable internal regulations and policies as are necessary to achieve compliance and to avoid an accidental breach of the terms of the Facilities Agreement.

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Chapter XIV

Summary Future Financials

MUSANDAM POWER COMPANY SOACFinancial projections for the years ending

31 December 2019 to 2023

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MUSANDAM POWER COMPANY SOAC

Financial projections for the years ending

31 December 2019 to 2023

Page(s)

Projected statement of profit or loss and other comprehensive income 96

Projected statement of financial position 97

Projected statement of changes in equity 98

Projected statement of cash flows 99

Notes to the financial projections 100-128

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96

Projected statement of profit or loss and other comprehensive incomefor the years ending 31 December 2019 to 31 December 2023

Notes 2019 2020 2021 2022 2023

RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Revenue 4.1 23,227 27,136 28,725 29,235 29,870

Operating cost 4.2 (16,407) (20,297) (21,862) (22,390) (22,968)

Gross profit 6,820 6,839 6,863 6,845 6,902

General and administrative expenses 4.3 (688) (706) (723) (743) (760)

Other income 43 30 15 - -

Finance costs (net) 4.4 (3,448) (3,173) (2,997) (2,998) (3,442)

Profit before tax 2,727 2,990 3,158 3,104 2,700

Taxation 4.5 (685) (450) (475) (467) (406)

Profit and total comprehensive income for the year 2,042 2,540 2,683 2,637 2,294

Basic earnings per share (in Bzs.) * 4.15 29.01 36.08 38.12 37.46 32.59

* The figures reflect the ten for one share split in 2019 prior to the IPO.

The attached notes 1 to 4 form part of these financial projection.

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Projected statement of financial positionas at 31 December 2019 to 31 December 2023

Note 2019 2020 2021 2022 2023RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

ASSETSNon-current assetsProperty, plant and equipment 73,866 71,870 69,879 67,889 65,898

Other receivable 4.6 494 254 - - -

Total non-current assets 74,360 72,124 69,879 67,889 65,898Current assets

Inventories 3,386 3,386 3,386 3,386 3,386

Trade and other receivables 4.6 2,794 2,958 3,023 3,044 3,069

Cash and cash equivalents 4.7 1,346 1,143 958 580 168

Total current assets 7,526 7,487 7,367 7,010 6,623Total assets 81,886 79,611 77,246 74,899 72,521EQUITY AND LIABILITIESCapital and reservesShare capital 4.8 7,039 7,039 7,039 7,039 7,039

Legal reserve 4.9 647 902 1,172 1,437 1,667

Retained earnings 1,310 1,651 2,120 2,548 2,668

Total equity 8,996 9,592 10,331 11,024 11,374Non-current liabilitiesSenior facility loan – non current portion

4.10 62,989 59,319 55,762 52,575 49,180

Provision for assets retirement obligation

4.11 168 185 203 222 243

Deferred tax liability (net) 4.5 2,287 2,736 3,211 3,678 4,085

Total non-current liabilities 65,444 62,240 59,176 56,475 53,508Current liabilitiesTrade and other payables 4.13 3,064 3,260 3,368 3,427 3,464

Senior facility loan - current portion 4.10 3,569 3,731 3,618 3,248 3,457

Working capital loan 773 738 723 715 708

Amount due to related parties 4.14 40 50 30 10 10

Total current liabilities 7,446 7,779 7,739 7,400 7,639Total liabilities 72,890 70,019 66,915 63,875 61,147Total equity and liabilities 81,886 79,611 77,246 74,899 72,521

The financial projections were approved and authorized for issue by the Board of Directors and signed on their behalf on XX xx 2019 by:

Director/Project Director Director/Finance Manager

The attached notes 1 to 4 part of these financial projections.

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Projected statement of changes in equityfor the years ending 31 December 2019 to 31 December 2023

Share capital

Legal reserve

Retained earnings

Total

RO ’000 RO ’000 RO ’000 RO ’000

At 1 January 2018 7,039 70 448 7,557

Profit and total comprehensive income for the year - - 3,721 3,721

Transfer to legal reserve - 372 (372) -

At 31 December 2018 7,039 442 3,797 11,278

Profit and total comprehensive income for the year - - 2,042 2,042

Transfer to legal reserve - 205 (205) -

Dividends - - (4,324) (4,324)

At 31 December 2019 7,039 647 1,310 8,996

Profit and total comprehensive income for the year - - 2,540 2,540

Transfer to legal reserve - 255 (255) -

Dividends - - (1,944) (1,944)

At 31 December 2020 7,039 902 1,651 9,592

Profit and total comprehensive income for the year - - 2,683 2,683

Transfer to legal reserve - 270 (270) -

Dividends - - (1,944) (1,944)

At 31 December 2021 7,039 1,172 2,120 10,331

Profit and total comprehensive income for the year - - 2,637 2,637

Transfer to legal reserve - 265 (265) -

Dividends - - (1,944) (1,944)

At 31 December 2022 7,039 1,437 2,548 11,024

Profit and total comprehensive income for the year - - 2,294 2,294

Transfer to legal reserve - 230 (230) -

Dividends - - (1,944) (1,944)

At 31 December 2023 7,039 1,667 2,668 11,374

The attached notes 1 to 4 form part of these financial projections.

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Projected statement of cash flowsfor the years ending 31 December 2019 to 31 December 2023

2019 2020 2021 2022 2023

RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Cash flows from operating activities

Net Profit before Tax 2,727 2,990 3,158 3,104 2,700

Adjustment for non-cash items

Finance cost 3,348 3,093 2,921 2,921 3,365

Asset retirement obligation - unwinding of discount 9 8 7 10 10

Amortisation of deferred financing charges 62 62 62 62 62

Depreciation 1,994 2,000 1,994 1,995 1,995

Operating cash flows before working capital adjustments 8,140 8,153 8,142 8,092 8,132

Inventories - - - - -

Trade and other receivables (279) 79 190 (21) (24)

Trade and other payables (146) 197 112 59 44

Amounts due to related parties (25) 10 (20) (20) -

Net cash from / (used in) operating activities 7,690 8,439 8,424 8,110 8,152

Cash flows from investing activities

Payment for purchase of property, plant and equipment. - - - - -

Net cash from / (used in) investing activities - - - - -

Cash flows from financing activities

Repayment of senior facility loan (3,405) (3,569) (3,731) (3,618) (3,248)

Finance costs paid (3,377) (3,094) (2,918) (2,918) (3,365)

Shareholder Loan Principal Repayments (3,067) - - - -

Working Capital Drawdown 773 (35) (16) (8) (7)

Dividend Payment (4,324) (1,944) (1,944) (1,944) (1,944)

Net cash used in financing activities (13,400) (8,642) (8,609) (8,488) (8,564)

Net increase in cash and cash equivalent (5,710) (203) (185) (378) (412)

Cash and cash equivalent at the beginning of the year 7,056 1,346 1,143 958 580

Cash and cash equivalents at the end of the year 1,346 1,143 958 580 168

The attached notes 1 to 4 form part of these financial projections.

100

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023

1 Legal status and principal activities The Company is a closed joint stock company registered and incorporated in the Sultanate of

Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) located in Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, PO Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Company SAOC (the “Parent”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is PO Box 261, Postal Code 118, Sultanate of Oman. The Parent holds 69.9% of the Company’s issued share capital.

The Company commenced commercial operations on 17 June 2017. The electricity generated from the Project is sold to Oman Power and Water Procurement Company SAOC under a 15 years Power Purchase Agreement. Natural gas required for the Project is supplied by the Ministry of Oil & Gas under a 15 years gas supply agreement

The Company has entered into the following significant agreements:

i) An Engineering, Procurement and Construction (EPC) contract with Wartsila Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wartsila Muscat LLC.

iii) A power purchase agreement (“PPA’) with Oman Water and Power Procurement Company SAOC (‘OPWP’) to sell the electricity generated from the Plant.

iv) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas to supply and purchase natural gas to and for the Plant.

v) An operation and maintenance agreement with Wartsila Muscat LLC to operate and maintain the Plant.

vi) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

vii) Usufructs Agreement with Ministry of Housing for the project Site, temporary areas and RAECO substation Area.

viii) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

2 Basis of preparation

These financial projections of the Company have been prepared by the Company’s management in accordance with the accounting policies and key assumptions set out in notes 3 and 4 respectively.

The financial projections are intended to show a possible outcome based on the stated assumptions. Because of the length of the period covered by the financial projections, the assumptions are necessarily more subjective than would be appropriate for a profit forecast. The financial projections do not therefore constitute a forecast.

Since the financial projections relate to the future, actual results are likely to be different from the projected results because events and circumstances do not occur as expected, and the differences may be material.

These financial projections are presented in Rial Omani (RO), rounded to the nearest thousand.

101

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies

The financial projections have been presented in accordance with International Financial Reporting Standards (IFRS).

The Company has adopted all the new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretation Committee (IFRIC) of IASC that are relevant to its operations and effective for the period beginning on 1 January 2019.

IFRS 16 “Leases” is applicable for annual periods beginning on or after 1 January 2019. The Company has applied the IFRS 16 in these projected financial statements from 1 January 2019 onwards as required, refer note 4.15.

The company has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has been not restated and continues to be reported under IAS 17 and IFRIC 4. On adoption of IFRS 16 Leases, an entity is not required to reassess whether existing contracts contain a lease, but can choose to carry forward the assessments under IFRIC 4 and IAS 17, and apply the definition of a lease only to new contracts entered into after the date of initial application. The company has adopted this choice and applied it consistently for all leases.

Basis of accounting

The financial projections are prepared on the historical cost convention. These financial projections are presented in Rial Omani (RO), rounded to the nearest thousand which is also the functional currency of the Company.

The following is a summary of significant accounting policies, which have been adopted and applied consistently in the financial projections.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation, any identified impairment loss and residual value.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Plant and machinery 40 years

Office equipment 3 years

Furniture and fixtures 3 years

Motor vehicles 3 years

102

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies (continued)

Property, plant and equipment (continued)

Capital spares shall be recognised in the carrying amount of the affected item of property, plant and equipment when it is put in use. The carrying amount of the replaced item is derecognised. When it is not practical to determine the carrying amount of the replaced part, the cost of the capital spares may be used as an indication of what the cost of the replaced part was at the time it was acquired.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.

Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the statement or profit or loss as the expense is incurred.

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the year that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

When each major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement or profit or loss in the year the asset is derecognised.

The assets’ residual values, useful lives and methods are reviewed, and adjusted prospectively, if appropriate, at each financial year end.

Capital work in progress

Capital work-in-progress is stated at cost, less impairment, if any. When commissioned, capital work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Company’s policy.

103

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies (continued)

Leases (Policy applicable before 1 January 2019)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership. All other leases are classified as operating leases.

Amounts receivable under operating leases, as lessor, are recognised as lease income on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. In accordance with IFRS, revenue stemming from (substantial) services in connection with the leased asset is not considered as lease revenue and is accounted for separately.

IFRIC 4 deals with the identification of services and take-or-pay sales or purchasing contracts that do not take the legal form of a lease but convey the rights to customers/suppliers to use an asset or a group of assets in return for a payment or a series of fixed payments. Contracts meeting these criteria should be identified as either operating leases or finance leases. This interpretation is applicable to the Company’s PPA.

Leases (Policy applicable after 1 January 2019)

At inception of a contract the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• the contract involves the use of an identified asset- this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

• the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

- the Company has the right to operate the asset; or

- the Company designed the asset in a way that predetermines how and for what purpose it will be used.

This policy is applied to contracts entered into, or changed, on or after 1 January 2019. At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

104

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies (continued)(i) As a lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments;

- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

- amounts expected to be payable under a residual value guarantee; and

- the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘Trade and other payables”’ in the statement of financial position.

105

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies (continued)

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.(ii) As a lessor

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies IFRS 15 to allocate the consideration in the contract.

The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

The accounting policies applicable to the Company as a lessor in the comparative period were not different from IFRS 16.

Financial instruments

Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are measured subsequently at amortised cost:• the financial asset is held within a business model whose objective is to hold financial assets in

order to collect contractual cash flows; and• the contractual terms of the financial asset give rise on specified dates to cash flows that are

solely payments of principal and interest on the principal amount outstanding.

106

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Company’s financial assets include trade and other receivable and cash at bank. These financial assets qualify for and are classified as debt instruments measured at amortised cost.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). The Company does not have any FVTOCI and FVTPL financial assets.

Amortised cost and effective interest rate method

(i) The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

107

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

For purchased or originated credit-impaired financial assets, the Company recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

Interest income is recognised in profit or loss and is included in the “finance income - interest income” line item.

Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI and trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

(i) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Company’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations.

108

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

• an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;

• significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;

• significant increases in credit risk on other financial instruments of the same debtor;

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise.

Despite the aforegoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

(1) The financial instrument has a low risk of default,

(2) The borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and

(3) Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Company considers a financial asset to have low credit risk when the asset has external credit rating of ‘investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

For financial guarantee contracts, the date that the Company becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contracts, the Company considers the changes in the risk that the specified debtor will default on the contract.

The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

109

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

(ii) Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the counterparty; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collateral held by the Company).

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;

(b) a breach of contract, such as a default or past due event (see (ii) above);

(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

(e) the disappearance of an active market for that financial asset because of financial difficulties.

(iii) Write-off

The Company writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Company’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

110

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

(iv) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract, as the Company is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Company expects to receive from the holder, the debtor or any other party.

If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Company recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

Derecognition of financial assets

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

111

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity instrument which the Company has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.

However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Company, are measured in accordance with the specific accounting policies set out below.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL. The Company does not have financial liabilities at FVTPL.

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.

112

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Financial instruments (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the ‘other gains and losses’ line item in profit or loss (note 11) for financial liabilities that are not part of a designated hedging relationship. For those which are designated as a hedging instrument for a hedge of foreign currency risk foreign exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

When the Company exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification should be recognised in profit or loss as the modification gain or loss within other gains and losses.

113

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if:

• there is a currently enforceable legal right to offset the recognised amounts; and

• there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Trade and other receivables

Trade and other receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Trade and other payables

Trade and other payables are initially measured at their fair value and subsequently measured at amortised cost, using the effective interest method

Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

Where a provision is measured using the cash flows estimated to settle the present obligation, 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 as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Taxation

Taxation is provided for in accordance with Omani fiscal regulations.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts.

114

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilized.

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Income tax is recognised in the statement of profit or loss except to the extent that it relates to items recognised in the statement of comprehensive income or directly in equity, in which case it is recognised in the statement of comprehensive income or directly in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Delay liquidated damages

Delay liquidated damages paid to Oman Power and Water Procurement Company SAOC are recognised as other receivables. Delay liquidated damages receivable are recognized when they are determined to be virtually certain of recovery.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank. Cash and cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash, which are subject to an insignificant risk of changes in value and have maturity of three months or less at the date of acquisition.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

Employee benefits

Provision for end of service indemnity for non-Omani employees’ is made in accordance with the Oman labour law, and is based on current remuneration and cumulative years of service at the reporting date.

End of service indemnity for Omani employees are contributed in accordance with the terms of the Social Security Law of 1991.

115

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Earnings per Share

Basic earnings per share is calculated by dividing the net profit for the period by the weighted average number of shares outstanding during the period.

Derecognition of financial assets and financial liabilities

Financial assets:

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired; or

• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and

• Either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

Financial liabilities:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and the Company intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards or for gains and losses arising from a group of similar transactions.

Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

116

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3 Significant accounting policies (continued) Impairment of non-financial asset

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

Revenue

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control of a product or service to a customer.

Revenue comprises tariffs for power capacity, electrical energy and fuel charges. Tariffs are calculated in accordance with the PPA.

Lease revenue

The PPA with OPWP is considered as a lease within the context of IFRIC 4 and has been classified as an operating lease under IAS 17. Under the PPA, the Company is entitled to the Capacity charges for each hour during which the plant is available for power generation. Capacity charge is treated as lease revenue under operating lease and is recognised on a straight line basis over the lease term.

Other revenue from the contracts with the customers

Revenue is measured based on the terms specified in the contract with a customer. The Company recognizes Electrical energy and fuel charges revenue when it transfers the control of a product or service to a customer i.e. when electricity is delivered and the customer has accepted the deliveries and the control has been transferred to the customer. Energy charge and fuel charge is determined based on the fuel and variable cost of power.

No revenue is recognised if it is not probable that the Company will collect the consideration to which the Company will be entitled in exchange for the goods or services that will be transferred to customers. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customers’ ability and intention to pay that amount of consideration when it is due.

117

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing each product to its present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

As of reporting date, inventories consist of diesel and lube oil.

Asset retirement obligation

The provision for asset retirement obligation is recognised when there is a present obligation as a result of assets constructed on land under usufruct contracts with the Ministry of Housing, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of provision can be measured reliably. The estimated future obligations include the costs of removing the facilities and restoring the affected areas. A corresponding asset is recognised in property, plant and equipment and depreciated accordingly.

The provision for asset retirement obligation is a best estimate of the present value of expected costs required to settle the obligation, at the reporting date based on the current requirements of the Usufruct agreement, using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of comprehensive income as a finance cost.

The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are dealt with prospectively and reflected as an adjustment to the provision and corresponding decommissioning asset recorded as property, plant and equipment.

If there is an indication that the new carrying amount of the asset is not fully recoverable, the asset is tested for impairment and an impairment loss is recognised where necessary.

118

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued)

Directors’ remuneration

The Board of Directors’ remuneration is accrued within the limits and the requirements of the Commercial Companies Law of the Sultanate of Oman.

Dividend on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders.

Earnings per share

The Company presents earnings per share (EPS) and net assets per share for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Project Director who manages the Company on a day-to-day basis, as per the directives given by the board of directors that makes strategic decisions.

New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective, and have not been applied in preparing these financial projections. None of these are expected to have any material effect on the financial projections of the Company.

Critical accounting judgements and key sources of estimation uncertainty.

The following are the significant estimates used in the preparation of the financial projections:

Lease classification

The Company has entered into the PPA”) with OPWP to generate electricity and make available the power capacity from its Plant.

Management believes that IFRIC 12 is not applicable to the arrangement as the residual interest is borne by the Company and not OPWP. The estimated useful life of the power plant of 40 years takes into account the Company’s right to extend the land lease under a Usufruct Agreement for an additional term of 25 years. Furthermore, the residual value of the assets will have substantial value at the conclusion of the PPA and the Company will be able to continue to generate revenue through supply of power taking into account the government’s future plans to deregulate the power sector in Oman.

119

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

3. Significant accounting policies (continued) Management considers the requirements of IFRIC 4, “Determining Whether an Arrangement

Contains a Lease”, which sets out guidelines to determine when an arrangement might contain a lease. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Once a determination is reached that an arrangement contains a lease, the lease arrangement is classified as either financing or operating according to the principles in IAS 17, Leases. A lease that conveys the majority of the risks and rewards of operation is a finance lease. A lease other than a finance lease is an operating lease.

Based on management’s evaluation, the PPA with OPWP is considered as a lease within the context of IFRIC 4 and has been classified as an operating lease under IAS 17 since significant risks and rewards associated with the ownership of the plant lies with the Company and not with OPWP.

The primary basis for this conclusion is that the PPA is for a term of 15 years while the economic life of the power plant is estimated to be 40 years. The present value of minimum lease payments under the PPA do not substantially recover the fair value of the plant at the inception of the lease.

Provision for asset retirement obligation

Upon expiry of their respective Usufruct, the Company will have an obligation to remove the facilities and restore the affected area. The estimated cost, discount rate and risk rate used in the provision for decommissioning costs calculation is based on management’s best estimates.

Useful lives and residual value of equipment

Depreciation is charged so as to write off the cost of assets, less their residual value, over their estimated useful lives. The calculation of useful lives is based on management’s assessment of various factors such as the operating cycles, the maintenance programs, and normal wear and tear using its best estimates. The calculation of the residual value is based on the management best estimates.

Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence.

Taxes

Uncertainties exist with respect to the interpretation of tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and nature of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.

The company establishes provisions, based on reasonable estimates, for possible consequences of finalization of tax assessments of the company. The amount of such provisions is based on various factors, such as experience of previous tax assessments and differing interpretations of tax regulations by the taxable entity and the responsible tax authority.

120

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions

The financial projections of the Company’s activities for the years 2019 to 2023 have been prepared by the Company’s management in good faith and with due care and attention, based on assumptions, which they consider appropriate. A careful effort has been made to estimate the future plant capacity utilisation and the related income generated by the Company on the basis of existing facilities to arrive at the projected statement of profit or loss. However, there can be no certainty as to the extent to which the actual results will match the projections or whether the assumptions will remain valid.

The following is a summary of key assumptions:

4.1 Revenue

The Company’s revenue stream comprises of energy charges, capacity charges and other charges.

Details of projected revenue from the revenue stream mentioned above for the five years are set out below:

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Energy charges 2,266 2,452 2,638 2,680 2,724

Capacity charges 10,851 10,947 11,016 11,056 11,170

Other charges 10,110 13,737 15,071 15,499 15,976

23,227 27,136 28,725 29,235 29,870

The PPA provides that the Company will make available and sell to OPWP a guaranteed electricity capacity, for which the Company will receive payment that will compensate for the investments made and the operating costs as follows;

i) Electricity Energy charge

The charge which comprises the Electrical Energy Variable Operation and Maintenance charge.

Electricity energy variable operations and maintenance charge

Electricity energy variable operations and maintenance charge is designed to cover the variable operation and maintenance costs to produce the electricity output delivered (other than in respect of fuel). The charge is calculated based on the electricity output and the electricity capacity operation and maintenance charge rate.

ii) Power Capacity Charge

The charge which comprises the power capacity investment charge and the power capacity fixed operation and maintenance charge.

121

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.1 Revenue (continued)

Power Capacity investment charge

Power capacity charge is designed to cover the investment by the Company such as debt service, return on equity, tax payments and connection fee (capital component). The charge is calculated based on the power capacity investment change rate and adjusted for scheduled unavailability, forced outages, any de-rating of the plant and seasonal weighting factor. The PPA allows for adjustment for any change in the RO/USD exchange rate.

Power Capacity fixed operation and maintenance charge

Power capacity fixed operation and maintenance charge is designed to cover the fixed costs to operate and maintain the plant, spare parts, insurance and overhead, manpower, generator license fee and connection fee (O&M component). Similar to the power capacity investment charge, it is calculated based on the power capacity operation and maintenance charge rate and adjusted for scheduled unviability, forced outages, any de-rating of the plant and seasonal weighting factor. Power capacity fixed O&M charge is indexed to the inflation rate and is adjusted for any change in the RO/USD exchange rate.

iii) Fuel Charge

The Fuel charge is the amount payable to compensate the generator for the total fuel demand required for the production of electricity energy delivered.

4.2 Operating cost

The operating cost over the period is as follows:

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Fuel cost 10,110 13,737 15,071 15,499 15,976

Operating and maintenance cost 3,642 3,866 4,088 4,177 4,265

Lease Depreciation 1 5 5 5 5

Depreciation 1,994 2,000 1,994 1,995 1,995

Others operating costs incl insurance 660 689 704 714 727

16,407 20,297 21,862 22,390 22,968

The Company has applied the following assumptions to calculate the projected operating cost using the load factors consistent with the revenue assumptions:

i) Operation and maintenance charge

Operation and maintenance cost includes operation and maintenance (O&M) charges (fixed and variable), long term service agreement (LTSA) (fixed and variable), connection fee, generation fee, BoP spares and consumables and powered costs.

122

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.2 Operating cost (continued)

ii) Fuel Cost

Fuel charge represents the payment due to the fuel provider in respect of usage of fuel for the plant based on the respective fuel agreements.

iii) Depreciation

Depreciation of the property plant and machinery, plant capital spares, equipment, furniture & fixtures and asset retirement obligation of the useful life of the asset.

iv) Others

Others comprise of general insurance costs, professional fees, usufruct charges, regular plant maintenance and government fees.

4.3 General and administrative expenses

Administrative and general expenses are semi-variable in nature, and projected in line with the business plan of the Company.

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Management Staff and Labour 349 362 375 389 403

Administrative and General Expenses 234 238 241 245 247

Consultants/Auditors 105 106 107 109 110

General and administrative expenses 688 706 723 743 760

4.4 Finance costs (net)

Finance cost after considering the impact of future interest rate is as follows:

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Interest on senior facility loan (note 4.10) 3,212 3,062 2,887 2,887 3,332

Interest on working capital loan 24 32 31 31 30

Unwinding cost 8 9 9 10 10

Amortisation of Deferred finance charges 62 62 62 62 62

Lease interest expenses 1 8 8 8 8

Bank charges - - - - -

Interest income - - - - -

Interest on Shareholders’ loans (note 4.14) 141 - - - -

Total Finance costs 3,448 3,173 2,997 2,998 3,442

123

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.5 Income tax

The taxation charges comprise:

a) Projected statement of profit or loss and other comprehensive income:

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Tax Expenses 685 450 475 467 406

b) Deferred tax liability:

2019 2020 2021 2022 2023

RO ’000

RO ’000 RO ’000 RO ’000 RO ‘000

Deferred tax assets (222) (466) (555) (540) (492)

Deferred tax liability 2,509 3,202 3,766 4,218 4,577

2,287 2,736 3,211 3,678 4,085

The Company is liable to income tax at 15% of taxable income.

4.6 Trade and other receivables

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

In accordance with Deed of Settlement dated 20 December 2018 in relation to the EPC delay LDs with the EPC Contractor, the Fixed Fee payable under clause 10.3 of the LTSA will be reduced by the total amount of US$ 2.1 million by way of pro-rata reduction of the monthly fee payable over three (3) years from 1 January 2019. In the event the Fixed Fee in any month is less than the pro-rata amount payable towards the US$ 2.1 million, the balance will be deducted from the Variable Fee payable under clause 10.3 of the LTSA. Receivables is shown as current and non-current parts.

Trade receivables (current portion) represent amounts receivable from Oman Power and Water Company and Ministry of Oil & Gas for the last invoice as of the reporting date and the non-current portion of other receivables represent amounts receivable (non-current portion) from LTSA as of the reporting date:

124

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Trade receivables (current) 2,810 2,971 3,035 3,056 3,080

Other receivables - - - - -

Provisions for Expected Credit Losses (IFRS 9) (16) (13) (12) (12) (11)

2,794 2,958 3,023 3,044 3,069

Other receivables (non-current) 494 254 - - -

3,288 3,212 3,023 3,044 3,069

4.7 Cash and cash equivalents

The balances in cash and cash equivalents with banks are as follows:

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

Cash and cash equivalents 1,346 1,143 958 580 168

4.8 Share capital

The authorized share capital is currently 20 million ordinary shares of RO 1 each. Each share will be split into ten before the initial public offering (IPO).The issued and fully-paid share capital of the Company is RO 7.039 million. The founding shareholders of the Company are divesting a portion of their shareholding in the Company in accordance with the regulatory requirements through an IPO of 28,156,000 ordinary shares with a value of 100 baisas per share. The issued and fully paid up share capital of the Company will remain unchanged during the period of the financial projections. The IPO proceeds and related share issue expenses will accrue to the founding shareholders. Thus the IPO is cash neutral for the Company.

4.9 Legal reserve

Article 106 of the Commercial Companies Law of 1974 requires that 10% of a Company’s net profit be transferred to a non-distributable statutory reserve until the amount of the statutory reserve becomes equal to at least one-third of the Company’s paid up share capital.

125

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.10 Senior facility loans

The movement of the long term loan during the projection period as per loan agreement schedule is as follows:

2019 2020 2021 2022 023RO ’000 RO ’000 RO ’000 RO ’000 RO ‘000

At 1 January - Senior facility loan 70,763 67,358 63,789 60,057 56,439

Add: Proceed from drawdowns during the year - - - - -

Less: Repayments made during the year (3,405) (3,569) (3,731) (3,618) (3,248)

Less: true-up adjustment - - - - -

At 31 December (gross) 67,358 63,789 60,058 56,439 53,191

less: deferred finance charges (1,090) (1,090) (1,090) (1,090) (1,090)

add: amortisation of deferred finance charges 290 351 412 474 536

At 31 December (net) 66,558 63,050 59,380 55,823 52,637

Less: Senior facility loan – current portion (3,569) (3,731) (3,618) (3,248) (3,457)

Senior facility loan – non-current portion 62,989 59,319 55,762 52,575 49,180

Facilities On 1 July 2015, the Company entered into a long term financing agreement for loan facilities (“the

term loans”) in the aggregate maximum amount of RO 79.25 million with a local bank.

Drawn down In 2018 RO 10.25 million had been drawn down (31 December 2017: RO 24.25 million and the

remaining undrawn amount had been cancelled.

Repayments The term loans is to be repaid in half yearly installments commencing from 30 June 2017, with the

last installment scheduled on 17 December 2031.

Interest The term loans bear interest 4.6% for 7 years and 3 months after the financial close date. After this,

unless Market Disruption Interest Rate applies a rate equal to the lower of (i) the five (5) year fixed deposit rate of the Facility Agent as of the Specified Time on the First Rate Fixing Date plus two per cent. (2%) per annum and (ii) six per cent. (6%) per annum.

Security The term loans are secured by a legal mortgage over’s the Company immovable assets, pledge

over the owner’s shares, pledge over the project accounts and assignment / charge over all of the Company’s rights, tittles and interest in and to the project documents the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

Covenants

The loan is subject to applicable financial covenants and DSRA requirements.

126

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.11 Provision for asset retirement obligation

The provision for asset retirement obligation is recognised when there is a present obligation as a result of assets constructed on land under usufruct contracts with the Ministry of Housing, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of provision can be measured reliably. The estimated future obligations include the costs of removing the facilities and restoring the affected areas. A corresponding asset is recognised in property, plant and equipment and depreciated accordingly.

The provision for asset retirement obligation is a best estimate of the present value of expected costs required to settle the obligation, at the reporting date based on the current requirements of the Usufruct agreement, using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of comprehensive income as a finance cost.

The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are dealt with prospectively and reflected as an adjustment to the provision and corresponding decommissioning asset recorded as property, plant and equipment.

If there is an indication that the new carrying amount of the asset is not fully recoverable, the asset is tested for impairment and an impairment loss is recognised where necessary.

The decommissioning obligation represents the present value of management’s best estimate of the future sacrifice of the economic benefits that will be required to remove the facilities and restore the affected area at the Company’s leased site. The estimate has been made on the basis of the independent calculation by a professional consultant discounted at 5.5% to its present value, over the plant’s estimated useful life of 40 years. The annual unwinding of discount is part of finance cost (Note 4.4).

4.12 Shareholders’ loans

Facilities

Shareholders’ provided funding of RO 13.05 million during 2016, which was fully utilized to repay the equity bridge loan. During 2017, the shareholders have resolved to convert one half of these funding into share capital of the Company and remaining half RO 6.539 million has been classified as loans from shareholders.

127

PROSPECTUS

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.12 Shareholders’ loans (continued)

Repayments

Shareholders’ loans are due for repayment subject to the consent of the term loan lenders which is dependent on cash flows. The repayment of RO 3.47 million was made in 2018 and balance amount of RO 3.067 million is expected to be paid in 2019.

Interest

Shareholders’ loans carry interest at the rate of 4.6% per annum.

Security

The Shareholders’ loans are unsecured.

4.13 Trade and other payables

Trade payable represent mainly amounts payable to MOG, LTSA and O&M operators for the last invoice as of the reporting date

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ’000

Trade payables 2,927 3,125 3,235 3,296 3,335

Lease liability 137 135 133 131 129

3,064 3,260 3,368 3,427 3,464

4.14 Related party transactions

Related parties comprise the shareholders, directors, key management personnel and business entities in which they have the ability to control or exercise significant influence in financial and operating decisions. Terms of these transactions are approved by the Company’s management. Government of Sultanate of Oman (the Government), indirectly owns 70% of the Company shares.

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ’000

Amount due to related parties 40 50 30 10 10

128

Notes to the financial projections for the years ending 31 December 2019 to 31 December 2023 (continued)

4 Key assumptions (continued)

4.15 Basic earnings per share

Basic earnings per share are calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

2019 2020 2021 2022 2023

RO ’000 RO ’000 RO ’000 RO ’000 RO ’000

Profit for the year 2,042 2,540 2,683 2,637 2,294

Weighted average number of shares outstanding during the year (in ‘000s) 70,390 70,390 70,390 70,390 70,390

Basic earnings per share (in bzs.) 29.01 36.08 38.12 37.46 32.59

The figures reflect the ten for one share split in 2019 prior to the IPO.

4.16 Application of IFRS 16

The Company has applied IFRS 16 ‘Leases’ from 1 January 2019, as required. In line with the implementation guidelines of the standard, a ‘right to use asset’ of OMR 0.15 million along with ‘lease liability’ of 0.15 million were recorded on 1 January 2019 in the books. Subsequently the ‘right to use asset’ will be amortized and ‘lease liability’ will be repaid over the lease terms. The right to use asset is included in the property, plant and equipment.

4.17 Going Concern

The Company’s management has made an assessment of the Company’s ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern. Therefore, the financial projections continue to be prepared on the going concern basis.

4.18 Dividend

The Company has projected a dividend distribution to the shareholders in 2019 for an amount of RO 4.324 million. RO 2.380 million from this amount will be distributed to the existing shareholders before the IPO.

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Chapter XV

Dividend Policy

As per the Articles of Association (AoA) of the Company, the Offer Shares rank equally with all other Shares for any rights to dividends that may be declared and paid in respect of the financial year of the Company ending 31 December 2018 on a pari-passu basis, and any subsequent years. Following the Offer, the Shareholders’ register of the Company maintained by the MCDC will be amended to enable new Shareholders to receive dividends declared.

Dividend Policy

The Management proposes to follow a reasonable dividend payout policy, subject to debt repayments, working capital and operational expenditure obligations. The amount of annual dividends and the determination of whether to pay dividends in any year may be affected by a number of other factors, including but not limited to the business prospects, financial performance, free cash availability, covenants under the Finance Documents and the outlook for the sector.

Musandam Power’s dividend policy is subject to restrictions contained in the CCL, its Articles and the covenants of the facilities agreements. These are summarised as follows:

• In accordance with Article 132 of the CCL, the company’s Board of Directors shall subtract 10% from the net profits of each financial year, after the deduction of taxes, to form a legal reserve till it reaches at least one-third of the company’s capital. Such reserve may be used to cover the company’s losses and to increase its capital by issuing shares. Such reserve, however, may not be distributed as share dividends to shareholders except when the company reduces its capital, provided the legal reserve shall not be less than one third of the capital after reduction.

• Distribution may be made only from net profits after the deduction of all the necessary costs and set aside required amortizations, allocations and reserves including allocations made by the company from the profits to increase its capital, pursuant to Article 131 of the CCL.

• the remaining profit thereafter may be distributed as an additional dividend to Shareholders or be carried forward to the following year on the Board’s recommendation;

• Dividend distribution will also be limited in time to respect prepayment clauses in the Facilities Agreement;

• The constraints on any payment of a dividend are given by way of a payment waterfall under the Facilities Agreement, where the Company has given an undertaking that it will only apply revenues to the distribution account, subsequent to the funding of all other project accounts in accordance with the terms of the Facilities Agreement.

Additionally, as set out in Chapter XII – Project Costs and Financing, The repayment of the outstanding Shareholders’ Loans amount of c. OMR 3.1 million is anticipated to be completed by November 2019 as detailed in Chapter XII – Project Costs and Financing.

After the IPO, it is intended that Shareholders will receive a stream of cash flows (dividend stream) during the term of the Project and for the post PPA period. The dividends are expected to be declared twice in a Financial Year subject to the terms of the Facilities Agreement. The first dividend post IPO would be paid in December 2019. Thereafter dividend would be paid twice every year in March and September.

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The following table shows the forecast of estimated dividends to be declared by the Company to its Shareholders, based on the forecast set out in “ Chapter XIV – Summary Future Financials” of this Prospectus.

Expected Dividend Announcement Date Total Dividends(OMR millions)

Dividend per share(Bzs)

December 2019 1.944 27.6

March 2020 0.972 13.8

September 2020 0.972 13.8

March 2021 0.972 13.8

September 2021 0.972 13.8

March 2022 0.972 13.8

September 2022 0.972 13.8

March 2023 0.972 13.8

September 2023 0.972 13.8

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Chapter XVI

Valuation and Price Justification

I. Overview

The pricing of the Company’s IPO is underpinned by various qualitative and quantitative factors based on the Company’s competitive strengths and form the basis for delivering steady cash flows to the shareholders. The key strengths of the Company can be summarized into four groups. These are:

i. Well defined contractual framework

ii. Strong Project Founders and Operator with an established track record

iii. Strategic importance of the Plant and efficient technology

iv. Financial strength

Each of these are discussed and elaborated below.

Well-defined contractual framework

• Steady and reliable cash flows till 2032, even in a scenario of power demand volatility

The Company has entered into a 15-year PPA (expires in January 2032) with OPWP. OPWP is owned by the Government of Oman and has a proven track record of contractual payments to similar utility companies in Oman. With a long term PPA, the Company has a well-established contractual framework ensuring cash flow protection against adverse events such as potential shocks in electricity demand during the PPA period. Under the PPA, the Company receives capacity charges from OPWP based on the Plant’s availability irrespective of the quantity of power output dispatched. This makes the Company resilient to power demand fluctuations during the PPA period.

• Natural gas supply and price risk is mitigated through the NGSA

The primary fuel used by the Company is natural gas. Under the 15 year NGSA entered into by the Company, MoG is responsible for the procurement and delivery to the Plant of all of its natural gas requirements over the PPA period. In the event that PPA is extended, the NGSA will automatically be extended. Any increase in the price of natural gas charged by MoG is directly passed through to OPWP under the PPA. Additional information on the NGSA can be found in Chapter XI - Contractual Framework of this prospectus. Further, in the event that natural gas is not available, the Plant will automatically change over to Fuel Oil operation and the Company is entitled to receive capacity charges as well as variable fuel cost from OPWP. Any incremental costs for the use of Fuel Oil instead of natural gas are also borne by the MoG.

Strong Project Founders and Operator with an established track record

• Strong experience of the Project Founders

The Company has the backing of Project Founders with a proven track record of implementing large and complex projects in Oman, GCC and globally. It should be noted that the most significant Project Founders, Oman Oil Company SAOC and LGI, will remain major shareholders in the Company immediately after the IPO, with a collective holding of 60%. The Project Founders namely Oman Oil Company SAOC and LGI have prior experience in owning and operating power plants across the globe. For more details on the Project Founders please refer “Chapter X - Description of Musandam Power and Business Overview”.

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• Experienced Operator to ensure efficient operations for the Plant

Further, WMU has been appointed as the operator under the O&M Agreement and LTSA provider. WMU’s parent company, Wärtsilä Corporation, is a global leader in smart technologies and complete lifecycle solutions for the energy and marine markets with a history of c. 180 years and a global market share of c. 13% in market for gas and liquid fuel power plants with less than 500 MW capacity. For more details on the Operator please refer “Chapter X - Description of Musandam Power and Business Overview”.

Strategic importance of the Plant and efficient technology

• Strategic importance of the Plant

The Plant with contracted capacity of c. 120.7 MW is the only independent power plant servicing the electricity demand of the Musandam Power System. Unlike other IPPs in Oman, the Plant was awarded on “closed procurement” basis to Oman Oil Company SAOC and LGI. Further, given the relatively small size of the Musandam Power System and the strategic importance of this Plant within Musandam Power System, IPA expects the continuation of the single buyer approach by OPWP in Musandam Governorate with the Company continuing to serve the requirements of the Musandam Power System in the post PPA period.

• State-of-the-art Plant with competitive heat rate and flexibility

In line with the unique requirement of Musandam Governorate, WMU’s reciprocating engines are optimally designed to:

(i) operate using both natural gas and Fuel Oil,

(ii) operate at extreme temperatures of up to 50°C,

(iii) deliver superior performance in highly humid conditions,

(iv) operate at very competitive heat rates,

(v) have flexibility of fast start-up and shutdown, and

(vi) switch over between gas and Fuel Oil operation seamlessly.

The Plant’s design is also suited to the island like mode of operations of the Musandam Power System and has low water requirement for cooling. Moreover, the Plant is designed to provide high flexibility to effectively handle the load variation which results in cost savings for the Company.

• Operating at high reliability since the COD

The Plant has achieved excellent operating performance parameters since the COD with a Plant reliability of 99.9% which evidences efficient plant operation.

Financial strength

The projected financial statements of the Company show a steady financial performance. This is underpinned by a well-defined contractual framework for a Plant with efficient technology managed by experienced Project Founders and WMU with an established track record.

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The Company’s historical and projected key financials are provided below.

Key Financials (OMR mn)

2014a 2015a 2016a 2017a 2018a 2019e 2020e 2021e 2022e 2023e

Operating Revenue - - - 9.3 16.5 23.2 27.1 28.7 29.2 29.9

% growth nm nm nm 78% 41% 17% 6% 2% 2%

Net Profit (0.06) (0.05) (0.07) 0.7 3.7 2.0 2.5 2.7 2.6 2.3

% growth nm nm nm nm nm -45% 24% 6% -2% -13%

EPS (Bzs) nm nm nm 9.9 52.9 29.0 36.1 38.1 37.5 32.6

DPS (Bzs)* - - - - - 27.6 27.6 27.6 27.6 27.6

Total Assets 14.1 45.0 67.1 94.4 89.2 81.9 79.6 77.2 74.9 72.5

Total Equity 0.4 0.4 0.3 7.6 11.3 9.0 9.6 10.3 11.0 11.4

Total Debt 12.0 36.0 55.2 70.5 73.8 67.4 63.8 60.1 56.4 53.2

Debt Equity (times) nm nm nm 9.3 6.5 7.5 6.6 5.8 5.1 4.7

Return on Equity (%) nm nm nm 9.2% 33.0% 22.7% 26.5% 26.0% 23.9% 20.2%

Return on Asset (%) nm nm nm 0.7% 4.2% 2.5% 3.2% 3.5% 3.5% 3.2%

ICR nm nm nm 1.68 2.43 1.83 1.99 2.11 2.09 1.83

*DPS for FY 2019e onwards refers to the post-IPO DPS. Please refer note 4.18 of Chapter XIV - Summary Future Financials

• Value in the post PPA period

As per IPA, which was appointed on behalf of the investors to ascertain the cash flows for the Company in the post PPA period, there will be significant value for the Company in the post-PPA period. This is because IPA expects that the capacity of existing plants and firm new builds in the Musandam Power System will not be sufficient to cover demand thereafter. Moreover, given the size of the Musandam Power System and the strategic importance of the Company, IPA expects the continuation of the single buyer approach by OPWP in Musandam Power System. The base case average annual EBITDA projected by IPA for the Company from the expiry of the PPA period to 2056 is c.RO 12.8mn.

II. Price Range

A Price Range of Bzs 260 to Bzs 325 per Share has been fixed for the IPO. This is based on a number of valuation methodologies that that have been used in the past for power sector IPOs in Oman while taking into consideration the current market conditions.

Valuation Methodologies

The methods used are as follows:

– Relative valuation; and

– Dividend discount model (DDM) valuation

These methods along with their advantages and disadvantages have been explained below:

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Relative Valuation Method

Under this approach, the valuation is benchmarked against other listed comparable companies which have a similar regulatory framework and represent a similar risk return profile i.e. operations, cash flows, capital structure, growth plans etc. The relative valuation is generally based on current financial results or projections for the next 1 to 2 years. The benchmarks which are frequently used for relative valuation in the utility sector in Oman include the dividend yield method and the price to earnings multiple.

Advantages of Relative Valuation method Disadvantages of Relative Valuation method

- Based on publicly available information

- Market efficiency theoretically implies that trading valuation should reflect all publicly available information

- Can indicate the value of a company without reflecting a control premium

- Takes into consideration current market conditions

- It may sometimes be difficult to find a sample of truly comparable companies. This is mitigated by the presence of a number of listed utility companies in Oman which have similar business and contracts

- Valuation may be affected by thin trading, small capitalization, ownership restrictions, limited coverage etc.

- External variables such as M&A activity and regulatory scrutiny may affect stock prices

Dividend Discount Model (DDM) Valuation Method

The DDM method of valuation captures the value of a company based on estimated future cash flows, discounted to a present value. This present value is then generally used to evaluate the attractiveness of an investment opportunity at a given price.

Advantages of DDM method Disadvantages of DDM method

- DDM may be one of the most theoretically sound valuation methods

- Forward-looking analysis, based on cash flow (and, therefore, potentially less influenced by accounting rules), and likely takes account of all contractual arrangements as well as expected operating strategy

- Potentially less influenced by volatile market conditions

- Allows valuation of the entire business in aggregate or of each of its components separately

- Valuation may be highly sensitive to underlying assumptions for future cash flows particularly by those relating to the post PPA period (mitigated by the presence of long term contracts in place in the case of the Company during the PPA period) and discount rate;

- In absence of long term contracts, the valuation may depend on long-term projections, which may be affected by technological, macroeconomic and regulatory changes.

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Relative valuation: Dividend yield

Dividend yield may be considered the primary relative valuation benchmark for the Company in view of its stable business model with no identified expansion plans.

5 year Dividends 2019e 2020e 2021e 2022e 2023e Average

Dividends (OMR mn)* 1.94 1.94 1.94 1.94 1.94 1.94

Dividends Per Share (Bzs)* 27.6 27.6 27.6 27.6 27.6 27.6

Dividend yield at 260 Bzs per share 10.7%# 10.7%# 10.7%# 10.7%# 10.7%# 10.7%#

Dividend yield at 325 Bzs per share 8.6%# 8.6%# 8.6%# 8.6%# 8.6%# 8.6%#

* Dividend and DPS, FY 2019e onwards refers to the post-IPO dividend and DPS. Please refer note 4.18 of Chapter XIV -

Summary Future Financials

# Excludes 2 Bzs of offer expenses

Relative Valuation: Price to earnings multiple

The price to earnings multiple may be considered a secondary benchmark and has been presented for information. The following table shows the projected P/E multiples for the period 2019-2023 at low end and high end of the Price Range.

2019e 2020e 2021e 2022e 2023e

Projected EPS (Bzs) 29.0 36.1 38.1 37.5 32.6

Implied P/E Multiple at 260 Bzs per Share 8.9x* 7.1x* 6.8x* 6.9x* 7.9x*

Implied P/E Multiple at 325 Bzs per Share 11.1x* 9.0x* 8.5x* 8.6x* 9.9x*

* Excludes 2 Bzs of offer expenses

Comparable companies

Peer companies for the Company in Oman comprise those with single or multiple location IPP’s, IWPP’s and IWP’s. Such companies share identical business models which are dependent on concession agreements and contracts with various counterparties, which serve as the underlying factor determining the strength of their cash flows. The following MSM-listed power and water sector companies were considered as comparable companies.

- ACWA Power Barka SAOG (“ACWA”): Owns and operates an electricity generation (397 MW) and water desalination plant, and associated gas interconnection facilities.

- Al Kamil Power SAOG Company SAOG (“Al Kamil”): Owns and operate a 291 MW power plant in Sharqiya, Oman.

- Sohar Power Company SAOG (“Sohar”): Owns, operates, and maintains electricity generating (597 MW) and water desalination project in Sohar, Oman.

- SMN Power Holding SAOG (“SMN”): Owns and operates an electricity generating plant (694 MW) at Rusayl and an electricity generation (688 MW) and a water desalination plant (120,000m3/day) at Barka, Oman.

- Sembcorp Salalah Power & Water Company SAOG (“Sembcorp”): Operates a power generation (445 MW) and water desalination plant (68,000m3/day) in Salalah, Oman.

- Al Batinah Power Company SAOG (“ABPC”): Owns and operates the 766 MW Sohar 2 power plant in Sohar, Oman.

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- Al Suwadi Power Company SAOG (“ASPC”): Owns and operates the 766 MW Barka 3 power plants in Barka, Oman.

- Phoenix Power Company SAOG (“PPC”): Owns, operates, and maintains electricity generating plant (2,018 MW) in Sur, Oman.

- Dhofar Generating Company (“DGC”): Owns and operates the Salalah II IPP which comprises of two power generation plants with a combined contracted capacity of 718 MW.

- Muscat City Desalination Company (“MCDC”): Owns and operates 42 MiGD water desalination plant in Muscat, Oman.

- Sharqiyah Desalination Company SAOG (“SDC”): Owns and operates 131,000 m3/day water desalination plant in Sur, Oman.

Company Market cap

(OMR mn)

Book value per

share (Bzs)(8)

TTM Dividend Yield(1)

TTM Price to Earnings multiple(2)

Debt to equity(2)(8)

ICR(2) RoE(2)(8) Year of P(W)PA expiry

(A) Remaining P(W)PA expiry period of upto 5 years

ACWA(3) 106.2 261 nm nm 1.3x nm nm 2021

Al Kamil 36.6 316 7.9% 9.8x nm nm 12.2% 2021

Sohar(3) 22.3 74 nm nm 4.5x nm nm 2022

(B) Remaining P(W)PA expiry period of 5 to 10 years

SMN(3) 16.4 223 nm 2.1x 3.1x 2.21x 17.4% 2024

Sembcorp 107.9 117 10.8% 7.9x 1.7x 2.12x 12.3% 2027

ABPC(4) 48.6 129 11.8% 5.0x 1.8x 2.41x 11.1% 2028

ASPC(4) 52.2 130 11.9% 5.2x 1.8x 2.40x 10.8% 2028

(C) Remaining P(W)PA expiry period of more than 10 years

PPC 131.6 137 4.2% 9.8x 1.6x 2.01x 6.7% 2029

DGC 42.2 232 9.5% nm 3.1x 1.53x 1.3% 2033

MCDC 18.4 115 6.8% 15.4x 4.0x 1.61x 6.7% 2034

SDC 28.3 182 6.9% 19.4x 2.9x 1.60x 8.2% 2036

Sector average of (A), (B), (C) 8.7% 9.3x 2.58x 1.98x 9.6%

MPC(7) 18.3-22.9

136 8.6% - 10.7%(5)(6)

5.7x-7.1x(6) 7.51x 2.22x 33.3% 2032

(1) TTM dividend yields based on company filings on the MSM website. Closing prices taken as of 10 September 2019

(2) TTM net income as of June 2019 used to calculate PE multiples, Book Value as of June 2019, Debt to equity as of June 2019 and ICR calculated as TTM Earnings Before Interest and Tax divided by TTM finance cost paid as of June 30, 2019, RoE is calculated as TTM Net profit divided by Shareholders’ equity as of June 30, 2019

(3) The Companies are not distributing dividends due to commencement of cash sweep under their debt facilities

(4) As per the disclosure in their prospectuses, ASPC and ABPC have cash sweep under their debt

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facilities, commencing from March 2023 which could adversely impact their future dividend distribution

(5) Based on average projected DPS of Bzs 27.6 for FY 2019 to 2023 (6) Excludes Bzs 2 of issue expenses(7) Market cap, dividend yield and P/E for MPC are based on Price Range of Bzs 260 to Bzs 325(8) Shareholders’ equity adjusted for any hedging reserves

Applicability of DDM for valuing the Company The Company has a business model with stable and reliable cash flows owing to the contractual framework discussed earlier in this Chapter. This is expected to provide reliable projected dividend distributions to investors, which have been used for discounting purpose. This approach is consistent with the IPO valuations of power and water sector companies in Oman in the past where projected dividends were discounted for DDM valuation.

Cashflows projections for the PPA and post PPA periods- Owing to the contractual agreement with OPWP, the Company’s operating cashflows can be

estimated with a fair amount of certainty for the PPA period (i.e. till January 2032).

- For the post-PPA period cashflows, projections have been provided by IPA, an independent consultant, appointed on behalf of potential investors. IPA’s estimates involve several assumptions including demand for power, available capacities, off-take arrangements, etc. in the post PPA period. IPA, drawing on its experience from more than 80 countries, has developed projected cash flows of the company under ten different scenarios.

- For the purpose of DDM valuation of the Company, the highest cash flows have been used as the optimistic case, the lowest cash flows have been used as the pessimistic case and the base case is the same as provided by IPA as the base case.

DDM Valuation:

Present value per share based on projected cashflows

The price per Share in Baizas based on projected dividend flows until FY2056 i.e., based on the cashflow projections by the Company during the PPA and the cashflow projections by IPA during the post-PPA period throughout the estimated useful life of the plant, under various scenarios is as follows:

Price per share

Scenarios*

(Bzs) Optimistic Case Base Case Pessimistic Case

Discount rate PPA Post-PPA

Total PPA Post-PPA

Total PPA Post-PPA

Total

8% 208 555 763 208 495 703 208 434 642

9% 199 447 646 199 397 597 199 348 547

10% 192 361 553 192 321 512 192 280 471

11% 184 294 478 184 260 444 184 226 411

12% 177 240 417 177 212 389 177 184 361Note: PPA and Post-PPA represents the present value of the dividends during the PPA and post-PPA period respectively.

* The same set of assumptions were taken for all the scenarios in the PPA period. In the post-PPA period, IPA has assumed the total investment cost for construction of a new plant at US$1,625 /kW in the base case. IPA has assumed an increase by 10% in the investment cost in optimistic case and a reduction of 10% in the pessimistic case

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Internal rate of return (IRR)

The IRR based on projected dividend flows under various scenarios and low and high end of Price Range is as follows:

Scenarios* Optimistic Case Base Case Pessimistic Case

Dividend IRR at 260 Bzs per Share** 14.9% 14.4% 13.8%

Dividend IRR at 325 Bzs per Share** 13.1% 12.6% 12.0%

* The same set of assumptions were taken for all the scenarios in the PPA period. In the post-PPA period, IPA has assumed the

total investment cost for construction of a new plant at US$1,625/kW in the base case. IPA has assumed an increase by 10% in

the investment cost in optimistic case and a reduction of 10% in the pessimistic case.

** Excludes 2 Bzs of offer expenses.

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Chapter XVII

Related Party Transactions and Material Contracts

Related Party Transactions

Related parties comprise the Shareholders and its affiliates, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions.

Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year ended 31 December 2018:

Transactions

2018 2017

RO ‘000 RO ‘000

Purchase of fuel from Oman Oil Marketing Company SAOG 2,264 3,211

Purchase of fuel / gas from Ministry of Oil and Gas 3,384 1,682

Support services provided by OGC 326 153

Interest on loan from shareholders 287 28

Reimbursement of expenses incurred by shareholders - -

6,261 5,074

In 2016, the Company received advances from the shareholders amounting to RO 13.08 million, which was utilised to repay the equity bridge loan. During 2017, the shareholders have resolved to convert one half these advances into share capital of the Company and the remaining half has been classified as unsecured loans from shareholders. The loan carries an interest rate of 4.6% (2017: 4.6%) per annum. In 2018 shareholder loan of RO 3.483 million has been repaid. The loan from shareholders are payable on demand and have been presently classified as a current liability.

Key management compensation

2018RO ‘000

2017RO ‘000

Salaries and other benefits 78 56

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Balances with related parties included in the statement of financial position are as follows:

2018 2017

RO ‘000 RO ‘000

Oman Oil Marketing Company SAOG - 187

Oman Gas Company SAOC 40 153

Oman Oil Company SAOC 18 20

LG International 7 8

65 368

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Chapter XVIII

Corporate Governance

Certain sections of this Chapter summarise the issues relating to corporate governance based on the Articles, the CCL and the rules and regulations issued by the CMA, in particular, the Code. The description provided in this chapter is only a summary and does not purport to give a complete overview of the Articles, nor of the relevant provisions of the CCL, the Code or the CMA rules and regulations.

Overview

This section details the composition of the Board, various Board committees and Management. It also highlights the corporate governance practices that Musandam Power has or will have in place.

Board

Current Board Composition

The current Board of Directors was elected on 25th May 2019, and its members’ term of office shall remain in force for a period of three years and until the third annual general meeting of Musandam Power, which follows this date. In the event that the date on which the third annual general meeting is held is more than three years following the date on which the current Board was elected, then the term of the Board shall be extended up to the date of such annual general meeting, provided however it shall not exceed expiry date set out for the AGM convention, pursuant to Article 181 of the CCL.

The current composition of the Board of Directors, in accordance with Article 18 of the Articles is as follows:

S/N Name Representing Independent/ Non-Independent

1 Ahmed Tufail Al Rahman Mujeeb Al Rahman (Chairman)

Personal Capacity Non-Independent

2 Jun H. Kim (Deputy Chairman) LGI Non-Independent

3 Mansoor Ali Al-Abdalii OOFDC Non-Independent

4 Hamid A. Hamirani Personal Capacity Independent

5 Maqbool-Hussain Moosa Yousuf Al-Lawati Personal Capacity Independent

Note 1: A director is deemed independent pursuant to CMA rules and regulations.

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Biographical Information of the Members of the Board

Name: Ahmed Tufail Al Rahman

Position: Chairman

Education: Mr. Ahmed Tufail is a charted accountant and finance professional. He holds Certified Public Accountant (CPA) from US and Associate Chartered Management Accountant (ACMA) from UK and Fellow of the Chartered Associated of Certified Accountants (FCCA) from the UK.

Experience: Mr. Tufail has joined OGC in 2017 as Finance Director. Prior to joining OGC, Mr. Tufail has been associated with KPMG in Oman for 21 years. Mr. Tufail has led large engagements in the oil and gas industry where he is considered as a subject matter expert.

List of Other Directorships:

In addition to Musandam Power Board, Mr. Tufail is a Director of Oman Oil Marketing Company SAOG, an oil distribution company in Oman

Name: Jun H. Kim

Position: Deputy Chairman

Education: Mr. Jun H. Kim holds a Bachelor’s Degree from Chung-Ang University

Experience: Mr. Kim is a director of Musandam Power Company and a Vice President of LG International Corp. (“LGI”). He, for more than 20 years, served in various sectors, including petrochemical and infrastructure businesses, and led the business expansions of LGI in the MENA region as a representative manager in Oman, UAE, Jordan, and Turkmenistan for the past 10 years.

His broad experiences in corporate strategy and project development, and achievements have brought many Korean companies to pay attention to business activities in the Middle East. From 2003, he has taken an active role in developing projects such as Aromatics Oman, and Oman Polypropylene Plant – the first petrochemical plant in Oman - and many others.

Mr. Kim is now the head of Project Division in LGI Headquarters located in Seoul, and is responsible for strategic development of infrastructure business around the globe. He is leading LGI in the construction of a hydropower plant in Indonesia, a project that has entered into a final phase of construction. His contribution, experience, and ability to develop and manage projects in the infrastructure domain are an invaluable asset to LGI and Musandam Power.

List of Other Directorships:

In addition to Musandam Power, Mr. Kim is also a director of the following company:

PT. Binsar Natorang Energi, a company operating a 41 MW Hydropower Plant located in Indonesia.

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Name: Maqbool Al-Lawati

Position: Director

Education: Mr. Maqbool Al-Lawati (BSc, FCCA), is an Alumni of IMD, Lausanne, Switzerland and graduate of Southeastern Oklahoma State University, USA.

Experience: Mr. Maqbool Al-Lawati (BSc, FCCA), citizen of the Sultanate of Oman, is a Fellow member of The Chartered Association of Certified Accountants (ACCA), UK; an Alumni of IMD, Lausanne, Switzerland and graduate of Southeastern Oklahoma State University, USA. He has been associated with Oil and Gas industry in Oman and Brunei Darussalam since 1979 and held various senior positions in Petroleum Development Oman LLC (PDO), Brunei Shell Petroleum (BSP) and Oman Liquefied Natural Gas LLC (Oman LNG) companies.

Mr. Al-Lawati is Proprietor of MHMY Auditors, a member firm of IAPA, established since 1990 in Muscat, Sultanate of Oman, serving over 250 clients in the fields of Statutory and Internal Audits, Tax Advisory, Out-Sourcing, Feasibility Studies, Strategic Management Consultancy, Project Financing and related activities.

Mr. Al-Lawati is also Partner and Chairman of the Lighthouse LLC, a consulting firm engaged in Business Strategy and Process consultancy, Human Capital Optimisation including Online Assessment Tools, Human Resource Management Systems (HRMS) and related activities.

Mr. Al-Lawati serves on the Board of Al-Hassan Engineering Company SAOG, as Chairman of the Board, Chairman of the Executive Committee as well as Member of Audit and Remuneration & Nominations Committees.

Until March 2013 Mr. Al-Lawati was Chief Financial Officer at Oman LNG, responsible for the company’s financial activities as well as Supply Chain Management. He was also Chairman of the ERP Committee and Deputy Chairman of Oman LNG Tender Board. Earlier at PDO he participated in all aspects of Finance, including PDO Pension Investment Portfolio, Secretary to PDO Board Finance Committee, Internal Audit Manager and Secretary to Integrated Audit Committee as well as member of the PDO Tender Board. He was also Skill-pool Manager for the Finance Function, responsible for the Career Development of over 150 Finance Professional Staff (many of whom are presently holding Senior Executive positions in various companies).

Mr. Al-Lawati was actively engaged in the Local Business Development within Oman, where PDO had the privilege of being the key provider of Private Business Activity within Oman, second only to the Government of Sultanate of Oman.

Mr. Al-Lawati has been engaged with numerous charitable social activities. He is presently serving as the Chairman of the Members Advisory Committee for the ACCA (Association of Chartered Certified Accountants) Oman Chapter. He is an ardent cricket enthusiast and has been active member of Oman Cricket Academy (OCA) since the 1980s.

List of Other Directorships:

In addition to the Musandam Power Board, Mr. Al-Lawati is Proprietor of MHMY Auditors, a Partner and Chairman of the Lighthouse LLC, and Mr. Al-Lawati serves on the Board of Al-Hassan Engineering Company SAOG, as Chairman of the Board, Chairman of the Executive Committee as well as Member of Audit and Remuneration & Nominations Committees. In addition Mr Al-Lawati is presently serving as the Chairman of the Members Advisory Committee for the ACCA (Association of Chartered Certified Accountants) Oman Chapter

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Name: Mansoor Ali Al-Abdali

Position: Director

Education: Mr. Al-Abdali graduated with a Bachelor Degree (BEng) in Mechanical Engineering, from the University of Manchester Institute of Science & Technology, UK, in May 1995, having previously obtained a Higher National Diploma (HND) in Mechanical Engineering, from Stockport Higher Education College, UK, in June 1993.

Experience: Mr. Al-Abdali has over 23 years of experience in the oil and gas industry with specific experience in the operation, maintenance, inspection and integrity management of oil and gas facilities. Mr Al-Abdali is currently employed as the Operations Director of OGC where he is responsible for the overall management of the gas supply network of Oman, including overseeing the delivery of 110 Million Metric Standard Cubic Meters of natural gas per day. From September 2009 to April 2014, Mr. Al-Abdali worked as the Integrity Manager of OGC where his role included the integrity management of pipelines and all other pressure retaining facilities owned by OGC. During his time in this role he established a new integrity department and setup the department’s business processes and integrity systems and solutions. Prior to joining OGC, Mr Al-Abdali had a long career with Petrol Development Oman LLC, first joining the company as a pipeline integrity engineer in 1995 and rising through the organisation to the position of Head of Integrity and Inspection, a post he held until join OGC in 2009. Throughout his career Mr Al-Abdali has gained extensive experience in, among other things: contract management; the management, operation and maintenance of industrial facilities; risk management and mitigation; and employee management.

List of Other Directorships:

Mr. Al-Abdali currently has no other directorships, although he is the ex-Chairman for NACE-Oman, and a founding member of Gulf Maintenance Professionals Society.

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Name: Hamid A. Hamirani

Position: Director

Education: Mr. Hamirani graduated with a Bachelor of Commerce degree from the University of Karachi, Pakistan in 1981. Mr. Hamirani has been a Member of the Association of Accounting Technicians (MAAT), United Kingdom, since 1985, and also in 1994 became a Fellow of the Chartered Association of Certified Accountants (FCCA), United Kingdom.

Experience: As an experienced investment advisor, Mr. Hamirani has obtained a rich work experience from both the UK and throughout Middle East. Having started his career in the UK and had the opportunity to work for Associated British Ports, BKL Week Green Chartered Accountants, and Morley & Scott during the period from 1985 to 1997.

Mr. Hamirani has executed assignments in numerous industrial and service sectors, including: aviation, port, agribusiness, oil and gas, tourism, securities market, real estate, transport, infrastructure, logistics and urban city planning.

Having initially settled in the Middle East in 1998, during his time in the region Mr. Hamirani has advised large corporates, investment houses and at present is an advisor to the Ministry of Finance of the Sultanate of Oman. Highlights of Mr. Hamirani’s current appointment include providing advice in relation to the development of the Duqm Special Economic Zone, advising on the integration of Oman Oil and ORPIC and representing the Ministry on various international trade delegations.

List of Other Directorships:

In addition to the Board of Musandam Power, Mr. Hamirani is also currently the Chairman of Baraka Sharewater Company, a member of the Omani Ministry of Finance’s Team for Fiscal and Debt Management, a member of the Board and a member of the Finance Committee of Petroleum Development Oman SAOC, and a member of the Board of the RAS Al Hamrah Development which is being progressed by Petrol Development Oman SAOC.

Compliance with Applicable Laws

Musandam Power was incorporated as an SAOC and is under transformation into an SAOG. Musandam Power has appointed a Board that complies with all applicable CMA and CCL requirements, including the requirement for Independent Directors, which represent the interests of all Shareholders, two out of five of the Company’s directors are Independent Directors in accordance with the description of ‘Independent Directors’ contained in principle 8 of the Code.

Appointment of the Board

The Board will be elected by the general meeting of the Shareholders by direct secret ballot. Each Shareholder shall have a number of votes equal to that of the Shares held by him. A Shareholder shall have the right to use the entirety of his votes in support of one nominee or divide his Shares among other nominees of his choice through the voting card. It follows from that that the total number of votes given to the nominees by one Shareholder must not exceed the total number of shares owned by him. The proposed Directors who receive the most votes in the ballot shall be declared elected.

Subject to the CCL and the SAOG Election Rules issued by the CMA (Ministerial Decision No.137/2002 as amended), the Code and without prejudice to the Articles, nominees to the membership of the Board must:

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• be of good conduct and sound reputation;

• be at least 25 years old;

• not be unable to settle their indebtedness to Musandam Power;

• not be declared insolvent or bankrupt unless the state of insolvency or bankruptcy has ceased pursuant to the law;

• not be convicted of a felony or dishonourable crime unless rehabilitated in accordance with law;

• not be a member or a representative of a juristic person in more than four SAOG companies based in Oman once appointed to the Board in question;

• be authorised to nominate himself for Board membership by the juristic person if he is nominated in such capacity;

• not be Chairman of more than two SAOG companies with their principle place of business in Oman; and

• not be a member of the board of directors or employee of a public or closed joint stock company, which is based in Oman and which is carrying out similar objects to that of the Company, which he intends to nominate himself to the Board.

Without any prejudice to the regulations of the CCL mentioned above, the following conditions will be fulfilled while forming the Board:

• the Board will be comprised of all non-executive Directors;

• a minimum of one-third of the total Board (subject to a minimum of two) will be composed of Independent Directors in accordance with the rules and conditions issued by the CMA as have been set out in the Code; and

• a juristic Shareholder will not be represented by more than one representative on the Board.

If a member of the Board ceases to meet any of the conditions necessary for membership of the Board, he/she must inform the Board and his/her place will be considered vacant from the date of receipt of that information; otherwise, his/her membership will terminate from the date Musandam Power finds out this information, without prejudice to his/her liability in accordance with law, and his/her place will be filled in accordance with the provisions of Article 188 and 201 of the CCL. In accordance with Artucle 188 of the CCL a membership shall cease to exist under the law if a director fails one of the conditions required for membership. The member shall immediately notify the Board of this effect. Decisions where such director cast his vote therein after losing his membership shall be null and void, unless such decisions are backed by votes required for their validity, without calculating such director’s vote.

The Board of Directors will elect a Chairman and a Deputy Chairman from its members. The Deputy Chairman will officiate as Chairman when the latter is absent. The Chairman of the Board of Directors must implement the resolutions of the Board of Directors and the regular business of Musandam Power shall be conducted under the supervision of the Board of Directors in accordance with the authority specified in the Articles and Musandam Power’s internal regulations.

Role of the Board

The primary role of the Board of Directors is to supervise and monitor management within a framework of prudent and effective controls that enable risk to be properly assessed and managed and to fulfil its statutory and regulatory obligations under applicable law and regulations.

Powers of the Board

The Board has full authority to perform all acts required to manage Musandam Power in accordance with its objectives and with the primary objective of creating value for the Shareholders. This authority is not limited or restricted except as provided by applicable law, by the Articles or by a resolution of the

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Shareholders. The day-to-day management of Musandam Power is performed by Musandam Power’s Management, as described in subsequent paragraphs contained in this Chapter.

Some of the principal functions of the Board include:

• to approve the Company’s commercial and financial policies, together with its estimated budget, with a view to achieving the objects of the Company and to maintain and promote the rights of its Shareholders;

• to develop, review and update necessary plans from time to time in order to put into operation the Company’s objectives and carry out its activities in light of the purpose underlying its establishment;

• to approve the quarterly and annual financial statements related to the Company’s business and work results as submitted by the executive management to the Board, in a way which reflects the true financial position of the Company;

• to supervise the performance of the executive management and to ensure that the work proceeds in a manner which achieves the Company’s objectives in light of the purpose underlying its establishment;

• in accordance with the Third Principle of the Code to appoint the head of internal audit and compliance officer (if any) of the Company;

• in accordance with the Second Principle of the Code to include in the annual report presented to the annual OGM of the Shareholders the reasons which justify the ability of the Company to pursue its specified activities and the achievement of its objectives;

• to appoint a secretary to the Board in its first meeting and in accordance with Article 189 of the CCL, the Board shall, upon the request of its Chairman, convene at least (4) four meetings each year provided that the period between any two meetings shall not exceed one hundred and twenty (120) days, and the Chairman may convene the Board whenever the need arises for convening it; and

• to include in the financial statements a full statement of all amounts which a Director may have received during the course of each year.

In accordance with Artilce 185 of the CCL the Board must not perform the following acts unless expressly authorised to do so by the Articles or by a resolution of the Shareholders at a general meeting:

• make donations, except donations required by the business wherever they are small and customary amounts;

• pledge or mortgage the assets of Musandam Power, except to secure debts of Musandam Power incurred in the ordinary course of Musandam Power’s business; or

• guarantee debts of third parties, except guarantees made in the ordinary course of business for the sake of achieving Musandam Power’s objectives.

In accordance with Article 176 of the CCL a resolution passed by an Extraordianry General Meeting of the Sharehodlers is required to sell all or a substantial part of Musandam Power’s fixed assets, such assests valued at 25% or more of the new value of the MPC’s assets.

Musandam Power will be bound by all acts performed by its Board, its Chairman, its Project Director and all other senior management (if any), as long as they act in the name of Musandam Power and within the scope of their powers.

In accordance with Article 193 of the CCL, the Board may, in the circumstances and subject to the rules specified by the Exeucitve Regulations, adopt any of its resolutions by way of minutes by circulation. In such case, the secretary of the Board shall record the resolutions that have been adopted by circulation, in the minutes of the meeting of the Board following the adoption thereof.

Pursuant to Article’s 202 and 203 of the CCL, Article 64 of the CML and Article 301 of the Executive Regulations, it is not permitted for any member of the Board or senior management to utilise the information that reaches them in the capacity of their positions or jobs to gain any benefit for themselves

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or their minor children or for any of their relatives to the fourth degree as a result of transactions in the Shares. It is also not permitted for any member of the Board or senior management who has a direct or indirect interest in any authority that is involved in activities which are aimed at influencing the price of Shares issued by Musandam Power.

This restriction is explained in the chapter relating to “Insider Trading” regulations contained in the Executive Regulations, which:

• define who an insider is (as any person who is in a position to have access to undisclosed material information and includes directors, executive management and any person who may have obtained such information as a consequence of his employment or family relationships or otherwise); and

• impose reporting obligations on issuers with respect to the list of directors, executive management and their spouses and relatives of the first degree and any amendments in such list.

Insider trading is punishable by fines and imprisonment under the CCL, the CML and the Executive Regulations.

A member of the Board or senior management or other related party of Musandam Power must not have any direct or indirect interest in the transactions or contracts concluded by Musandam Power for its account, except those concluded in accordance with the rules and regulations of the CMA.

The members of the Board will be liable to Musandam Power, the Shareholders and third parties for damages caused by their acts in violation of applicable law and their acts which fall beyond the scope of their powers, or by any fraud or negligence in the performance of their duties or by their failure to act prudently under certain circumstances.

The provisions of Article 18 of the CCL shall apply to lawsuits raised against the Company as follows:

“An action instituted on applications resulting from the implementation of this Law against or among the partners or shareholders of the company, concerning the Incorporation Documents or businesses of the company shall not be accepted nor shall an action against the managers, board members, auditors, or liquidators of the company or against heirs or successors of any of the above, on account of their acts during the exercise of their duties, be accepted, unless instituted within five years commencing from the latest among the following dates:

1. Date of registration of company with the Registrar;

2. Date of act or omission, which is the basis of the action; or

3. Date of approval of partners or of the general meeting of the company on which the Director or Board of Directors submitted an account of the company’s operations for the period covering the act or omission, which is the cause of the action against the managers, Board of Directors or any of its members.”

Remuneration of the Board

The OGM will determine the annual remuneration and sitting fees of the Chairman and the members of the Board in accordance with the regulations on such matters issued by the CMA in accordance with Article 197 of the CCL. However at the date of this Prospectus the CMA has not issued such regulations. Previous rules on this matter provided that the annual remuneration and sitting fees of the Chairman and the members of the Board would not be more than 5 per cent of the net annual profits of Musandam Power after providing for taxation and deducting the legal and optional reserves and setting aside or distributing the dividends to Shareholders at not less than 5 per cent of the net profits and MPC propose to comply with this methodology until the MOCI issues the updated regulations on this matter. The maximum total over-all limit on the entire remuneration and sitting fees paid by Musandam Power will be OMR 200,000, with a sub-ceiling of OMR 10,000 as a sitting fee for each Director per annum. If Musandam Power makes losses or insufficient profit to the extent that setting

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aside or distributing dividends to the Shareholders is not possible, remuneration and sitting fees will be determined in accordance with the rules issued by the CMA. The remuneration will be distributed amongst the members of the Board in such proportions and manner as they, by agreement, may determine, failing which the remuneration will be divided equally among the Board. A member of the Board will be eligible for compensation for his services if he is assigned a job or travels or does something related to Musandam Power’s affairs.

Board Committees

In order to assist the Board in performing its obligations, the Board may form committees to advise it and make recommendations on certain matters. In accordance with Article 196 of the CCL and the Code the Board has constituted an Audit and Risk Committee and Nomination and Remuneration Committee each comprising of 3 directors. The Board may establish other committees from time to time. Each Committee shall be established in accordance with the provisions of the Code.

Audit and Risk Committee

The members of the Audit and Risk Committee are:

• Maqbool Al-Lawati – Chairman;

• Mansoor Ali Al-Abdali – Member; and

• Hamid A. Hamirani – Member.

The role of the Audit and Risk Committee involves:

• Considering the name of the auditor in the context of their independence (particularly with reference to any other non-audit services), fee and terms of engagement, and recommending the auditors to the board for appointment.

• Reviewing the audit plan and results of the audit.

• Implementing appropriate systems to check financial fraud and ensure the fairness of financial statements.

• Oversight of the internal audit function.

• Oversight of the adequacy of the internal control systems.

• Oversight of financial statements in general including the review of annual and quarterly financial statements before issue, qualifications contained in draft financial statements, and discussions of accounting principles therein and changes in accounting standards adopted by the Company.

• Serving as a channel of communication for the Board with the external and internal auditors.

• Reviewing risk management policies.

• Reviewing proposed related party transactions and making suitable recommendations to the Board.

Following the IPO, the Audit and Risk Committee shall comprise at least three Directors, the majority of whom shall be Independent Directors. In all cases, the Chairman of the Audit and Risk Committee shall be from amongst the independent directors. At least one of the members should have financial and accounting expertise. The Audit and Risk Committee will also be responsible for recommending the appointment and remuneration of a suitably qualified and experienced person for the position of internal audit manager of the Company. Such person will be charged with responsibility for the following:

• Developing the internal audit strategy for the Company;

• Auditing operations and financial statements of the Company;

• Ensuring the Company’s compliance with laws and regulations applicable to the Company; and

• Preparing periodic reports to the Board with respect to the adequacy and effectiveness of the Company’s system of internal administrative, accounting and financing controls and on other issues

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on which the internal audit manager is requested to report by the Audit Committee of the Board.

Nomination and Remuneration Committee

The members of the Nomination and Remuneration Committee (NRC) are:

• Mansoor Ali Al-Abdali – Chairman;

• Maqbool Al-Lawati – Member; and

• Hamid A. Hamirani – Member.

The role of the Nomination and Remuneration Committee involves:

• assisting the Shareholders, while electing the Board at a general meeting in the nomination of proficient directors and the election of the most fit for the purpose;

• assisting the Board in selecting the appropriate and necessary executives for the executive management of the Company;

• assisting the Company in formulating clear, credible and accessible policies to inform shareholders about directors’ and executives’ remuneration subject to the provisions of Administrative Decision No. 11/2005 on the rules of remuneration and sitting fees for directors of SAOG’s;

• developing and deploying additional performance based criteria to determine the bonus and remuneration of the chief executive officer and senior executive management of the Company.

• submitting to the Board an annual plan of action;

• providing succession planning for the executive management;

• developing a succession policy or plan for the Board or at least the chairperson;

• preparing detailed job descriptions of the role and responsibilities for directors including the chairperson;

• identifying and nominating qualified persons to act as interim directors on the Board in the event a seat becomes vacant;

• nominating qualified persons to assume senior executive positions, as required or directed by the Board;

• preparing a bonus, allowances and incentive policy for the executive management; and

• reviewing such policies periodically, taking into account market conditions and company performance.

Senior Management Team

The current composition of the Management is as follows:

Name Position

Salim Al Hashmi Project Director(Fulfilling the role of Chief Executive Officer)

Abdul Hameed Al Jabri Finance Manager

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Biographical Information of the Senior Management Team

Name: Salim Marhoun Al- Hashmi

Position: Project Director (Fulfilling the role of Chief Executive Officer)

Year of Joining: 2014

Education: Master of Science from Cardiff Metropolitan University- UK, Certified Project Manager by PMI & Prince2

Experience: 24 Years

Mr. Salim Marhoun Al Hashmi, is the Project Director of the Company, fulfilling the role of Chief Executive Officer, and has over 24 years of rich experience in the Project Management, IT Infrastructure, Oil & Gas, and Power sectors. He has held a variety of management, technical, commercial positions, worked with several well credited and recognised organizations and has been associated with major projects and contracts.

In 1994, Mr. Al Hashmi started his career as Computer Programmer. In 1998 Mr. Al Hashmi joined Ministry of Defence (MOD) as an Army officer. During his c. 14 years tenure with the MOD, Mr. Al Hashmi was handling the Armed Forces Medical Services (AFMS) IT & Infrastructure project management. In addition to his responsibility with project management he also held the position of system analysis and Oracle Database Management Administrator (DBA). Along with his role in AFMS, Mr. Al Hashmi has been involved in many other projects within MOD.

In 2011, Mr. Al Hashmi joined Oman Oil Company Exploration and Production (OOCEP) as an Interface Manager for Musandam Gas Plant (MGP) project. As an interface manager he managed all the associated technical and non-technical interfaces for the Musandam Gas Plant project, across all parties (contractors, authorities, and with the community).

In 2014, during the development stage of the Musandam IPP Mr. Al Hashmi joined the Company as Project Director. Mr. Al Hashmi’s responsibilities include the overall management of the project and the Company through its formation and its transition to operation. He is also responsible for leading the development and execution of the Company’s long term strategy with a view to creating shareholder value.

Name: Abdulhameed Al Jabri

Position: Finance Manager

Year of Joining: 2017

Education: Member of Association of Chartered Certified Accountants (ACCA) – UK, Bachelor of Commerce

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Experience: 17 Years

Mr. Al Jabri has over 17 years of experience working in the audit and consultancy profession, mainly in the power and water sector, with Deloitte Oman. Throughout his tenure with Deloitte Mr. Al Jabri has held different positions including auditor, chief accountant and finally achieving the position of finance manager. Mr. Al Jabri’s experience has provided him with the opportunity to develop a comprehensive knowledge of the complete business cycle related to the management of power and water generation businesses.

Mr. Al Jabri joined Musandam Power as Finance Manager in January 2017. During his time with the Company Mr. Al Jabri has participated in the development of internal company procedures as well as supporting the successful financial transition from the construction of the Plant to its operation stage.

Brief details of the key members of WMU who are active in operation and maintenance activities for the Project are set out below:

Name Position

Mr. Siva Prasad Nandikolla Facility Manager

Mr. Siva Nageswararao Sonthi Operations Manager

Mr. Satyanarayana Raju Sagi Maintenance Manager

Biographical Information

Name: Siva Prasad Nandikolla

Position: Facility Manager

Year of Joining: 2016

Education: Diploma in Mechanical engineering, State Board of Technical Education & Training, Andhra Pradesh, India

Experience: 24 years

Mr. Nandikolla has 24 years of experience in Wärtsilä power plants’ operations and maintenance. He has progressed while performing different roles along his career starting from Trainee and progressing to Executive-O&M, Manager-O&M, Sr. Manager-O&M, Plant Manager & Contract Manager. He has worked in different Wärtsilä power plants operating with different technologies involving different fuels. He has obtained good experience & exposure by working in Wärtsilä power plants up to 175MW (18 Wärtsilä Gas engines) in different countries including India, Sudan, South Africa, Mozambique and Oman. This experience has provided him with comprehensive knowledge of complete mobilization, operations, maintenance & management of Wärtsilä power plants.

Mr. Nandikolla took up the position of Musandam IPP Facility Manager in February 2016 and during his time in this role he has built the O&M team, participated in developing of all Plant procedures, including those involved in commissioning of the plant and the continuing O&M activities from the COD of the Plant.

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Name: Siva Nageswararao Sonthi

Position: Operations Manager

Year of Joining: 2016

Education: Diploma in Electrical Engineering and Bachelor of Science from BITS Pilani (India)

Experience: 22 years

Mr. Sonthi has 22 years of experience out of which 16 years are in Wärtsilä power plant Operations and Maintenance. During his career Mr. Sonthi has obtained experience and exposure to Wärtsilä gas power plants, worked in different countries including India, South Africa, Mozambique and Oman. Mr. Sonthi is experienced in power plant electrical systems and operations management.

Mr. Sonthi joined as Operations Manager for Musandam IPP in August 2016.

Name: Satyanarayana Raju Sagi

Position: Maintenance Manager

Year of Joining: 2016

Education: Bachelor Degree in Mechanical Engineering from JNR Vidyapeeth, India

Experience: 18 years

Mr. Sagi has over 18 years of experience in high capacity engine maintenance. He has obtained experience in Wärtsilä plant’s field service and his area of responsibility includes managing the Wärtsilä work shop as person in-charge.

Mr. Sagi took up the position of Musandam IPP Maintenance Manager (LTSA Onsite representative) in July 2016.

Internal Regulations

In accordance with the provisions set out in Article 117 of the CCL, Musandam Power is required to adopt internal regulations for regulating its management, business and personnel affairs through its Board of Directors, within one year from the date of registration of the transformation of Musandam Power as a SAOG. Accordingly, Musandam Power shall implement corporate governance processes that meet the CMA’s requirements for an SAOG as required by the CCL and by the CMA’s regulations. These regulations shall cover at least the following, separately from the rules and regulations of the CMA and the Code:

• Organisational structure of Musandam Power, including the responsibilities related to the various posts within Musandam Power and the reporting structure/procedures;

• Specifying the extent of authority vested in each post with regard to approval of financial expenditure;

• Specifying the allowance for meetings, remuneration and other privileges as prescribed in respect of the members of the Board of Directors and Board committees, and the basis for their calculation;

• Policies related to procurement and other transactions concerning the Company (works and procurement manual) and service contracts;

• The minimum level of information required to be submitted to the Board of Directors;

• Authorities, duties and responsibilities relevant to executive management and Board committees;

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• Policies related to human resources including salaries, appointment, development, training, promotions and termination of services etc., and covering other relevant aspects;

• Investment policies;

• Policies in relation to related party transactions;

• Policies and procedures for disclosure of material information in a transparent and timely manner to the CMA and the MSM including procedures to classify/ identify material information and the determination of the right to access such information by officers of the Company; and

• Any other regulations that the Board may deem necessary to achieve an adequate level of corporate governance.

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Chapter XIX

Rights and Liabilities of Shareholders

Shareholders’ liabilities

The liability of a Shareholder will be limited to payment of the value of the Shares for which the Shareholder has subscribed. The Shareholder will not be liable for the debts of Musandam Power except to the limit of the value of the Shares subscribed.

Shareholders’ rights

All the Shares enjoy equal and inherent rights in accordance with the CCL. These rights include the following:

• the right to receive dividends declared by the general meeting of the Shareholders;

• preferential rights to subscribe for any new Shares;

• the right to share in the distribution of the proceeds of Musandam Power’s surplus assets on liquidation;

• the right to transfer Shares in accordance with applicable law;

• the right to access Musandam Power’s balance sheet, profit and loss account and Shareholders’ register;

• the right to be invited to attend the general meeting and vote in such meetings personally or by proxy (each Shareholder will have one vote for each Share owned);

• the right to apply for annulment of any resolution made by the general meeting or the Board of Directors, if such resolution(s) are contrary to applicable law or the Articles or the internal regulations of Musandam Power, in accordance with Article 68 of the Articles and Article 8 of the CML, provided that Shareholders who own at least 5% of the Musandam Power’s issued share capital shall have the right to submit such an application to the CMA;

• the right to institute legal proceedings on behalf of the Shareholders or Musandam Power against the Board or the auditors of Musandam Power; and

• In accordance with Article 174 of the CCL, the competent authority may, at the request of shareholders holding a minimum of 5% of the company’s shares, issue a decision suspending the resolutions adopted by the company’s general meeting which are detrimental to such shareholders or adopted in favour of a certain category of shareholders or to bring a special benefit to the members of the Board of Directors or others, if the reasons for such request are proved to be genuine.

The request to suspend the implementation of the resolutions adopted by the general meeting shall not be accepted after the passage of five working days from the date of such resolutions.

Any stakeholder may institute an action with the competent court to seek nullification of the resolutions stipulated in the first paragraph of this Article and furnish the competent authority with a copy thereof, within five working days from the date on which a court decision on the suspension of the resolutions adopted by the general meeting is issued, otherwise the suspension shall be deemed null.

The court shall consider any action on the nullification of the resolutions adopted by the general meeting. The court may summarily order the suspension of the competent authority’s decision at the request of the litigant, until the action is adjudicated.

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Reports and statements

The Board shall prepare unaudited quarterly financial statements for the first, second and third quarter of each Financial Year. It shall also prepare an annual report within 60 days from the end of each Financial Year, comprising the audited balance sheet, profit and loss statement, cash flow statement, changes in shareholder’s equity, report of the Board of Directors, report on the discussions held by the Board and their analysis and report on the organisation and management of Musandam Power. These statements should be disclosed at least 15 days prior to the OGM through the electronic transmission system on the MSM website.

The unaudited quarterly financial statements of Musandam Power shall be forwarded to the Information Centre within thirty days from the end of each quarter or any other legal period prescribed by the disclosure rules and conditions issued by the CMA though the private electronic transmission system of the Information Centre. The said Information Centre shall also be provided with two copies duly endorsed by the Board. The Company shall also have it published within the aforementioned period.

Under Article 280 of the Executive Regulations, all SAOG’S companies are required to disclose their initial quarterly results within 15 days from the end of each quarter, on the basis of such results being approved by the executive management and prior to approval by the board. Musandam Power will comply with the provisions of this article.

Ordinary General Meeting and Annual General Meeting

The AGM of Musandam Power shall be held, at least once in every year during 90 days following the end of the Financial Year, at such venue, day and time as incorporated in the notice of the meeting. OGM’s may be called at any time through a year as required by the Board or otherwise.

• To study and approve of the report of the Board of Directors;

• To study and approve of the report on the management and organization of the Company;

• To review the auditor’s report and approval of the balance sheet and profit and loss statement of the Company;

• To study and approve the corporate governance report;

• To review the report on declaration of dividend. However, such dividend shall be distributed only from the net profit generated or from the optional reserves account subject always to the provisions set out in Article 132 of the CCL;

• To review the report on the sitting allowance for the meetings of the members of Board and committees constituted under it for the forthcoming Financial Year and approve the same;

• To review the annual remuneration (if any) of the members of the Board of Directors for the Financial Year;

• To consider and approve transactions (if any) entered into by the Company with related parties during the previous Financial Year (if any);

• To make a note of any expected transactions with the related parties during the next Financial Year (if any);

• To appoint auditors for the next financial year and fix their fees, taking into consideration the provisions laid down in the law for such appointment; and

• To elect members to the Board in case of expiry of the term of office of one or more of them or in the case of a vacancy that has arisen on the Board.

• To approve the assessment standards for evaluation of the Board in accordance with the Code; and

• To appoint an independent third party to undertaken evaluation of the Board performance in accordance with the Code.

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The Board shall establish the agenda of the AGM and OGM. If the AGM or OGM is convened by the auditors, the agenda shall then be established by them. The Board, or the auditors if necessary, shall include in the agenda any proposal put forward by Shareholders who represent more than 5 per cent of the Issued and Paid Up Share Capital of Musandam Power provided that such proposal is submitted for inclusion in the agenda at least 20 days before the date of the meeting.

The resolutions of the AGM and OGM shall not be valid unless the meeting is attended by Shareholders or their proxies who represent at least half of the Issued and Paid Up Share Capital of Musandam Power. If such a quorum is not formed, a second meeting shall be called to discuss the same agenda. The proposed date for the second AGM or OGM shall be listed in the Shareholders invitation notice for the first AGM/OGM, provided that the date for the second meeting shall be no more a maximum of 7 days following the date of the first AGM/OGM. The resolution of the second AGM/OGM shall be valid regardless of the number of shares represented, provided that such meeting is held within 7 days from the date of the first meeting. The resolutions of the AGM and OGM shall be adopted by simple majority of votes cast, provided however that such resolutions shall only be valid if approved by CMA and appropriately registered.

Extraordinary General Meetings

In accordance with Article 176 of the CCL an EGM will be convened to decide on issues such as:

• disposal of the fixed assets of Musandam Power’s or any part thereof valued at 25% or more of the net value of Musandam powers’ assets ;

• an amendment to the Articles;

• the transformation merger, dissolution and liquidation of Musandam Power; and

An AEGM shall also be conviened to decide on all other matters which such meeting is specifically authorized to settle in accordance with the law or the Company’s Articles of Association.

The resolutions of the EGM shall not be valid unless the meeting is attended by Shareholders or proxies representing at least 75% of Musandam Power’s Issued and Paid-Up Share Capital. Failing such a quorum, a second meeting shall be convened to discuss the same agenda. The Shareholders invitation notice for the first EGM shall specify a proposed date for the second EGM, provided the date for the second meeting shall be no more than a maximum of 7 days from the date of the first EGM.

The resolutions of the second EGM shall be valid if the meeting is attended by Shareholders or proxies representing more than half of Musandam Power’s Share Capital, provided such meeting is held within 7 days of the date of the first EGM.

The resolutions of the EGM shall be adopted by a majority of 75% of the votes cast in respect of a resolution, provided such resolution must always receive votes in favour representing more than fifty per cent of Musandam Power’s Issued and Paid-Up Share Capital. Provided however that such resolutions shall only be valid if approved by CMA and appropriately registered

Any shareholder or any interested party may refer to the Primary Commercial Court within five years from the date on which the meeting was held, to decide on nullification of any decision if taken during a general meeting in violation of the CCL, the provisions of the Articles, the company’s internal regulations, or through deceit or misuse of authority.

Lock-up Period - Exemption from the applicability of Article 127 of the CCL

Article 127 of the CCL restricts the founders of an SAOG from disposing of their shares in such company, before it has published two balance sheets for two consecutive financial years, starting from the date of commencement of registration by the company. However, Article 17(a) of the Sector Law exempts the founders of an entity licensed under the Sector Law from the restriction imposed by Article 127 of the

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CCL and allows them to offer their shares in such company for sale, even if the licensed entity has not published two balance sheets for two consecutive financial years.

General restrictions on transfer of ownership of the Shares

The shareholding of each Shareholder may not exceed the maximum limit prescribed and provided for in the Articles, the CCL and the Capital Market Law respectively, unless the necessary approvals are secured.

Any person whose shareholding, along with his minor children’s shareholding, reaches 10 per cent or more of Musandam Power’s Issued and Paid-Up Share Capital, is required to advise the CMA of the same in writing. Further, the Shareholder must inform the CMA in writing of any transaction or dealing which leads to any further increase in this percentage immediately after it happens.

No single person or related person up to the second degree may hold or to purchase 25 per cent or more of the shares of an SAOG, save in accordance with the rules issued by the CMA on the subject.

Any change of control of Musandam Power (including a transfer of ownership of 20% of its share capital) would require prior written approval of the AER under the terms of the Generation Licence.

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Chapter XX

Subscription Conditions and Procedures

The Offer entails a two phased process, i.e. (a) Phase I Offer; and (b) Phase II Offer. Phase I Offer is being offered to investors through a book-building mechanism with the primary objective to discover the price of the Offer Shares based on the bids received from Phase I Applicants “the Offer Price”. The Offer Price will be announced on the MSM website (msm.gov.om) before the Phase II Offer Period commences. This announcement is expected to be followed by the Phase II Offer to Phase II Applicants through a fixed price offering at the Offer Price. The subscription conditions and procedures applicable to both the Phase I Offer and Phase II Offer are set out in this Chapter XX as a part of this Prospectus. An overview of the Phase I Offer is summarised below:

PHASE I OFFER

Offer Structure

Phase I Offer

Proposed allocation of the number of Offer Shares

14,078,000 Shares

Proposed allocation of the percentage of Offer Shares

50%

Basis of Pricing and Allotment Book building mechanism (as described in more detail later in this chapter)

Minimum Subscription 200,100 Shares and thereafter in multiples of 100 Shares

Maximum Subscription 2,815,600 Shares equivalent to 10% of the Offer Shares

Terms of Payment of Application Money 100% of the Phase I Application Money (i.e. highest value amongst all bids by an Applicant) to be paid at the time of submission of the Application

Offer Subscription Period 3 November 2019 to 7 November 2019

Subscription Conditions and Procedures Applicable to Phase I Offer

Eligibility for the Subscription of Offer Shares

The subscription for Phase I Offer Shares will be open to Omani and non-Omani individuals and juristic persons who have their accounts with MCDC. All GCC individuals and juristic persons are treated as Omani individuals and juristic persons for the purpose of owning shares in Omani SAOGs.

No single person shall by himself, or through a related person up to the second degree, hold or purchase 25 percent or more of the shares of an SAOG, except with the explicit written approval of the CMA as per the applicable regulations.

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Prohibitions with Regard to the Applications for Subscription

In accordance with the Capital Market Law, the following persons shall not be permitted to subscribe to the Offer:

i. Sole proprietorship establishments - The owners of sole proprietorship establishments may only submit Applications in their personal names.

ii. Trust accounts - Applicants registered under trust accounts may only submit Applications in their personal names.

iii. Multiple Applications - An Applicant may not submit more than one Application.

iv. Joint Applications - Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs).

All such Applications may be rejected without contacting the Applicant.

Subscription on Behalf of Minor Children

For the purpose of this Phase I Offer, any person under 18 years of age on the date of submission of an Application will be defined as a minor.

Only a father may subscribe on behalf of his minor children.

If an Application is made on behalf of a minor by any person other than the minor’s father, the person submitting the Application will be required to attach a valid Shariah (Legal) Power of Attorney issued by the competent authorities authorising him or her to deal in the funds of the minor through sale, purchase and investment.

Applicant’s Number with MCDC

Any Applicant who subscribes for the Phase I Offer Shares must have an account and Investor Number with the MCDC. Any Applicant may apply to obtain an Investor Number and open an account by completing the ‘MCDC Application’. This may be obtained from the MCDC’s Head Office or its website at www.mcd.gov.om, or from brokerage companies licensed by the CMA. The completed form may be submitted by an Applicant through any of the following channels:

i. At the head office of the MCDC, at P.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman.

ii. At the office of any brokerage company licensed by the CMA.

iii. By sending a facsimile to MCDC at +968 24817491.

iv. By opening an account through the MCDC website at www.mcd.gov.om

In order to open an account with the MCDC, a juristic person will be required to furnish a copy of its constitutional documents, in the form prescribed by the MCDC, along with a completed MCDC Application in order to open an account and receive an Investor Number.

Applicants who already hold accounts with the MCDC are advised, before the Phase I Offer, to confirm their details as noted in the Application. Applicants may update their particulars through any of the channels mentioned above.

All correspondence including allocation notices and dividend cheques will be sent to Applicant’s address as recorded at the MCDC. Applicants should ensure that their addresses as provided to the MCDC are correct and kept up-to-date.

Each Applicant should secure from the MCDC its Investor Number as the Investor Number will be required in order to complete the Application. Each Applicant is responsible for ensuring that the Investor Number set out in their application is correct. Applications not bearing the correct Investor Number may be rejected without contacting the Applicant.

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For more information on these procedures, Applicants should contact the MCDC:

Muscat Clearing & Depository Co. SAOCP.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman Tel: +968 2482 2222; Fax: +968 2481 7491 www.mcd.gov.om

Offer Period

The Phase I Offer Period will commence on 3 November 2019 and end on 7 November 2019 at 2 PM Oman Time.

Subscription and Application Process for Phase I Applicants

(a) Applicants who wish to subscribe for Phase I Offer Shares may do so by completing an Application. Applications for Phase I will be available at the head offices of the Collection Agents and can be submitted at the head offices of the Collection Agents. The list of name, address and contact details of Collection Agents for Musandam Power IPO are provided later in this chapter. The Application must be completed in full in accordance with the instructions contained in this Prospectus. Incomplete Applications may be rejected. Applicants may only use the specified Application for the purpose of making a subscription for the Phase I Offer.

(b) Each Applicant may only submit one Application. Phase I Applicants may place an Application with a Collection Agent from 3 November 2019 to 7 November 2019. Along with the Application, all Phase I Applicants must make a payment equal to the Phase I Application Money in the manner described under the paragraph “Terms of Payment”.

(c) Each Applicant may make up to three (3) bids in the Application and will need to specify in the Application the price applicable to the Shares that are the subject of each such bid, which is within the Price Range (each “a Bid Price”), accompanied with the number of Phase I Offer Shares bid for at that Bid Price.

(d) The bids must be listed in descending price order on the Application, starting with the highest Bid Price and ending with the lowest Bid Price. For each Phase I Application, the quantity of Offer Shares bid for at the highest Bid Price must be the minimum number of Offer Shares bid for in the Application. Subsequent bids at lower Bid Price levels in the application must contain a bid for an equal or higher number of Offer Shares than the preceding price point. No Phase I Applicant would be allowed to withdraw their Application after it is submitted to the Collection Agent. Please see below an indicative illustration of the application process.

Indicative illustration of the bids in an Application

Applicant Name Applicant A Applicant B

Bids submitted by Phase I Applicants

No. of Offer Shares at each Bid Price

5,000 at Bzs 26010,000 at Bzs 300

5,000 at Bzs 32510,000 at Bzs 30015,000 at Bzs 260

In the illustration above, two applications have been received for Phase I Offer. Each Applicant has placed different bids. For Applicant A, the bid at Bzs 260 should have been greater than 10,000 Offer Shares as Applicant A is already willing to buy 10,000 Offer Shares at Bzs 300. As a result the bid of 5,000 at Bzs 260 for Applicant A will be rejected. Applicant B has made valid bids as the quantity of Offer Shares demanded at every lower price point is higher. Further, in case the cut-off price is determined as Bzs 300, then Applicant B will receive allotment base on only the bid of 10,000 Offer Shares at Bzs 300 and the bid of 5,000 Offer Shares at Bzs 325 will not be considered.

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(e) The Phase I Application Money represents the highest value single bid in Omani Rials on an Application. For example, if an Applicant submits a bid for 1,000,000 Offer Shares at a Bid Price of Bzs 325 per Share, a bid for 1,200,000 Offer Shares at a Bid Price of Bzs 310 per Share, and a bid for 1,500,000 Offer Shares at a Bid Price of Bzs 300 per Share, the highest value single Order in Omani Rials is for 1,500,000 Offer Shares at a Bid Price of Bzs 300. Hence the Phase I Application Money in this case would equal to OMR 450,000 and the Applicant must pay OMR 450,000 for the Application to be valid.

Indicative illustration of the bids in an Application

Bid Bid Price (Bzs) Total Offer Shares demanded at the price

Bid amount (OMR)

Bid 1 325 (A1) 1,000,000 (B1) 325,000 (A1 * B1)

Bid 2 310 (A2) 1,200,000 (B2) 372,000 (A2 * B2)

Bid 3 300 (A3) 1,500,000 (B3) 450,000 (A3 * B3)

(f) Each Phase I Applicant, who has placed his bid and would like to revise his Application should do the following:

a. Submit an Application Revision Form in the last 2 working days of the Phase I Offer Period i.e. 6 November 2019 and 7 November 2019, for those who have applied in the first 3 days of the Phase I Offer Period only;

b. Applicants would be allowed to make revisions in relation to both the desired number of Shares and the Bid Price, but only once, by filling out the Application Revision Form;

c. Only upward revision of Bid Prices or number of Shares or both is allowed, subject to payment of the Additional Application Money to the respective Collection Agent. For the sake of clarity, an Applicant cannot make any downward revision of Bid Prices or number of Phase I Offer Shares or both; and

d. The Applicant will not be able to increase or decrease the number of bids using the Application Revision Form. For example, if an Applicant submitted 2 bids in the original Application, the Applicant must submit 2 bids in the Application Revision Form as well.

e. The Applicant who submits the Application within the last two days of the Phase I Offer Period; i.e. 6 November 2019 or 7 November 2019, may not submit the Application Revision Form.

Indicative Price Determination and Allocation Process

The price determination and allocation for the Phase I Offer Shares shall be determined by the MCDC in consultation with the Issue Manager and the CMA, according to the conditions set out in this Prospectus.

1) Indicative Price Determination Process

(a) In Phase I, Applications for Offer Shares at each Bid Price mentioned in the Applications will be grouped together to determine the total demand at each Bid Price;

(b) in respect of the Offer Shares that the Issuer will issue, the Bid Price shall be accepted in descending order until aggregate demand for Offer Shares at a certain Bid Price is equal to, or more, than the total Offer Shares, the Bid Price so accepted shall be the Offer Price;

(c) the Offer Price shall be based on the bid which covers the total Offer Shares amongst the bids which are at or higher than the Offer Price.

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2) Indicative Allocation Process

(a) each applicant will be allotted Offer Shares at the Offer Price regardless of whether it bids at a higher Bid Price than the Offer Price;

(b) bids in Applications for Shares at a Bid Price lower than the Offer Price shall not receive any allocation.; and

(c) MCDC will refund all amounts to unsuccessful Applicant for whom all the bids in the Application are less than the announced Offer Price, within three working days from the end of the Phase I Offer Close date. Such Applicants shall also be entitled to submit Application for the Phase II Offer Shares in accordance with the conditions mentioned in the Prospectus.

Indicative illustration of book building mechanism

The table below shows orders received from five hypothetical Phase I Applicants where Total Offer Shares is 30,000:

Applicant Name Applicant A

Applicant B

Applicant C

Applicant D

Applicant E

Total cumulative

demand

Bids submitted by Phase I Applicants

(No. of Offer Shares at each Bid Price)

10,000 at Bzs 300

5,000 at Bzs 325

10,000 at Bzs 260

5,000 at Bzs 325

10,000 at Bzs 300

15,000 at Bzs 260

15,000 at Bzs 300

10,000 at Bzs 260

Effective demand analysis

@260 Bzs 10,000 10,000 15,000 15,000 10,000 60,000

@300 Bzs 10,000 5,000 10,000 15,000 - 40,000

@325 Bzs - 5,000 5,000 - - 10,000

Offer Price

300 Bzs

In the illustration above, five applications have been received for Phase I Offer. Each Applicant has placed different bids. Applicants A and D do not wish to purchase Offer Shares at a Bid Price above Bzs 300 and Applicant E does not wish to purchase Offer Shares at a Bid Price above Bzs 260. Applicants B and C have provided multiple bids indicating that they will purchase less Offer Shares as the share price goes higher. Based on the bids received, MCDC will analyse the effective demand at each Bid Price within the offer range. For example while Applicant A has placed a bid at a Bid Price of Bzs 300 he would be willing to buy the same number of Offer Shares for less and his demand will be included in the demand at the Offer Share at Bid Price of Bzs 260.

MCDC will review the order book to determine the Offer Price. As can be seen from the analysis above, the highest price at which the Company has received sufficient demand for the total Offer Shares offered i.e. 30,000 is at a Bid Price of Bzs 300 and is thus able to price the offering at Bzs 300. This will mean that all Phase I Applicants who have applied at or above a Bid Price of Bzs 300 will receive a pro-rata allotment.

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Should any Applicant require additional explanation or clarification on the calculation of the Phase I Application Money, or the allocation procedure, the following individual should be contacted:

Mr. Jignesh Dharod bank muscat SAOG email: jignesh@bankmuscat.com Tel: +968 24801155

Minimum Subscription Limit for Phase I

The minimum number of Shares for Phase I Applicants will be 200,100 Offer Shares and in multiples of 100 Offer Shares thereafter.

Maximum Subscription Limit for Phase I

The maximum number of Shares that can be applied for by a Phase I Applicant is 10 per cent (10%) of the total Offer size which equates to 2,815,600 Offer Shares. It is not permissible for any Applicant to subscribe for more than this amount.

For the purpose of calculation of the maximum subscription percentage, an Application for subscription of a father (or guardian) shall be aggregated with any Applications submitted on behalf of related minor children. If the amount of the Phase I Offer Shares subscribed for following this aggregation exceeds the said percentage, the Phase I Offer Shares applied for under each Application shall be reduced proportionately before making the allotment.

None of Musandam Power and/or the Issue Manager is liable for any changes in applicable laws or regulations that occur after the date of this Prospectus. Applicants are advised to make their own independent investigations to ensure that their Applications comply with prevailing laws and regulations.

Price Range for Phase I Offer

A Price Range has been fixed at between Bzs 260 to Bzs 325 per Offer Share by the Company. Phase I Applicants can provide a Bid Price only for price within the Price Range and any bids made at a Bid Price falling outside this Price Range will not be considered and any Applications made containing only a Bid Price(s) outside of this Price Range may be rejected without contacting the Applicant.

Copies of the Prospectus will be available to the Applicants at the head offices of the Collection Agents, at the Company’s offices or can be downloaded from the websites of the CMA and MSM, as follows: www.cma.gov.om & www.msm.gov.om.

Terms of Payment• The Collection Agents will open escrow accounts entitled the “Musandam Power IPO – Phase I” for

the collection of the Phase I Application Money from each Phase I Applicant. These escrow accounts will be managed by each Collection Agent which will on the next working day after the receipt of a payment against each Application transfer the collection proceeds to the common escrow account maintained by MCDC.

• Each Applicant can pay by demand draft, pay by an account transfer or pay by his/her own brokerage account with a licensed broker (provided the broker has been appointed as a Collection Agent for Musandam Power IPO) for their individual Phase I Application Money at the time of submission of their Applications. Payments through cheques may not be accepted unless the Phase I Application money is credited to the Collection Agent’s escrow account before 12 PM on the Offer I Closing Date.

Particulars of the Bank Account of the Applicant• In accordance with the instructions of the CMA, each Applicant needs to verify the details of the

bank account listed in the records of the MCDC. The bank account listed in the records of the MCDC will be used for the transfer of refunds.

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Documentation Required• A copy of a valid power of attorney, duly endorsed by the competent legal authorities, must be

included in the event that the Application is on behalf of another person (with the exception of an Application made by a father on behalf of his minor children).

• In case of Applications by juristic persons (non-individuals) which are signed by a person in his or her capacity as an authorised signatory, a copy of adequate and valid documentation evidencing the capacity to sign should be attached to an Application.

Mode of Application• The Applicant will be responsible for furnishing all particulars and will ensure the correctness and

validity of the information set out in the Application. The Applicant will be required, before completing the Application, to carefully read this Prospectus, including the conditions and procedures governing the Application.

• The Applicant will be required to fill in the Application and furnish copies of all particulars as noted on the Application.

• The Applicant will be required to submit the Application at the head offices of the Collection Agent, together with the Phase I Application Money and the documents that may be required in support of the Application.

• Demand draft for the Phase I Application Money will be in favour of “Musandam Power IPO – Phase I”.

Collection Agents Receiving the Applications

The Phase I Applicants’ Applications will be accepted at the head offices of the Collection Agents from 10 AM to 2 PM except for the Phase I Offer Closing Date when they will be accepted from 10AM to 12PM. The Collection Agent receiving the Applications is required to accept the Application, after confirmation of compliance with the procedures for Applications set out in this Prospectus. The Collection Agent must instruct the Applicants to comply and fulfil any requirements set out in the Application.

Applicants must submit an Application to one of the Collection Agents on or before the closing of the Phase I Offer Period. The Collection Agent shall refuse any Application received after 12PM on the Phase I Offer Closing Date.

Payment into Escrow Account for the Offer • All Applicants must, with the submission of the Application, pay the Application Money by demand

draft, instruct an account transfer or pay through his/her brokerage account with a licensed broker (provided the broker has been appointed as a Collection Broker for Musandam Power IPO).

• Where an Applicant has been allocated fewer Offer Shares than indicated in the Application or at an Offer Price lower than the Bid Price at which the Phase I Application Money was calculated, the excess amount, if any, paid on the Application, will be refunded to the Applicant.

• After the receipt of the valid Application along with receipt of the Phase I Application Money, the Collection Agent must enter the bids contained in the Application into the PAM System.

• Each Collection Agent must transfer the aggregate of the Application Money against all of the Applications they have received and entered in the PAM System of the MSM to the common escrow account held by the MCDC on the next working day after the day of receipt of the Application.

Acceptance of the Applications

The Collection Agent will not accept Applications in the following circumstances:

• If the Application does not bear the signature of the Applicant.

• If the Application Money is not paid by the Applicant in accordance with the conditions set out in this Prospectus.

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• If the Bid Price and bid Offer Share combination in the Application is not as per the instructions in this prospectus.

• If the Application does not include the Applicant’s Investor Number registered with the MCDC.

• If the Application is submitted in joint names.

• If the Applicant is a sole proprietorship or trust account.

• If the Investor Number furnished in the Application is incorrect.

• If the Applicant submits more than one Application in the same name, all of them will be rejected.

• If the supporting documents are not enclosed with the Application.

• If the Application does not contain all the particulars of the bank account of the Applicant.

• If the power of attorney is not attached to the Application in respect of an Applicant who subscribes on behalf of another person (with the exception of fathers who subscribe on behalf of their minor children).

• If appropriate documentation confirming the authority of a signatory to sign an Application is not included with an Application by juristic persons (non-individuals) which are signed by a person in his or her capacity as an authorised signatory.

• If the Application does not comply with the legal requirements as provided for in this Prospectus.

• If the Application Revision Form is submitted for Applicants, for whom the original Application is submitted after 5 November 2019.

• If the Application is received after 12PM on 7 November 2019, the Phase I Offer Closing Date.

If the Collection Agent receives an Application that does not comply with the procedures set out in this Prospectus, due effort will be taken to contact the Applicant so that the mistake may be corrected. If the Applicant does not rectify the Application within a specified period, Collection Agent may return the Application together with the Phase I Application Money to the Applicant.

Refusal of Applications

The Collection Agent, Issue Manager may reject any Application under any of the conditions referred to above, subject to securing the approval of the CMA and submission of a comprehensive report furnishing the details of the Applications that are rejected and the reasons behind the rejections.

Enquiry and Complaints

Any Applicant, who intends to seek clarification or file complaints with regard to issues related to the allotment or rejection of Applications or refund of the Application Money in excess of the subscription, may contact the head office of the Collection Agent where the subscription was made. In case there is no response from the branch, the Applicant may contact the person whose details are set out below:

Collection Agent Contact Name Postal Address Contact Details

Ahli Bank S.A.O.G. Duaa Al Zaabi P.O. Box 545,P.C. 116,Mina Al Fahal, Sultanate of Oman

Tel: +968 2457 7922Fax: +968 2456 7841Email: duaa.alzaabi@ahlibank.om

Bank Dhofar S.A.O.G. Aisha Al Khanjari P.O. 1507, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2472 6371Fax: +968 2479 7246Email: askhanjari@bankdhofar.com

bank muscat S.A.O.G Hamid Said Hashmat

P.O. 134, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2476 7990Fax: +968 2478 7764Email: hamids@bankmuscat.com

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Collection Agent Contact Name Postal Address Contact Details

National Bank of OmanS.A.O.G.

Arpan Taunk P.O. 751, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2477 8610Fax: +968 2477 8993Email: arpant@nbo.co.om

Gulf Baader Capital Markets S.A.O.C.

Amit Maheshwari P.O. Box 974, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2235 0729Fax: +968 2235 0745Email: amit@gbcmoman.net

Ubhar Capital S.A.O.C. Osama Al Qinna P.O. Box 1137, P.C. 111, Al Seeb, Sultanate of Oman

Tel: +968 2494 9009Fax: +968 2494 9099Email: o.qinna@u-capital.net

United Securities LLC Osama Shihab P.O. Box 2566, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2476 3329Fax: +968 2450 3750Email: Osama@usoman.com

Disclosure of the bids• The bids may be displayed on the website of the MSM www.msm.gov.om during the Phase I Offer

Period

• The following is an example of the snapshot of the bids which may be displayed on the MSM’s website:

Please note that in the figure presented above:

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a) “No. of Order” - specifies the number of unique bids entered by various collection agents at each price point;

b) “Volumes” - specifies the total aggregate number of shares bid for at each price point;

c) “Price” - refers to the bid price at which the number of orders and volumes data are presented;

d) Percentage” - specifies the total aggregate number of shares bid for at each price point as percentage of the overall aggregate number of shares bid.

• Since each Application by the Applicants will have up to three bids, the snapshot of the bids shown in the example above reflects the quantity of shares for each unique bid and hence the sum of volume column in the above table should be understood accordingly.

• The Applicants who have submitted their applications 2 days prior to the Phase I Offer Closing Date, have the option to revise their bids upwards both in terms of quantity of shares demanded and the bid price. Consequently the live bid data displayed on MSM is subject to change due to this revision and should be understood accordingly.

• The information presented above will be provided by the MSM. The Company and the Issue Manager will not be responsible for the availability, quality, accuracy, completeness or suitability of the information provided by the MSM

Determination of the Offer Price

• MCDC will collect the bids entered into the PAM system by the Collection Agents.

• Any bid which does not meet the conditions specified in this Prospectus will be rejected.

• MCDC will subsequently prepare a cumulative demand schedule at various Bid Prices and also determine the cut-off price or the highest Bid Price at which the Company has received sufficient demand to sell all Offer Shares in the Offering. MCDC to provide a report with aforementioned details to the Issue Manager who inturn should submit the report to the CMA for approval.

• The cut-off price so arrived shall be deemed to include the issue expenses of Bzs 2 per Offer Share

• The CMA, in consultation with the Issue Manager, will approve the Offer Price and the Offer Price will be disclosed through an announcement on the website of the MSM i.e. www.msm.gov.om and newspaper advertisements within approximately two working days after the close of the Phase I Offer Period.

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PHASE II OFFER

Offer Structure

Phase II Offer

Proposed allocation of the number of Offer Shares

14,078,000 Shares

Proposed allocation of the percentage of Offer Shares

50%

Basis of Pricing and Allotment Fixed price and pro-rata allotment

Minimum Subscription 1,000 Shares and thereafter in multiples of 100 Shares

Maximum Subscription 200,000 Shares

Terms of Payment of Application Money 100% of the Phase II Application Money to be paid at the time of submission of the Application

Offer Subscription Period Phase II Offer Period to be announced on the MSM website (www.msm.gov.om) and through newspaper advertisement after completion of Phase I, with approval of the CMA

Subscription Conditions and Procedures Applicable to Phase II Offer

Eligibility for the Subscription of Offer Shares

The subscription for Phase II Offer Shares will be open to Omani and non-Omani individuals and juristic persons who have their accounts with MCDC. All GCC individuals and juristic persons are treated as Omani individuals and juristic persons for the purpose of owning shares in Omani SAOGs.

No single person shall by himself, or through a related person up to the second degree, hold or purchase 25 percent or more of the shares of an SAOG, except with the explicit written approval of the CMA as per the applicable regulations.

Prohibitions with Regard to the Applications for Subscription

In accordance with the Capital Market Law, the following persons shall not be permitted to subscribe to the Offer:

i. Sole proprietorship establishments - The owners of sole proprietorship establishments may only submit Applications in their personal names.

ii. Trust accounts - Applicants registered under trust accounts may only submit Applications in their personal names.

iii. Multiple Applications - An Applicant may not submit more than one Application.iv. Joint Applications - Applicants may not submit applications in the name of more than one

individual (including on behalf of legal heirs).

All such Applications may be rejected without contacting the Applicant.

Subscription on Behalf of Minor Children

For the purpose of this Phase II Offer, any person under 18 years of age on the date of submission of an Application will be defined as a minor.

Only a father may subscribe on behalf of his minor children.

170

If an Application is made on behalf of a minor by any person other than the minor’s father, the person submitting the Application will be required to attach a valid Shariah (Legal) Power of Attorney issued by the competent authorities authorising him or her to deal in the funds of the minor through sale, purchase and investment.

Applicant’s Number with MCDC

Any Applicant who subscribes for the Phase II Offer Shares must have an account and Investor Number with the MCDC. Any Applicant may apply to obtain an Investor Number and open an account by completing the ‘MCDC Application’. This may be obtained from the MCDC’s Head Office or its website at www.mcd.gov.om, or from brokerage companies licensed by the CMA. The completed form may be submitted by an Applicant through any of the following channels:

v. At the head office of the MCDC, at P.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman.

vi. At the office of any brokerage company licensed by the CMA.vii. By sending a facsimile to MCDC at +968 24817491.viii. By opening an account through the MCDC website at www.mcd.gov.om

In order to open an account with the MCDC, a juristic person will be required to furnish a copy of its constitutional documents, in the form prescribed by the MCDC, along with a completed MCDC Application in order to open an account and receive an Investor Number.

Applicants who already hold accounts with the MCDC are advised, before the Phase II Offer, to confirm their details as noted in the Application. Applicants may update their particulars through any of the channels mentioned above.

All correspondence including allocation notices and dividend cheques will be sent to Applicant’s address as recorded at the MCDC. Applicants should ensure that their addresses as provided to the MCDC are correct and kept up-to-date.

Each Applicant should secure from the MCDC its Investor Number as the Investor Number will be required in order to complete the Application. Each Applicant is responsible for ensuring that the Investor Number set out in their application is correct. Applications not bearing the correct Investor Number may be rejected without contacting the Applicant.

For more information on these procedures, Applicants should contact the MCDC:Muscat Clearing & Depository Co. SAOCP.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman Tel: +968 2482 2222; Fax: +968 2481 7491 www.mcd.gov.om

Offer Period

The Phase II Offer Period will be announced on the MSM website (www.msm.gov.om) and through newspaper advertisement after completion of Phase I with approval of the CMA.

Subscription and Application Process for Phase II Applicants

Mode of Application

Phase II Offer will be conducted only through the E-IPO Mechanism. The Applicants will be able to submit Applications either through Collection Banks or through Collection Brokers:

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PROSPECTUS

1. Application through Collection Banks

I. E-IPO channel by the Collection Banks: The Applicant will need to get in touch with their respective bank which has been appointed as a

Collection Bank for Musandam Power IPO for further guidance on the E-IPO channel provided by the respective bank.

The Application Money will be paid by the Applicant as per the terms of the E-IPO collection process utilised by each Collection Bank. The Applicant will be required, before completing the Application through E-IPO, to carefully read this Prospectus, including the conditions and procedures governing the E-IPO Application.

II. E-IPO Platform: The Applicants can furnish all particulars in the E-IPO platform at the following website. www.mcd.gov.om

After verifying all the particulars, the Applicant will need to print the E-IPO Application. The Applicant needs to submit the E-IPO Application along with supporting documents and Phase II Application Money to one of the Collection Banks. The Collection Bank in turn after verifying the supporting documents and confirming the receipt of the Phase II Application Money will validate the E-IPO Application in the E-IPO platform and share a copy of the acknowledgment of the E-IPO Application with each Applicant. The Applicant needs to ensure that they receive a copy of the acknowledgement from the Collection Bank as a valid proof of their Application.

Each Applicant can make payments through the following routes: (i) by cash; (ii) by cheque or demand draft in favour of “Musandam Power IPO – Phase II”; or (iii) instruct their bank to debit their bank account (provided the bank has been appointed as a Collection Bank for Musandam Power IPO) for the Phase II Application Money at the time of submission of the Application.

2. Application through Collection Brokers The Applicants will provide instructions along with supporting documents and Phase II Application

Money to their brokers (provided the broker has been appointed as a Collection Broker for Musandam Power IPO) to apply in the IPO on their behalf. The Collection Brokers on receipt of such instructions along with supporting documents and upon confirmation of the receipt of Phase II Application Money will create an E-IPO Application on behalf of the Applicant on the E-IPO Broker Platform. The Collection Broker who makes the Application on behalf of the Applicant will download and share a copy of acknowledgment of the E-IPO Application to each Applicant. The Applicant needs to ensure that they receive a copy of the acknowledgment from the Collection Broker as a valid proof of their Application.

Each Applicant can make payments through the following routes: (i) by cheque or demand draft in favour of “Musandam Power IPO – Phase II”; or (ii) instruct their broker to debit their brokerage account (provided the broker has been appointed as a Collection Broker for Musandam Power IPO) for the Phase II Application Money at the time of submission of the Application.

Terms of Payment

• The Collection Agents will open escrow accounts entitled the “Musandam Power IPO – Phase II” for the collection of the Phase II Application Money from Phase II Applicants. These escrow accounts will be managed by each Collection Agent who will within the next two working days after the receipt of the payment against each Application transfer the collection proceeds to the common escrow account maintained by MCDC.

Particulars of the Bank Account of the Applicant

• In accordance with the instructions of the CMA, the Applicant will need to verify the details of the bank account listed in the records of the MCDC. The bank account listed in the records of the MCDC will be used for the transfer of refunds.

172

Documentation Required

• A copy of a valid power of attorney duly endorsed by the competent legal authorities must be included in the event the subscription is on behalf of another person (with the exception of a subscription made by a father on behalf of his minor children).

• In case of applications by juristic persons (non-individuals) which are signed by a person in his or her capacity as an authorised signatory, a copy of adequate and valid documentation evidencing the authority of the person to sign should be attached to the Application.

Minimum Limit of Subscription

The minimum number of Offer Shares for Phase II Applicants will be 1,000 Offer Shares and in multiples of 100 Offer Shares thereafter.

Maximum Limit of Subscription

The maximum number of Offer Shares that can be applied for by a Phase II Applicant is 200,000 Offer Shares.

None of Musandam Power and the Issue Manager is liable for any changes in applicable laws or regulations that occur after the date of this Prospectus. Applicants are advised to make their own independent investigations to ensure that their Applications comply with prevailing laws and regulations.

Collection Agents Receiving the Applications

The Phase II Applicants’ Applications will be accepted by the Collection Agents during official working hours only. The Phase II Offer period will be announced on the MSM website (www.msm.gov.om) and through newspaper advertisement after completion of the Phase I Offer Period and in consultation with the CMA. The Applications will be accepted at all the branches of the Collection Agents.

The Collection Agent receiving the Applications is required to accept the Application, after confirmation of the Application’s compliance with the procedures set out in this Prospectus. The Collection Agent must instruct the Applicants to comply and fulfil any requirements set out in the Application.

Applicants must submit an Application to one of the Collection Agents on or before the closing of the Phase II Offer Period. The Collection Agent shall refuse any Application received after the end of official working hours on the Phase II Offer Closing Date.

Acceptance of the Applications

The Collection Agent will not accept Applications in the following circumstances:

• If the Application does not bear the signature of the Applicant (in case of Application through E-IPO Platform).

• If the Phase II Application Money is not paid by the Applicant in accordance with the conditions set out in this Prospectus.

• If the Phase II Application Money is paid by cheque and the cheque is dishonoured for any reason whatsoever

• If the Application is submitted in joint names.• If the Applicant is a sole proprietorship or trust account.• If the Applicant submits more than one Application in the same name, all of them will be rejected.• If the supporting documents are not enclosed with the Application.• If the Application does not contain all the particulars of the bank account of the Applicant.• If the particulars of the bank account provided in the Application are found to be incorrect or not

relevant to the Applicant, with the exception of Applications submitted in the names of minor children, who are allowed to make use of the particulars of the bank accounts held by their fathers.

173

PROSPECTUS

• If the power of attorney is not attached to the Application in respect of an Applicant who subscribes on behalf of another person (with the exception of fathers who subscribe on behalf of their minor children).

• If appropriate documentation confirming the authority of a signatory to sign an Application is not included with an Application by juristic persons (non-individuals) which are signed by a person in his or her capacity as an authorised signatory.

• If the Application does not comply with the legal requirements as provided for in this Prospectus.• If the Application is received after official working hours on the Phase II Offer Closing Date.• If the Applicant is among those who have submitted bids at or higher than the Offer Price.

If the Collection Agent receives an Application that does not comply with the procedures set out in this Prospectus, due effort will be taken to contact the Applicant so that the mistake may be corrected. If the Applicant does not rectify the Application within a specified period, Collection Agent will return the Application together with the Phase II Application Money to the Applicant.

Refusal of Applications

The Collection Agent, Issue Manager may reject any Application under any of the conditions referred to above, subject to securing the approval of the CMA and submission of a comprehensive report furnishing the details of the Applications that are rejected and the reasons behind the rejections.

Enquiry and Complaints

Any Applicant, who intends to seek clarification or file complaints with regard to issues related to the allotment of Offer Shares or rejection of Applications or a refund of the Phase II Application Money in excess of the subscription, may contact the branch of the Collection Agent where the subscription was made. In case there is no response from the branch, the Applicant may contact the person whose details are set out below:

Collection Agent Contact Name Postal Address Contact Details

Ahli Bank S.A.O.G. Duaa Al Zaabi P.O. Box 545,P.C. 116,Mina Al Fahal, Sultanate of Oman

Tel: +968 2457 7922Fax: +968 2456 7841Email: duaa.alzaabi@ahlibank.om

Bank Dhofar S.A.O.G. Aisha Al Khanjari P.O. 1507, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2472 6371Fax: +968 2479 7246Email: askhanjari@bankdhofar.com

bank muscat S.A.O.G Hamid Said Hashmat

P.O. 134, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2476 7990Fax: +968 2478 7764Email: hamids@bankmuscat.com

National Bank of OmanS.A.O.G.

Arpan Taunk P.O. 751, P.C. 112, Ruwi,Sultanate of Oman

Tel: +968 2477 8610Fax: +968 2477 8993Email: arpant@nbo.co.om

Gulf Baader Capital Markets S.A.O.C.

Amit Maheshwari P.O. Box 974, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2235 0729Fax: +968 2235 0745Email: amit@gbcmoman.net

Ubhar Capital S.A.O.C. Osama Al Qinna P.O. Box 1137, P.C. 111, Al Seeb, Sultanate of Oman

Tel: +968 2494 9009Fax: +968 2494 9099Email: o.qinna@u-capital.net

United Securities LLC Osama Shihab P.O. Box 2566, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2476 3329Fax: +968 2450 3750Email: Osama@usoman.com

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FOR BOTH PHASE I AND PHASE II INVESTORS

Allocation in Case of Undersubscription

In case of undersubscription in Phase I Offer i.e., aggregate demand by Phase I Applicants is less than the total Offer Shares, the next steps will be undertaken as advised by the CMA in consultation and agreed with the Issue Manager.

Any undersubscription in Phase II Offer shall be carried over to the Phase I Offer to meet any oversubscription occurring there, if the applications exceed the collection percentage prescribed for Phase I, amounting to (50%) of the Offered Shares.

Allocation in Case of Oversubscription

In case of oversubscription in Phase I Offer i.e., aggregate demand by Phase I Applicants is equal to or more than the Offer Shares, the allocation of Phase I Offer Shares will be completed on pro-rata basis to Applicants who have bid at or above the announced Offer Price. Any undersubscription in Phase II Offer shall be carried over to the Phase I Offer to meet any oversubscription in Phase I Offer.

In case of oversubscription in Phase II Offer, the Phase II Offer Shares distribution shall be completed on a pro-rata basis. In accordance with Article 105 of the CCL, the CMA may decide that a minimum number of Offer Shares be distributed equally among Applicants, taking into consideration small subscribers and the remaining Offer Shares shall be allocated on a pro-rata basis.

Allotment Letters and Refund of Money

The Issue Manager will arrange to allot the Offer Shares to all eligible Applicants within 15 days after the end of the Phase II Offer Period after receiving the written approval of the CMA on the basis of allotment. MCDC will undertake the reconciliation of funds and refund the excess Application Money to eligible Applicants within 15 days after the end of the Phase II Offer Period and after receiving the approval of the CMA. Any Applicant, for whom the refund of excess Application Money could not be processed due to incorrect details of the bank account registered with MCDC, may approach MCDC for the refunds. Any unclaimed amount within 30 days of the end of Phase II Offer Period will be transferred to the Unclaimed Funds Account with the CMA. MCDC will send allotment letters to Applicants who have been allotted Offer Shares to their addresses registered with the MCDC.

175

PROSPECTUS

Proposed Timetable

The following table shows the expected timetable for completion of the subscription procedures:

Procedure Date

Receipt of the Administrative Decision from the CMA approving the IPO 14 October 2019

Statutory Notice for the IPO 16 October 2019

Commencement of Investor Roadshows and Marketing 20 October 2019

Commencement of subscription for Phase I Applicants 3 November 2019

Closing of subscription for Phase I Applicants 7 November 2019

Announcement of Offer Price on the MSM 12 November 2019

Commencement of subscription for Phase II Applicants *

Closing of subscription for Phase II Applicants *

Notification to the CMA of the outcome of the subscription and the proposed allotment for Phase I and Phase II Applicants

*

Approval of the CMA on the proposed allotment *

Commencement of refund and dispatch of the notices regarding allotment

*

Listing of the Offer Shares with MSM *

* to be announced on the MSM website (www.msm.gov.om) and through newspaper advertisement after completion of

Phase I, with approval of the CMA

Listing and Trading of the Offer Shares

The Offer Shares will be listed with MSM in accordance with the laws and procedures in force on the date the application is made for the listing and registration. The exact date of listing will be published on the MSM website.

Responsibilities and Obligations

The Issue Manager, the Collection Agents and the MCDC must abide by the responsibilities and obligations set out by the directives and regulations issued by the CMA. The Issue Manager and the Collection Agents must also abide by any other responsibilities that are provided for in the agreements entered into among them and Musandam Power and the Selling Shareholders.

The parties concerned will be required to take remedial measures with regard to any liability arising from any negligence committed in the performance of the functions and responsibilities assigned to them. The Issue Manager will be the entity responsible before the regulatory authorities for taking suitable steps and measures for redressing such liability.

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Chapter XXI

Historical Financial Statements

Page

Audited Financial Statements for the Year Ended 31st December 2015 F-175

Audited Financial Statements for the Year Ended 31st December 2016 F-195

Audited Financial Statements for the Year Ended 31st December 2017 F-216

Audited Financial Statements for the Year Ended 31st December 2018 F-243

Audited Financial Statements for the Period Ended 30th June 2019 F-300

F-177

PROSPECTUS

Musandam Power Company SAOC

FINANCIAL STATEMENTS

31 DECEMBER 2015

F-179

PROSPECTUS

STATEMENT OF COMPREHENSIVE INCOMEFor the period of 31 December 2015

01/01/2015to

31/12/2015

18/11/2014 to

31/12/2014

RO RO

General and administrative expenses (48,587) (56,174)

LOSS AND TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR/PERIOD (48,587) (56,174)

The attached notes 1 to 17 form part of these financial statements.

F-180

STATEMENT OF FINANCIAL POSITIONAt 31 December 2015

2015 2014

Notes RO RO

ASSETS

Non-current assets

Equipment 4 2,923 4,391

Capital work in progress 4 37,861,091 1,906,922

37,864,014 1,911,313

Current assets

Other receivable 5 7,045,092 6,837,037

Bank balances 53,084 5,373,209

7,098,176 12,210,246

TOTAL ASSETS 44,962,190 14,121,559

EQUITY AND LIABILITIES

Equity

Share capital 6 500,000 500,000

Accumulated losses (104,761) (56,174)

Total equity 395,239 443,826

Non-current liabilities

Equity bridge loan 8 - 11,830,000

Senior facility loan 9 21,865,340 -

21,865,340 11,830,000

Current liabilities

Equity bridge loan 8 12,992,777 -

Accounts payable and accruals 10 9,704,559 407,996

Amounts due to related parties 11 4,275 1,439,737

22,701,611 1,847,733

Total liabilities 44,566,951 13,677,733

TOTAL EQUITY AND LIABILITIES 44,962,190 14,121,559

The financial statements were authorised for issue in accordance with a resolution of the directors on 09-03-2016.

The attached notes 1 to 17 form part of these financial statements.

F-181

PROSPECTUS

STATEMENT OF CHANGES IN EQUITYFor the period of 31 December 2015

Note Share

capital

Accumulated losses

Total

RO RO RO

Proceeds from issue of share capital 6 500,000 - 500,000

Loss and total comprehensive expense

for the period - (56,174) (56,174)

Balance at 31 December 2014 500,000 (56,174) 443,826

Balance at 1 January 2015 500,000 (56,174) 443,826

Loss and total comprehensive expense for the year - (48,587) (48,587)

Balance at 31 December 2015 500,000 (104,761) 395,239

The attached notes 1 to 17 form part of these financial statements.

F-182

STATEMENT OF CASH FLOWSFor the period of 31 December 2015

01/01/2015 to

31/12/2015

18/11/2014 to

31/12/2014

Notes RO RO

OPERATING ACTIVITIES

Loss for the year/period (48,587) (56,174)

Adjustments for:

Depreciation 4 1,468 -

Operating cash flows before working capital adjustments (47,119) (56,194)

Other receivable (208,055) (6,837,037)

Accounts payable and accruals 9,296,563 407,996

Amounts due to related parties (1,435,462) 1,439,737

Net cash from / (used in) operating activities 7,605,927 (5,045,478)

INVESTING ACTIVITIES

Purchase of equipment 4 - (4,391)

Addition to capital work in progress (35,836,117) (1,906,922)

Net cash used in investing activities (35,836,117) (1,911,313)

FINANCING ACTIVITIES

Issue of share capital 6 - 500,000

Receipt of equity bridge and facility loan 1,077,777 12,000,000

Receipt of senior facility loan 22,923,000 -

Deferred financing costs (1,090,712) (170,000)

Net cash flows from financing activities 22,910,065 12,330,000

Net (decrease) / increase in cash and cash equivalent (5,320,125) 5,373,209

Cash and cash equivalent at beginning of the year / period 5,373,209 -

Cash and cash equivalent at the end of the year / period 53,084 5,373,209

The attached notes 1 to 17 form part of these financial statements.

F-183

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015

1 CORPORATE INFORMATION AND ACTIVITIES

The Company is a closed joint stock company registered and incorporated in the Sultanate of Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) to be located in the Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, PO Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Company SAOC (the “Parent”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is PO Box 261, Postal Code 118, Sultanate of Oman. The Parent holds 69.9% of the Company’s issued share capital.

The electricity generated from the Project will be sold to Oman Power and Water Procurement Company SAOC under a 15 years Power Purchase Agreement. Natural gas required for the Project will be supplied by the Ministry of Oil & Gas under a 15 years gas supply agreement.

The Company has entered into the following significant agreements:

i) An Engineering, Procurement and Construction (EPC) contract with Wartsila Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wartsila Muscat LLC.

iii) An equity bridge loan agreement with Bank Muscat SAOG to fund the equity component of the construction costs of the proposed Project.

iv) A power purchase agreement (“PPA’) with Oman Water and Power Procurement Company SAOC to sell the electricity generated from the Plant.

v) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas to supply and purchase natural gas to and for the Plant.

vi) An operation and maintenance agreement with Wartsila Muscat LLC to operate and maintain the Plant.

vii) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

viii) Usufructs Agreement with Ministry of Housing for the project Site, temporary areas and RAECO substation Area.

ix) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

F-184

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

2.1 Standards and amendments effective in 2015 and relevant for the Company’s operations:

For the year ended 31 December 2015, the Company has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for periods beginning on 1 January 2015.

The adoption of these standards and interpretations has not resulted in changes to the Company’s accounting policies and has not affected the amounts reported for the current and prior periods.

2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company:

The following new standards and amendments have been issued by the International Accounting Standards Board (IASB) but are not yet mandatory for the year ended 31 December 2015:

IFRS 9: Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but comparative information is not compulsory. The Company has performed a high-level impact assessment of all three aspects of IFRS 9 and expects no significant impact on its balance sheet and equity. The Company plans to adopt the new standard on the required effective date.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plan to adopt the new standard on the required effective date. The Company is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments.

IFRS 16 Leases

The IASB issued IFRS 16 Leases (IFRS 16), which requires lessees to recognise assets and liabilities for most leases. For lessors, there is little change to the existing accounting in IAS 17 Leases. The Company will perform a detailed assessment in the future to determine the extent. The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application is permitted, provided the new revenue standard, IFRS 15 Revenue from Contracts with Customers, has been applied, or is applied at the same date as IFRS 16.

F-185

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Commercial Companies Law of 1974, as amended.

The financial statements have been presented in Rial Omani (“RO”) which is also the functional currency of the Company.

The financial statements are prepared under the historical cost convention.

A summary of significant accounting policies, which are consistent with those used in the previous period, are set out below.

3.2 Equipment and capital work in progress

(a) Equipment

Equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Office equipment 3 years

Furniture and fixtures 3 years

An item of equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss, when the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(b) Capital work in progress

Capital work in progress includes all expenditure incurred on process design, detailed engineering, construction, equipment, project management, legal fees, and other costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. Certain costs which are attributable to the project though cannot be identified to a specific asset are being charged to capital work-in-progress.

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the period that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

Capital work in progress is recorded at cost less impairment, if any.

F-186

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.3 Impairment and un-collectability of financial assets

An assessment is made at each reporting date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, an impairment loss is recognised in the profit or loss. Impairment is determined as follows:

(d) For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the profit or loss;

(e) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset;

(f) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective interest rate.

3.4 Other receivables

Other receivables are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

3.5 Account payables and accruals

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

3.6 Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The expense relating to any provision is presented in the statement of comprehensive income of any reimbursements.

3.7 Income tax

Taxation is provided for in accordance with Omani fiscal regulations.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised.

F-187

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.7 Income tax (continued)

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss.

3.8 Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

3.9 Derecognition of financial assets and financial liabilities

Financial assets:

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired; or

• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and

• Either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and the Company intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards or for gains and losses arising from a group of similar transactions.

3.10 Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

F-188

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

3.12 Impairment of non-financial asset

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.13 Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

3.14 Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

3.15 Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date.

F-189

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

4 EQUIPMENT AND CAPITAL WORK IN PROGRESS

Equipment

2015 2014

RO RO

Gross book value 4,391 4,391

Less: depreciation (1,468) -

Net book value 2,923 4,391

Equipment at a net book value of RO 4,391 were transferred by the Parent Company on 31 December 2014.

Capital work in progress

The Company had entered into an EPC contract with Wartsila Muscat LLC on 25 November 2014 for services relating to the design, engineering, procurement, construction, start up, commissioning, testing and other work necessary to construct and complete the project.

As at reporting date, capital work-in-progress mainly relates to the costs incurred towards EPC contract, site surveys, environmental study, consultation fees towards proposal for providing technical services, development fees paid to shareholders and financing of the project. The related details are set out below:

2015 2014

RO RO

EPC related expenses 32,145,278 -

Professional fees 3,425,055 1,640,435

Development fees paid to shareholders 1,202,251 -

Interest costs 635,366 -

Amortisation of deferred financing cost 118,052 -

Site surveyor cost 120,000 120,000

Environmental study cost 70,000 70,000

Others 145,089 76,487

37,861,091 1,906,922

F-190

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

5 OTHER RECEIVABLE

2015 2014

RO RO

Advance payment made to the contractor 6,837,037 6,837,037

Prepaid insurance 190,078 -

Others 17,977 -

7,045,092 6,837,037

6 SHARE CAPITAL

2015 2014

RO RO

Authorised share capital 20,000,000 shares of RO 1 each 20,000,000 20,000,000

Issued and paid up share capital 500,000 shares of RO 1 each 500,000 500,000

7 STATUTORY RESERVE As required by the Commercial Companies Law of the Sultanate of Oman, 10% of annual profit of

the Company is required to be transvferred to statutory reserve until the reserve is equal to one third of the issued share capital of the Company. The reserve is not available for distribution.

No transfer has been made during the year (2014: nil) as the Company has reported a loss.

8 EQUITY BRIDGE LOAN

2015 2014

RO RO

Non-current

Opening balances 12,000,000 -

Drawdowns 1,077,777 12,000,00013,077,777 12,000,000

Less: deferred financing costs (170,000) (170,000)

12,907,777 11,830,000

Amortisation of deferred financing costs 85,000 -

12,992,777 11,830,000

Less: current portion (12,992,777) -

- 11,830,000

The equity bridge loan is denominated in Rial Omani and carries interest at commercial rates. The loan is to be repaid on the earlier of completion of the Project or by 31 December 2016. The loan is secured by corporate guarantee from the shareholders.

F-191

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

9 SENIOR FACILITY LOAN

2015 2014

RO RO

Non-current

Opening balances - -

Drawdowns 22,923,000 -

22,923,000 -

Less: deferred financing costs (1,090,712) -

21,832,288 -

Amortisation of deferred financing costs 33,052 -

21,865,340 -

The senior facility loan is denominated in Rial Omani and carries interest at commercial rates. The loan is to be repaid in 30 half yearly instalments commencing on 30 June 2017. The loan is secured by:

(a) Legal mortgage over the Company’s immovable assets.

(b) Pledge over the owner’s shares.

(c) Pledge over the project accounts.

(d) Assignment / charge over all of the Company’s rights, titles and interest in and to the project documents, the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

10 ACCOUNTS PAYABLE AND ACCRUALS

2015 2014

RO RO

Accrued expenses 9,591,341 307,605

Trade accounts payable 113,218 100,391

9,704,559 407,996

F-192

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

11 RELATED PARTY TRANSACTIONS

Related parties comprise the shareholders, directors, key management personnel and business entities in which they have the ability to control or exercise significant influence in financial and operating decisions.

Transactions

2015 2014

RO RO

Development fees paid to shareholders 1,202,251 -

Reimbursement of expenses incurred by shareholders 4,275 1,439,737

1,206,526 1,439,737

Key management compensation

2015 2014

RO RO

Salaries and other benefits 54,000 18,000

Balances with related parties included in the statement of financial position are as follows:

Amounts due to related parties

2015 2014

RO RO

Oman Oil Company SAOC 4,275 1,130,713

LG International - 309,024

4,275 1,439,737

12 TAXATION

The tax rates applicable to the Company is 12% (2014 - 12%). The Company has reported accounting as well as taxable loss. Therefore, the applicable tax rate is nil (2014 - nil). The average effective tax rate cannot be determined in view of no taxable income.

Deferred income taxes are calculated on all temporary differences using a principal tax rate of 12%. In view of the uncertainty regarding the availability of future taxable profits, no deferred tax asset has been recognised in these financial statements.

F-193

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

13 COMMITMENTS

(i) Capital commitments

During the previous year, the Company had entered into an agreement with Wartsila Muscat LLC towards engineering, procurement and construction amounting to RO 68,352,733 (USD 177,539,565). As at 31 December 2015, commitments to Wartsila Muscat LLC amounted to RO 29,370,418 (USD 76,286,300).

(ii) Operating leases

The Company has entered into a lease agreement on 9 February 2015 with the Government of the Sultanate of Oman, represented by the Ministry of Housing in respect of the land used for project site and temporary areas. The lease agreement for land used for project site is for an initial term of 15 years, renewable for further periods. At 31 December 2015, the company had lease commitments of RO 142,762 as follows:

2015 2014

RO RO

Due within one year 10,197 -

Due after one year but within five years 40,789 -

Due after five years 91,776 -

142,762 -

14 CONTINGENT LIABILITY

At 31 December 2015, the Company had contingent liability in respect of performance bond arising in the ordinary course of business from which it is anticipated that no material liabilities will rise, amounting to RO 5,000,000 (2014 – nil).

F-194

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

15 RISK MANAGEMENT

Liquidity risk

The Company maintains sufficient bank balances and approved bank credit limits to meet its obligations as they fall due for payment and is therefore not subjected to significant liquidity risk.

The table below summarises the maturities of the Company’s undiscounted financial liabilities at 31 December:

At 31 December 2015 Less than 3 months

3 to 12 months

1 to 5years

> 5years

Total

RO RO RO RO RO

Accounts payables and accruals 132,707 9,571,852 - - 9,704,559

Equity bridge loan 98,083 13,372,027 - - 13,470,110

Senior facility loan 263,615 790,844 7,815,505 25,954,736 34,824,700

Due to related parties 4,275 - - - 4,275

Total 498,680 23,734,723 7,815,505 25,954,736 58,003,644

At 31 December 2014 Less than 3

months3 to 12 months

1 to 5years

> 5years

Total

RO RO RO RO RO

Accounts payables and accruals 166,678 241,318 - - 407,996

Equity bridge loan 90,000 270,000 12,360,000 - 12,720,000

Due to related parties - 1,439,737 - - 1,439,737

Total 256,678 1,951,055 12,360,000 - 14,567,733

Currency risk

The Company’s majority of foreign currency transactions are denominated in US Dollar. As the Rial Omani is pegged to the US Dollar the transactions are not expected to have any significant currency risk.

Capital management

The initial share capital of the Company is RO 500,000 divided into 500,000 shares of RO 1 each. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to members, return capital to members, issue new shares, or sell assets to reduce debt.

F-195

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2015 (continued)

16 FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments comprise of financial assets and financial liabilities.

Financial assets consist of cash and bank balances and other receivable. Financial liabilities consist of accounts payable, accruals and amounts due to related parties.

The fair values of financial instruments are not materially different from their carrying values.

17 COMPARATIVE INFORMATION

The comparative figures in these financial statements are not strictly comparable due to differences in the reporting period between the current period and the previous period. The previous period financial statements are prepared for the period from 18 November 2014 to 31 December 2014.

196

Musandam Power Company SAOC

FINANCIAL STATEMENTS

31 DECEMBER 2016

197

PROSPECTUS

MUSANDAM POWER COMPANY SAOC

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2016

Pages

Independent auditor’s report F198 -F199

Statement of comprehensive income F200

Statement of financial position F201

Statement of changes in equity F202

Statement of cash flows F203

Notes to the financial statements F204 - F216

F-200

2016 2015

RO RO

General and administrative expenses

(52,008) (38,887)

Staff costs (21,903) (9,700)

LOSS AND TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (73,911) (48,587)

The attached notes 1 to 16 form part of these financial statements.

STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2016

F-201

PROSPECTUS

2016 2015

Notes RO RO

ASSETS

Non-current assets

Equipment 4 1,591 2,923

Capital work in progress 4 59,493,979 37,861,091

59,495,570 37,864,014

Current assets

Other receivable 5 6,856,578 7,045,092

Bank balances 720,432 53,084

7,577,010 7,098,176

TOTAL ASSETS 67,072,580 44,962,190

EQUITY AND LIABILITIES

Equity

Share capital 6 500,000 500,000

Accumulated losses (178,672) (104,761)

Total equity 321,328 395,239

Senior facility loan 9 39,670,167 21,865,340

39,670,167 21,865,340

Current liabilities

Equity bridge loan 8 - 12,992,777

Senior facility loan 9 1,511,277 -

Accounts payable and accruals 10 12,486,527 9,704,559

Amounts due to related parties 11 13,083,281 4,275

27,081,085 22,701,611

Total liabilities 66,751,252 44,566,951

TOTAL EQUITY AND LIABILITIES 67,072,580 44,962,190

The financial statements were authorised for issue in accordance with a resolution of the directors on 09-03-2017.

The attached notes 1 to 16 form part of these financial statements.

STATEMENT OF FINANCIAL POSITIONAt 31 December 2016

F-202

Note Share capital

Accumulated losses

Total

RO RO RO

Balance at 1 January 2015 6 500,000 (56,174) 443,826

Loss and total comprehensive expense for the year - (48,587) (48,587)

Balance at 31 December 2015 500,000 (104,761) 395,239

Balance at 1 January 2016 500,000 (104,761) 395,239

Loss and total comprehensive expense for the year - (73,911) (73,911)

Balance at 31 December 2016 500,000

(178,672) 321,328

The attached notes 1 to 16 form part of these financial statements.

STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2016

F-203

PROSPECTUS

2016 2015

Notes RO RO

OPERATING ACTIVITIES

Loss for the year (73,911) (48,587)

Adjustments for:

Depreciation 4 1,470 1,468

Operating cash flows before working capital adjustments (72,441) (47,119)

Other receivable 188,514 (208,055)

Accounts payable and accruals 2,781,968 9,296,563

Amounts due to related parties 1,229 (1,435,462)

Net cash from operating activities 2,899,270 7,605,927

INVESTING ACTIVITIES

Purchase of equipment 4 (138) -

Addition to capital work in progress (21,481,782) (35,836,117)

Net cash used in investing activities (21,481,920) (35,836,117)

FINANCING ACTIVITIES

Loan from shareholders 13,077,777 -

Repayment (receipt) of equity bridge loan (13,077,777) 1,077,777

Receipt of senior facility loan 19,250,000 22,923,000

Deferred financing costs - (1,090,712)

Net cash flows from financing activities 19,250,000 22,910,065

Net increase / (decrease) in cash and cash equivalent 667,348 (5,320,125)

Cash and cash equivalent at beginning of the year 53,084 5,373,209

Cash and cash equivalent at the end of the year 720,432 53,084

The attached notes 1 to 16 form part of these financial statements.

STATEMENT OF CASH FLOWSFor the year ended 31 December 2016

F-204

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016

1 CORPORATE INFORMATION AND ACTIVITIES

The Company is a closed joint stock company registered and incorporated in the Sultanate of Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) to be located in the Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, PO Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Company SAOC (the “Parent”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is PO Box 261, Postal Code 118, Sultanate of Oman. The Parent holds 69.9% of the Company’s issued share capital.

The electricity generated from the Project will be sold to Oman Power and Water Procurement Company SAOC under a 15 years Power Purchase Agreement. Natural gas required for the Project will be supplied by the Ministry of Oil & Gas under a 15 years gas supply agreement. The Company is still in commissioning stage and operations are expected to start end of April 2017.

The Company has entered into the following significant agreements:

i) An Engineering, Procurement and Construction (EPC) contract with Wartsila Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wartsila Muscat LLC.

iii) A power purchase agreement (“PPA’) with Oman Water and Power Procurement Company SAOC (‘OPWP’) to sell the electricity generated from the Plant.

iv) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas to supply and purchase natural gas to and for the Plant.

v) An operation and maintenance agreement with Wartsila Muscat LLC to operate and maintain the Plant.

vi) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

vii) Usufructs Agreement with Ministry of Housing for the project Site, temporary areas and RAECO substation Area.

viii) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

F-205

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

2.1 Standards and amendments effective in 2016 and relevant for the Company’s operations:

For the year ended 31 December 2016, the Company has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for periods beginning on 1 January 2016.

The adoption of these standards and interpretations has not resulted in changes to the Company’s accounting policies and has not affected the amounts reported for the current and prior periods.

2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company:

The following new standards and amendments have been issued by the International Accounting Standards Board (IASB) but are not yet mandatory for the year ended 31 December 2016:

IFRS 9: Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but comparative information is not compulsory. The Company has performed a high-level impact assessment of all three aspects of IFRS 9 and expects no significant impact on its financial statements. The Company plans to adopt the new standard on the required effective date.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plan to adopt the new standard on the required effective date. The Company is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments.

IFRS 16 Leases

The IASB issued IFRS 16 Leases (IFRS 16), which requires lessees to recognise assets and liabilities for most leases. For lessors, there is little change to the existing accounting in IAS 17 Leases. The Company will perform a detailed assessment in the future to determine the extent. The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application is permitted, provided the new revenue standard, IFRS 15 Revenue from Contracts with Customers, has been applied, or is applied at the same date as IFRS 16.The Company will assess the implementation of the new standards during 2017.

F-206

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Commercial Companies Law of 1974, as amended.

The financial statements have been presented in Rial Omani (“RO”) which is also the functional currency of the Company.

The financial statements are prepared under the historical cost convention.

A summary of significant accounting policies, which are consistent with those used in the previous period, are set out below.

3.2 Equipment and capital work in progress

(a) Equipment

Equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Office equipment 3 years

Furniture and fixtures 3 years

An item of equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss, when the asset is derecognised.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(b) Capital work in progress

Capital work in progress includes all expenditure incurred on process design, detailed engineering, construction, equipment, project management, legal fees, and other costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. Certain costs which are attributable to the project though cannot be identified to a specific asset are being charged to capital work-in-progress.

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the period that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

Capital work in progress is recorded at cost less impairment, if any.

F-207

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)3.3 Impairment and un-collectability of financial assets

An assessment is made at each reporting date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, an impairment loss is recognised in the profit or loss. Impairment is determined as follows:

(g) For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the profit or loss;

(h) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset;

(i) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective interest rate.

3.4 Other receivables Other receivables are stated at original invoice amount less an allowance for any uncollectible

amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

3.5 Account payables and accruals Liabilities are recognised for amounts to be paid in the future for goods or services received,

whether billed by the supplier or not.

3.6 Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The expense relating to any provision is presented in the statement of comprehensive income of any reimbursements.

3.7 Income tax Taxation is provided for in accordance with Omani fiscal regulations.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised.

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss.

F-208

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.8 Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

3.9 Derecognition of financial assets and financial liabilities

Financial assets:

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired; or

• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and

• Either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

Financial liabilities:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and the Company intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards or for gains and losses arising from a group of similar transactions.

3.10 Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

3.11 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

F-209

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of non-financial asset

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.13 Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

3.14 Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

3.15 Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date.

4 EQUIPMENT AND CAPITAL WORK IN PROGRESS

Equipment

2016 2015

RO RO

Gross book value 4,391 4,391

Add: addition 138

Less: depreciation (2,938) (1,468)

Net book value 1,591 2,923

F-210

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

4 EQUIPMENT AND CAPITAL WORK IN PROGRESS (continued)

Capital work in progress

The Company had entered into an EPC contract with Wartsila Muscat LLC on 25 November 2014 for services relating to the design, engineering, procurement, construction, start up, commissioning, testing and other work necessary to construct and complete the project.

As at reporting date, capital work-in-progress mainly relates to the costs incurred towards EPC contract, Interest costs, liquidated damages and consultation fees towards proposal for providing technical services, . The related details are set out below:

2016 2015

RO RO

Opening balance 37,861,091 1,906,922

EPC related expenses 17,849,728 32,145,278

Professional fees 791,473 1,784,620

Development fees paid to shareholders - 1,202,251

Interest costs 2,012,656 635,366

Amortisation of deferred financing cost 151,104 118,052

Liquidated damages 350,000 -

Diesel cost 158,962 -

Insurance 190,078 -

Others 128,887 68,602

59,493,979 37,861,091

5 OTHER RECEIVABLE

2016 2015

RO RO

Advance payment made to the contractor 6,837,037 6,837,037

Prepaid insurance 18,195 190,078

Others 1,346 17,977

6,856,578 7,045,092

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

6 SHARE CAPITAL

2016 2015

RO RO

Authorised share capital

20,000,000 shares of RO 1 each 20,000,000 20,000,000

Issued and paid up share capital

500,000 shares of RO 1 each 500,000 500,000

7 STATUTORY RESERVE

As required by the Commercial Companies Law of the Sultanate of Oman, 10% of annual profit of the Company is required to be transferred to statutory reserve until the reserve is equal to one third of the issued share capital of the Company. The reserve is not available for distribution.

No transfer has been made during the year (2015: nil) as the Company has reported a loss.

8 EQUITY BRIDGE LOAN

2016 2015

RO RO

Opening balance 12,992,777 12,000,000

Drawdowns - 1,077,777

Less: deferred financing charges - (170,000)

12,992,777 12,907,777

Amortisation of deferred financing charges 85,000 85,000

13,077,777 12,992,777

Less: paid during the year (13,077,777) -

Closing balance - 12,992,777

The equity bridge loan is denominated in Rial Omani and carries interest at commercial rates. The loan is fully repaid on 29 December 2016. The loan was secured by corporate guarantee from the shareholders.

F-212

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

9 SENIOR FACILITY LOAN

2016 2015

RO RO

Opening balances 21,865,340 -

Drawdowns 19,250,000 22,923,000

41,115,340 22,923,000

Less: deferred financing charges - (1,090,712)

41,115,340 21,832,288

Amortisation of deferred financing charges 66,104 33,052

41,181,444 21,865,340

Less: current portion 1,511,277 -

Non-current portion 39,670,167 21,865,340

The senior facility loan is denominated in Rial Omani and carries interest at commercial rates. The loan is to be repaid in 30 half yearly instalments commencing on 30 June 2017. The loan is secured by:

(a) Legal mortgage over the Company’s immovable assets.

(b) Pledge over the owner’s shares.

(c) Pledge over the project accounts.

(d) Assignment / charge over all of the Company’s rights, titles and interest in and to the project documents, the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

10 ACCOUNTS PAYABLE AND ACCRUALS

2016 2015

RO RO

Accrued expenses 12,133,430 9,591,341

Trade accounts payable 3,096 113,218

Provisions for liquidated damages 350,000 -

12,486,526 9,704,559

Liquidated damages (LD) is recorded based on the agreement between the Company (the generator) and OPWP (the buyer). The agreement states if the generator faced delays in achieving the start operation date, a payment of RO 25,000 is paid to the buyer for each day of delay. The Company is evaluating its position to levy liquidated penalties to its EPC contractor at an agreed daily rate, in accordance with the EPC contract.

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

11 RELATED PARTY TRANSACTIONS

Related parties comprise the shareholders, directors, key management personnel and business entities in which they have the ability to control or exercise significant influence in financial and operating decisions.

Transactions

2016 2015

RO RO

Development fees paid to shareholders - 1,202,251

Reimbursement of expenses incurred by shareholders 5,504 4,275

5,504 1,206,526

Key management compensation

2016

RO

2015

RO

Salaries and other benefits 55,260 54,000

Balances with related parties included in the statement of financial position are as follows:

Amounts due to related parties

2016 2015

RO RO

Oman Oil Company SAOC 9,159,948 4,275

LG International 3,923,333 -

13,083,281 4,275

During 2016, the Company received advances from the shareholders amounting to RO 13.08 million (2015: nil), which was utilised to repay the equity bridge loan. These loans are repayable on demand after the commercial operation date of the plant. The shareholders are also evaluating to convert these advances into share capital during 2017. Pending such decision, the advances received from shareholders have been presently classified as a current liability.

F-214

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

12 TAXATION

The tax rates applicable to the Company is 12% (2015 - 12%). The Company has reported accounting as well as taxable loss. Therefore, the applicable tax rate is nil (2015 - nil). The average effective tax rate cannot be determined in view of no taxable income.

Deferred income taxes are calculated on all temporary differences using a principal tax rate of 12%. In view of the uncertainty regarding the availability of future taxable profits, no deferred tax asset has been recognised in these financial statements.

The Company’s tax assessment is yet to be agreed with the taxation authority. The corporate tax rate in Oman has been increased to 15% with effect from 1 January 2017.

13 COMMITMENTS

(i) Capital commitments

During 2014, the Company had entered into an agreement with Wartsila Muscat LLC towards engineering, procurement and construction amounting to RO 68,352,733(USD 177,539,565). As at 31 December 2016, commitments to Wartsila Muscat LLC amounted to RO 24,613,333 (USD 63,914,135).

(ii) Operating leases

The Company has entered into a lease agreement on 9 February 2015 with the Government of the Sultanate of Oman, represented by the Ministry of Housing in respect of the land used for project site and temporary areas. The lease agreement for land used for project site is for an initial term of 15 years, renewable for further periods. At 31 December 2016, the Company had lease commitments of RO 132,565 as follows:

2016 2015

RO RO

Due within one year 10,197 10,197

Due after one year but within five years 40,789 40,789

Due after five years 81,579 91,776

132,565 142,762

14 CONTINGENT LIABILITY

At 31 December 2016, the Company had contingent liability in respect of performance bond arising in the ordinary course of business from which it is anticipated that no material liabilities will rise, amounting to RO 5,000,000 (2015 – RO 5,000,000).

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

15 RISK MANAGEMENT

Liquidity risk

The Company maintains sufficient bank balances and approved bank credit limits to meet its obligations as they fall due for payment and is therefore not subjected to significant liquidity risk.

The table below summarises the maturities of the Company’s undiscounted financial liabilities at 31 December:

At 31 December 2016 Less than 3 months

3 to 12 months

1 to 5years

> 5years

Total

RO RO RO RO RO

Accounts payables and accruals 12,486,536 - - - 12,486,536

Senior facility loan 484,990 2,984,967 14,479,927 39,906,028 57,855,912

Due to related parties 5,504 13,077,777 - - 13,083,281

Total 12,997,030 16,062,744 14,479,927 39,906,028 83,425,729

At 31 December 2015 Less than 3

months3 to 12 months

1 to 5years

> 5years

Total

RO RO RO RO RO

Accounts payables and accruals 132,707 9,571,852 - - 9,704,559

Equity bridge loan 98,083 13,372,027 - - 13,470,110

Senior facility loan 263,615 790,844 7,815,505 25,954,736 34,824,700

Due to related parties 4,275 - - - 4,275

Total 498,680 23,734,723 7,815,505 25,954,736 58,003,644

Currency risk

The Company’s majority of foreign currency transactions are denominated in US Dollar. As the Rial Omani is pegged to the US Dollar the transactions are not expected to have any significant currency risk.

Capital management

The initial share capital of the Company is RO 500,000 divided into 500,000 shares of RO 1 each. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to members, return capital to members, issue new shares, or sell assets to reduce debt.

F-216

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2016 (continued)

16 FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments comprise of financial assets and financial liabilities.

Financial assets consist of cash and bank balances and other receivable. Financial liabilities consist of accounts payable, accruals and amounts due to related parties.

The fair values of financial instruments are not materially different from their carrying values.

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PROSPECTUS

Musandam Power Company SAOC

FINANCIAL STATEMENTS

31 DECEMBER 2017

F-218

MUSANDAM POWER COMPANY SAOC

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

Pages

Independent auditor’s report F219 - F220

Statement of comprehensive income F221

Statement of financial position F222

Statement of changes in equity F223

Statement of cash flows F224

Notes to the financial statements F225-F 243

F-219

PROSPECTUS

F-220

F-221

PROSPECTUS

2017 2016

Notes RO ‘000 RO ‘000

Revenue 11 10,385 -

Operating costs 12

(5,882) -

Gross profit 4,503 -

General and administrative expenses (323) (62)

Finance costs (1,877) (12)

Profit (loss) before tax for the year

2,303 (74)

Tax expense 14 (337) -

Profit (loss) and total comprehensive income (expense) for the year 1,966 (74)

Basic and diluted earnings (loss) per share for the year (in RO) 19 1.881 (0.148)

The attached notes 1 to 21 form part of these financial statements.

STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2017

F-222

2017 2016

Notes RO ‘000 RO ‘000

ASSETSNon-current assetsProperty, plant and equipment 4 87,957 59,495

Total non-current assets 87,957 59,495

2. Current assets 3. Inventories 1,580 -

2. Trade and other receivables 5 867 6,857

Bank balances 5,046 720

Total current assets 7,493 7,577

TOTAL ASSETS 95,450 67,072

EQUITY AND LIABILITIESEquityShare capital 6 7,039 500

Legal reserve 7 197 -

Retained earnings (accumulated losses) 1,590 (179)

Total equity 8,826 321

Non-current liabilitiesProvision for asset retirement obligation 10 3,979 -

Provision for end of service benefits 6 6

Non-current portion of senior facility loan 8 60,513 39,670

Deferred tax liability 14 337 -

Total non-current liabilities 64,835 39,676

Current liabilitiesLoan from shareholders 13 6,539 -

Trade and other payables 9 12,333 12,481

Amounts due to related parties 13 368 13,083

Current portion of senior facility loan 8 2,549 1,511

Total current liabilities 21,789 27,075

Total liabilities 86,624 66,751

Total equity and liabilities 95,450 67,072

Net assets per share (in RO) 20 1.254 0.642

The financial statements were authorised for issue in accordance with a resolution of the directors on

The attached notes 1 to 21 form part of these financial statements.

STATEMENT OF FINANCIAL POSITIONAt 31 December 2017

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PROSPECTUS

Share capital Legal reserve

(Accumulatedlosses)

retained earnings Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000

Balance at 1 January 2016 500 - (105) 395

Loss and total comprehensive expense for the year - - (74) (74)

Balance at 31 December 2016 500 - (179) 321

Conversion of loan into share capital(note 6) 6,539 - - 6,539

Profit and total comprehensive income for the year - - 1,966 1,966

Transfer to legal reserve - 197 (197) -

Balance at 31 December 2017 7,039 197 1,590 8,826

The attached notes 1 to 21 form part of these financial statements.

STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2017

F-224

2017 2016

Notes RO ‘000 RO ‘000

OPERATING ACTIVITIES

Profit (loss) for the year, before tax 2,303 (74)

Adjustments for:

Asset retirement obligation - unwinding of discount 10 207 -

Amortisation of deferred financing charges 68 66

Depreciation 4 1,668 2

Operating cash flows before working capital adjustments 4,246 (6)

Inventories (1,580) -

Trade and other receivables 5,990 189

Trade and other payables (148) 2,781

Amounts due to related parties 363 (65)

Net cash from operating activities 8,871 2,899

INVESTING ACTIVITY

Addition to property, plant and equipment 4 (26,358) (21,482)

Net cash used in investing activity (26,358) (21,482)

FINANCING ACTIVITIES

Loan from shareholders - 13,078

Repayment of equity bridge loan - (13,078)

Receipt of senior facility loan 24,250 19,250

Repayment of senior facility loan (2,437) -

Movement in restricted cash 15 (iii) (3,468) -

Net cash flows from financing activities 18,345 19,250

Net increase in cash and cash equivalent 858 667

Cash and cash equivalent at beginning of the year 720 53

Cash and cash equivalent at the end of the year 15 (iii) 1,578 720

The attached notes 11 to 21 form part of these financial statements.

STATEMENT OF CASH FLOWSFor the year ended 31 December 2017

F-225

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017

1 CORPORATE INFORMATION AND ACTIVITIES

The Company is a closed joint stock company registered and incorporated in the Sultanate of Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) located in Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, PO Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Company SAOC (the “Parent”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is PO Box 261, Postal Code 118, Sultanate of Oman. The Parent holds 69.9% of the Company’s issued share capital.

The Company commenced commercial operations on 17 June 2017. The electricity generated from the Project is sold to Oman Power and Water Procurement Company SAOC under a 15 years Power Purchase Agreement. Natural gas required for the Project is supplied by the Ministry of Oil & Gas under a 15 years gas supply agreement.

The Company has entered into the following significant agreements:

i) An Engineering, Procurement and Construction (EPC) contract with Wartsila Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wartsila Muscat LLC.

iii) A power purchase agreement (“PPA’) with Oman Water and Power Procurement Company SAOC (‘OPWP’) to sell the electricity generated from the Plant.

iv) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas to supply and purchase natural gas to and for the Plant.

v) An operation and maintenance agreement with Wartsila Muscat LLC to operate and maintain the Plant.

vi) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

vii) Usufructs Agreement with Ministry of Housing for the project Site, temporary areas and RAECO substation Area.

viii) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

2.1 Standards and amendments effective in 2017 and relevant for the Company’s operations:

For the year ended 31 December 2017, the Company has adopted all of the following new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for periods beginning on 1 January 2017.

F-226

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES (continued)

2.1 Standards and amendments effective in 2017 and relevant for the Company’s operations:

• Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative

• Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses

• Annual Improvements Cycle - 2014-2016

• Amendments to IFRS 12 Disclosure of Interests in Other Entities:

Clarification of the scope of disclosure requirements in IFRS 12

The adoption of these standards and interpretations has not resulted in any major changes to the Company’s accounting policies and has not affected the amounts reported for the current and prior periods.

2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company:

The following new standards and amendments have been issued by the International Accounting Standards Board (IASB) but are not yet mandatory for the year ended 31 December 2017:

IFRS 15 Revenue from Contracts with Customers

IFRS 15 was issued in May 2014, and amended in April 2016, and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. The Company plans to adopt the new standard on the required effective date using the modified retrospective approach.

The Company has performed an initial assessment and concluded that the impact is not material as in majority of the Company’s contracts with customers, rendering of service is generally expected to be the only performance obligation and accordingly, adoption of IFRS 15 is not expected to have any significant impact on the Company’s revenue and profit or loss. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Company.

IFRS 16 Leases

The IASB issued IFRS 16 Leases (IFRS 16), which requires lessees to recognise assets and liabilities for most leases. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). For lessors, there is little change to the existing accounting in IAS 17 Leases. Company will perform a detailed assessment in the future to determine the extent.

F-227

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES (continued)

2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company: (continued)

Early application is permitted, provided the new revenue standard, IFRS 15 Revenue from Contracts with Customers, has been applied, or is applied at the same date as IFRS 16. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Company plans to adopt the new standard on the required effective date and will not restate comparative information. During 2017, the Company has performed an impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Company in 2018 when the Company will adopt IFRS 9. Overall, the Company expects no significant impact on its statement of financial position and equity.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and the Commercial Companies Law of 1974 of the Sultanate of Oman, as amended.

On adoption of IFRIC 4 “Determining whether an arrangement contains a lease” the management concluded that its PPA contain lease arrangements. The lease arrangement has been determined to be operating leases under IAS 17.

The financial statements have been presented in Rial Omani (“RO”) which is also the functional currency of the Company.

The financial statements are prepared under the historical cost convention.

A summary of significant accounting policies, which are consistent with those used in the previous year, are set out below.

F-228

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.2 Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation, any identified impairment loss and residual value.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Plant and machinery 30 years

Office equipment 3 years

Furniture and fixtures 3 years

Motor vehicles 3 years

Capital spares shall be recognised in the carrying amount of the affected item of property, plant and equipment when it is put in use. The carrying amount of the replaced item is derecognised. When it is not practical to determine the carrying amount of the replaced part, the cost of the capital spares may be used as an indication of what the cost of the replaced part was at the time it was acquired.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.

Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the statement or profit or loss as the expense is incurred.

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the year that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

When each major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement or profit or loss in the year the asset is derecognised.

The assets’ residual values, useful lives and methods are reviewed, and adjusted prospectively, if appropriate, at each financial year end.

F-229

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)3.2 Property, plant and equipment (continued)

Capital work in progress

Capital work-in-progress is stated at cost, less impairment, if any. When commissioned, capital work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Company’s policy.

3.3 Impairment and un-collectability of financial assets

An assessment is made at each reporting date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, an impairment loss is recognised in the profit or loss. Impairment is determined as follows:(a) For assets carried at fair value, impairment is the difference between cost and fair value, less

any impairment loss previously recognised in the profit or loss;(b) For assets carried at cost, impairment is the difference between carrying value and the present

value of future cash flows discounted at the current market rate of return for a similar financial asset;

(c) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective interest rate.

3.4 Trade receivables

Trade receivables are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

3.5 Account payables and accruals

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

3.6 Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The expense relating to any provision is presented in the statement of comprehensive income of any reimbursements.

3.7 Income tax

Taxation is provided for in accordance with Omani fiscal regulations.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised.

F-230

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.7 Income tax (continued)

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss.

3.8 Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

3.9 Derecognition of financial assets and financial liabilities

Financial assets:

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired; or

• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and

• Either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

Financial liabilities:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and the Company intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards or for gains and losses arising from a group of similar transactions.

3.10 Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

3.12 Impairment of non-financial asset

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.13 Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

3.14 Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

3.15 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment.

Revenue comprises tariffs for power capacity, electrical energy and fuel charges. Tariffs are calculated in accordance with the PPA. Capacity charge payable to the Company for each hour during which the plant is available for power generation. Capacity charges income is recognised on a straight line basis over the lease term. Energy charge revenue which compensates the Company for the fuel and variable cost of power is recognised based on the supply of generated power. The operating revenue is recognised by the Company on an accrual basis of accounting.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due and associated costs.

F-232

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.16 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing each product to its present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

As of reporting date, inventories consist of diesel and lube oil.

3.17 Asset retirement obligation

The provision for asset retirement obligation arose on assets constructed on land under usufruct contracts with the Ministry of Housing. A corresponding asset is recognised in property, plant and equipment. The asset retirement obligation is provided at the present value of expected costs to settle the obligation using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of income as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

3.18 Directors remuneration

The Board of Directors’ remuneration is accrued within the limits and the requirements of the Commercial Companies Law of the Sultanate of Oman.

3.19 Dividend on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders.

3.20 Significant accounting judgments, estimates and assumptions

The presentation of financial statements, in conformity with IFRS, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, incomes and expenditures. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

F-233

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.20 Significant accounting judgments, estimates and assumptions (continued)

The following are the significant estimates used in the preparation of the financial statements:

a) Useful lives of property, plant and equipment

Depreciation is charged so as to write-off the cost of assets over their estimated useful lives. The calculation of useful lives is based on management’s assessment of various factors such as the operating life, the maintenance programs, and normal wear and tear using its best estimates.

b) Allowance for doubtful debts

Provision for doubtful debts is based on management’s best estimates of recoverability of the amounts due along with the number of days for which such debts are due. As of 31 December 2017, trade receivables amounting to RO 115 thousands is past due for more than 120 days. The management is in advanced stage of discussion with OPWP towards recovery of this amount and accordingly, this balance is not impaired.

c) Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence, based on historical selling prices.

d) Deferred tax

Uncertainties exist with respect to the interpretation of tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and nature of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of finalisation of tax assessments of the Company. The amount of such provisions is based on various factors, such as experience of previous tax assessments and differing interpretations of tax regulations by the taxable entity and the responsible tax authority.

e) Asset retirement obligation

Asset retirement obligation costs are based on management’s technical assessment of the probable future costs to be incurred in respect of the decommissioning of the plant facilities.

f) Going concern

As at reporting date, the Company has a net current liability position of RO 14.30 million (2016: RO 19.50 million). The Company has commenced commercial operations on 17 June 2017 and has reported a profit after tax amounting to RO 1.97 million for the year ended 31 December 2017. The above coupled with the strong cash position of the Company and undrawn commitment on the senior facility loan has allowed the management to view the Company as a going concern and is satisfied that the Company has the resources and shareholders support to continue in business for the foreseeable future. Therefore, these financial statements continue to be prepared on the going concern basis.

F-234

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

4 PROPERTY, PLANT AND EQUIPMENT

Plant and machinery

Furniture and

fixtures

Computer and office

equipment

Motor vehicles

Capital work in

progress

Assetretirement

Total

Cost RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

1 January 2016 - - 4 - 38,012 - 38,016

Additions - - - - 21,482 - 21,482

1 January 2017 - - 4 - 59,494 - 59,498

Additions - 30 7 44 26,277 3,772 30,130

Transfers 85,771 - - - (85,771) - -

31 December 2017 85,771 30 11 44 - 3,772 89,628

Depreciation

1 January 2016 - - 1 - - - 1

Charge for the year - - 2 - - - 2

1 January 2017 - - 3 - - - 3

Charge for the year 1,530 6 3 3 - 126 1,668

31 December 2017 1,530 6 6 3 - 126 1,671

Net book value

31 December 2017 84,241 24 5 41 - 3,646 87,957

31 December 2016 - - 1 - 59,494 - 59,495

(a) The Company had achieved the commercial operation date on 17 June 2017 and commenced depreciating its assets from that date.

(b) The Company’s power plant is constructed on land leased from Ministry of Housing. The future minimum lease commitments in relation to these are disclosed in note 15 (ii).

F-235

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

4 PROPERTY, PLANT AND EQUIPMENT (continued)

The depreciation charge has been allocated in the statement of comprehensive income as follows:

2017 2016

RO ‘000 RO ‘000

Operating expenses (note 12) 1,662 -

General and administrative expenses 6 2

1,668 2

(d) Borrowing costs amounting to RO 3.75 million (2016: RO 2.66 million) incurred during the plant construction period is capitalised.

5 TRADE AND OTHER RECEIVABLES

2017 2016

RO ‘000 RO ‘000

Trade receivables 752 -

Prepaid expenses 103 18

Others 12 2

Advance payment made to the contractor - 6,837

867 6,857

As of 31 December 2017, none of the trade receivable balances were impaired.

6 SHARE CAPITAL

2017 2016

RO ‘000 RO ‘000

Authorised share capital

20,000,000 shares of RO 1 each 20,000 20,000

Issued and paid up share capital

7,039,000 shares (2016: 500,000 shares) of RO 1 each 7,039 500

During the year, the shareholders of the Company authorised the conversion of RO 6.54 million payable by the Company to the shareholders, into share capital of the Company. The amount was registered as share capital on 29 November 2017.

F-236

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

7 STATUTORY RESERVE

As per the Commercial Companies Law of the Sultanate of Oman, 10% of the profit for the year is required to be transferred to a statutory reserve until the reserve is equal to one third of the issued share capital. Accordingly, during 2017, RO 197 thousands (2016: no transfers were made as the Company had incurred a loss) of Company’s annual profit was transferred to the legal reserve. The reserve is not available for distribution.

8 SENIOR FACILITY LOAN

2017 2016

RO ‘000 RO ‘000

Opening balances 42,172 22,922

Add: drawdowns 24,250 19,250

Less: repayment (2,437) -

63,985 42,172

Less: deferred financing charges paid (1,090) (1,090)

Amortisation of deferred financing charges 167 99

63,062 41,181

Less: current portion 2,549 1,511

Non-current portion 60,513 39,670

The senior facility loan is denominated in Rial Omani and carries interest at commercial rates. The loan is to be repaid in half yearly instalments commencing on 30 June 2017, with the last instalment scheduled on 17 December 2031. Due to delay in commencement of commercial operations, the first instalment was deferred to 29 December 2017. The loan is subject to applicable financial covenants and DSRA requirements. The loan is secured by:

(a) Legal mortgage over the Company’s immovable assets.

(b) Pledge over the owner’s shares.

(c) Pledge over the project accounts.

(d) Assignment / charge over all of the Company’s rights, titles and interest in and to the project documents, the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

F-237

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

9 TRADE AND OTHER PAYABLES

2017 2016

RO ‘000 RO ‘000

Trade accounts payable 11,482 3

Accrued expenses 851 12,128

Provisions for liquidated damages - 350

12,333 12,481

10 PROVISION FOR ASSET RETIREMENT OBLIGATION

Under the Usufruct Agreement, the Company has a legal obligation to remove the plant at the end of its useful life and restore the land. The Company shall at its sole cost and expense dismantle, demobilise, safeguard and transport the assets, eliminate soil and ground water contamination, fill all excavation and return the surface to grade of the designated areas. The fair value of asset retirement obligation provision has been calculated using an expected present value technique. This technique reflects assumptions such as costs, plant useful life, inflation and profit margin that third parties would consider to assume the settlement of the obligation.

The movement in provision for asset retirement obligation is as follows:

2017 2016

RO ‘000 RO ‘000

At 1 January - -

Additions 3,772 -

Unwinding of discount 207 -

3,979 -

11 REVENUE

2017 2016

RO ‘000 RO ‘000

Capacity charges 7,116 -

Energy charges 2,885 -

Other charges 384 -

10,385 -

F-238

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

12 OPERATING COSTS

2017 2016

RO ‘000 RO ‘000

Fuel cost 2,188 -

Operating and maintenance expenses 1,689 -

Depreciation (note 4) 1,662 -

Others 343 -

5,882 -

13 RELATED PARTY TRANSACTIONS

Related parties comprise the shareholders, directors, key management personnel and business entities in which they have the ability to control or exercise significant influence in financial and operating decisions.

Transactions

2017 2016

RO ‘000 RO ‘000

Purchase of fuel from Oman Oil Marketing Company SAOG 3,211 -

Support services provided by Oman Gas Company SAOC 153 -

Interest on loan from shareholders 28 -

Reimbursement of expenses incurred by shareholders - 5

Advance from shareholders - 13,078

3,392 13,083

During 2016, the Company received advances from the shareholders amounting to RO 13.08 million, which was utilised to repay the equity bridge loan. During 2017, the shareholders have resolved to convert one half these advances into share capital of the Company and the remaining half has been classified as loans from shareholders. The loan carries market rate of interest. The shareholders are also evaluating to convert the interest bearing loan into share capital during 2018. Pending such decision, the loan from shareholders have been presently classified as a current liability.

F-239

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

13 RELATED PARTY TRANSACTIONS (continued)

Key management compensation

2017 RO ‘000

2016 RO ‘000

Salaries and other benefits 56 55

Balanceswithrelatedpartiesincludedinthestatementoffinancialpositionareasfollows:

2017 2016

RO ‘000 RO ‘000

Oman Oil Marketing Company SAOG 187 -

Oman Gas Company SAOC 153 -

Oman Oil Company SAOC 20 9,160

LG International 8 3,923

368 13,083

Loan from shareholders includes amounts payable to Oman Oil Company SAOC amounting to RO 4.5 million and LG International amounting to RO 1.96 million as at the reporting date.

14 TAXATION

2017 2016

RO ‘000 RO ‘000

a) Recognised in the income statement in the current year

Deferred tax expense 337 -

b) Deferred tax liability

As at 1 January 2017

RO ‘000

Recognised during the

yearRO ‘000

As at 31 December

2017RO ‘000

Deferred tax asset

Carry forward losses - 1,315 1,315Effect of provision for asset retirement obligation - 50 50

- 1,365 1,365Deferred tax liability

Effect of accelerated tax depreciation - (1,702) (1,702)

Net deferred tax liability - (337) (337)

F-240

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

14 TAXATION (continued) The tax rate applicable to the Company is 15% (2016: 12%). The corporate tax rate in Oman

increased to 15% in 2017 effective from 26 February 2017. For the purpose of determining the taxable result for the year, the accounting profit has been adjusted for tax purposes. Adjustments for tax purposes include items relating to both income and expense. The adjustments are based on the current understanding of the existing tax laws, regulations and practices.

The Company has incurred a taxable loss during the year. Therefore the applicable tax rate is nil. The average tax rate cannot be determined in view of the tax loss.

As of 31 December 2017, none of the Company’s tax assessments have been completed by the Omani taxation authorities.

15 COMMITMENTS (i) Capital commitments

During 2014, the Company had entered into an agreement with Wartsila Muscat LLC towards engineering, procurement and construction amounting to RO 68.35 million (USD 177.54 million). As at 31 December 2017, commitments to Wartsila Muscat LLC amounted to RO 10.26 million (USD 26.63 million).

The Company has issued a performance bond to OPWP in accordance with the PPA, which amounted to RO 5 million as of reporting date.

(ii) Operating leases

The Company has entered into a lease agreement on 9 February 2015 with the Government of the Sultanate of Oman, represented by the Ministry of Housing in respect of the land used for project site and temporary areas. The lease agreement for land used for project site is for an initial term of 15 years, renewable for further periods. At 31 December 2017, the Company had lease commitments of RO 0.12 million as follows:

2017 2016

RO ‘000 RO ‘000

Due within one year 10 10

Due after one year but within five years 41 41

Due after five years 71 81

122 132

(iii) Other commitments

Under the terms of the debt financing agreement, the Company is required to maintain a debt service reserve amount (DSRA) equal to its next repayment instalment for the half-year till the final instalment of the term loan. Thus, at 31 December 2017, the bank balances constitutes DSRA of RO 3.47 million (2016: nil). Accordingly, the unrestricted cash and cash equivalent as at 31 December 2017 amounts to RO 1.58 million (2016: RO 0.72 million).

F-241

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

16 CLAIMS AND COUNTER CLAIMS

During 2017, the EPC contractor has raised certain claims towards additional costs incurred and scheduled extension of time. The Company had appointed an independent legal consultant to evaluate the claims raised by the EPC contractor and concluded that the claims are not tenable. Further, the Company is entitled to liquidated damages which higher than the claim raised by the EPC contractor.

Further, the Company is also in a position to receive a compensation from OPWP for the “Buyer Risk Event” clause in the PPA being activated. The Company is currently in advanced stages of discussion with OPWP to finalise the compensation to the Company.

17 RISK MANAGEMENT

Currency risk

The Company’s majority of foreign currency transactions are denominated in US Dollar. As the Rial Omani is pegged to the US Dollar the transactions are not expected to have any significant currency risk.

Capital management

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to members, return capital to members, issue new shares, or sell assets to reduce debt. During 2017, the shareholders of the Company authorised the conversion of RO 6.54 million payable by the Company to the shareholders, into share capital of the Company.

Liquidity risk

The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Further, the Company maintains sufficient bank balances and approved bank credit limits to meet its obligations as they fall due for payment.

F-242

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

17 RISK MANAGEMENT (continued) The table below summarises the maturities of the Company’s undiscounted financial liabilities at

31 December:

At 31 December 2017 Less than 3 months

3 to 12

months

1 to 5

years

> 5

years

Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Accounts payables and accruals 12,333 - - - 12,333

Senior facility loan - 6,514 26,373 81,497 114,384

Due to related parties - 6,907 - - 6,907

Total 12,333 13,421 26,373 81,497 133,624

At 31 December 2016 Less than 3 months

3 to 12 months

1 to 5years

> 5years

Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Accounts payables and accruals 12,487 - - - 12,487

Senior facility loan 485 2,985 14,480 39,906 57,856

Due to related parties 5 13,078 - - 13,083

Total 12,977 16,063 14,480 39,906 83,426

18 FAIR VALUES OF FINANCIAL INSTRUMENTS Financial instruments comprise of financial assets and financial liabilities.

Financial assets consist of cash and bank balances and other receivable. Financial liabilities consist of accounts payable, accruals, borrowings and amounts due to related parties.

The fair values of financial instruments are not materially different from their carrying values.

19 EARNINGS PER SHARE: BASIC AND DILUTED

2017 2016

RO RO

Profit attributable to ordinary shareholders of the Company for basic earnings per share 1,966 (74)

Weighted average number of shares (in thousands) 1,045 500

Earnings (loss) per share (RO) 1.881 (0.148)

No figure for diluted earnings per share has been presented because the Company has not issued any instruments which would have an impact on earnings per share when exercised.

F-243

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2017 (continued)

20 NET ASSETS PER SHARE

Net assets per share is calculated by dividing the equity attributable to the shareholders of the Company at the reporting date by the number of shares outstanding as follows:

2017 2016

RO ‘000 RO ‘000

Net assets 8,826 321

Number of shares outstanding at 31 December (in thousands) 7,039 500

Net assets per share (RO) 1.254 0.642

21 SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic decisions maker. The Company’s operating activities are disclosed in note 1 to the financial statements. The strategic business unit offers similar products and services and is managed as one segment. For the strategic business unit, the Project Director reviews internal management reports on a monthly basis. Performance is measured based on the profit before income tax, as included in the internal management reports. The Project Director considers the business of the Company as one operating segment and monitors accordingly.

F-244

Musandam Power Company SAOC

FINANCIAL STATEMENTS

31 DECEMBER 2018

F-245

PROSPECTUS

MUSANDAM POWER COMPANY SAOC

Report and financial statements

for the year ended 31 December 2018

Pages

Independent auditor’s report F246–F248

Statement of financial position F249

Statement of profit or loss and other comprehensive income F250

Statement of changes in equity F251

Statement of cash flows F252

Notes to the financial statements F253–F300

F-249

PROSPECTUS

2018 2017

Notes RO ‘000 RO ‘000

Restated

ASSETSNon-current assetsProperty, plant and equipment 5 75,706 83,507

Other receivables 7 466 -

Total non-current assets 76,172 83,507

Current assetsInventories 6 3,386 1,580

Trade and other receivables 7 2,548 4,299

Cash and bank balances 8 7,056 5,046

Total current assets 12,990 10,925

Total assets 89,162 94,432

EQUITY AND LIABILITIESEquityShare capital 9 7,039 7,039

Legal reserve 10 442 70

Retained earnings 3,797 448

Total equity 11,278 7,557

Non-current liabilitiesSenior facility loan - non-current portion 11 66,495 60,513

Deferred tax liability 19 1,602 588

Provision for asset retirement obligation 13 152 3,979

Provision for end of service benefits 6 6

Total non-current liabilities 68,255 65,086

Current liabilitiesLoan from shareholders 18 3,067 6,539

Trade and other payables 12 3,090 12,333

Amounts due to related parties 18 65 368

Senior facility loan - current portion 11 3,407 2,549

Total current liabilities 9,629 21,789

Total liabilities 77,884 86,875

Total equity and liabilities 89,162 94,432

Net assets per share 24 1.602 1.074

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

Statement of financial position At 31 December 2018

F-250

2018 2017

Notes RO ‘000 RO ‘000

Restated

Revenue 14 16,496 9,292

Operating costs 15 (9,609) (5,807)

Gross profit 6,887 3,485

Other income 1,750 -

General and administrative expenses 16 (599) (323)

Finance costs – net 17 (3,303) (1,877)

Profit before tax 4,735 1,285

Tax expense 19 (1,014) (588)

Profit and total comprehensive income for the year 3,721 697

Basic and diluted earnings per share for the year 23 0.529 1.394

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

Statement of profit or loss and other comprehensive incomefor the year ended 31 December 2018

F-251

PROSPECTUS

Share capital

Legal reserve

Retained earnings

Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000

At 1 January 2017 500 - (179) 321

Profit and total comprehensive income for the year restated (note 27) - - 697 697

Conversion of loan into share capital (note 9) 6,539 - - 6,539

Transfer to legal reserve restated (note 27) - 70 (70) -

At 31 December 2017 (restated) 7,039 70 448 7,557

Profit and total comprehensive income for the year - - 3,721 3,721

Transfer to legal reserve - 372 (372) -

At 31 December 2018 7,039 442 3,797 11,278

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

Statement of changes in equityfor the year ended 31 December 2018

F-252

2018 2017

RO ‘000 RO ‘000

Restated

Cash flows from operating activitiesProfit before tax 4,735 1,285

Adjustments for:

Asset retirement obligation - unwinding of discount (196) 207

Finance costs – net 3,303 1,877

Provision for impairment of other receivables 115 -

Deferred Finance costs 63 68

Depreciation 1,809 1,593

Operating cash flows before working capital adjustments 9,829 5,030

Inventories (92) (1,580)

Trade and other receivables 1,170 2,558

Trade and other payables (9,239) (148)

Amounts due to related parties (303) 363

Net cash from operating activities 1,365 6,223

Cash flows from investing activities

Payment for purchase of property, plant and equipment (7) (21,833)

Reimbursement of costs 654 -

Net cash from / (used in) investing activities 647 (21,833)

Cash flows from financing activitiesProceeds from senior facility loan 10,253 24,250

Proceeds from working capital facility 1,500 -

Repayment of senior facility loan (3,475) (2,437)

Repayment of working capital facility (1,500) -

Repayment of Shareholder loan (3,477) -

Movement in restricted cash 3,468 (3,468)

Finance costs paid (3,303) (1,877)

Net cash from financing activities 3,466 16,468

Net increase in cash and cash equivalent 5,478 858

Cash and cash equivalent at beginning of the year 1,578 720

Cash and cash equivalent at the end of the year (Note 8) 7,056 1,578

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

Statement of cash flows for the year ended 31 December 2018

F-253

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018

1. Corporate information and activities

The Company is a closed joint stock company registered and incorporated in the Sultanate of Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) located in Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, PO Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Company SAOC (the “Parent”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is P O Box 261, Postal Code 118, Sultanate of Oman. The Parent holds 69.9% of the Company’s issued share capital.

The Company commenced commercial operations on 17 June 2017. The electricity generated from the Project is sold to Oman Power and Water Procurement Company SAOC under a 15 years Power Purchase Agreement. Natural gas required for the Project is supplied by the Ministry of Oil & Gas under a 15 years gas supply agreement.

The Company has entered into the following significant agreements:

An Engineering, Procurement and Construction (EPC) contract with Wärtsilä Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

i) An Engineering, Procurement and Construction (EPC) contract with Wärtsilä Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wärtsilä Muscat LLC.

iii) A Power Purchase Agreement (“PPA’) with Oman Water and Power Procurement Company SAOC (‘OPWP’) to sell the electricity generated from the Plant.

iv) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas to supply and purchase natural gas to and for the Plant.

v) An operation and maintenance agreement with Wärtsilä Muscat LLC to operate and maintain the Plant.

vi) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

vii) Usufructs Agreement with Ministry of Housing for the project site, temporary areas and RAECO substation Area.

viii) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

F-254

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

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 statements

The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2018, have been adopted in these financial statements.

The Company applies, for the first time, IFRS 9 Financial Instruments (as revised in July 2014) and IFRS 15 Revenue from contracts with customers ) and the related consequential amendments to other IFRS Standards that are effective for an annual period that begins on or after 1 January 2018. The impact of the initial application of these standards is disclosed as below:

IFRS 9 Financial Instruments

The Company has adopted IFRS 9 Financial Instruments effective from 1 January 2018. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement. The Company has not restated comparative information for 2017 as permitted by the transitional provisions of the standard. Therefore, the information presented for 2017 does not reflect the requirements of IFRS 9. The key changes to the Company’s accounting policies resulting from the adoption of IFRS 9 are summarised below:

Impact of initial application of IFRS 9 Financial Instruments

In the current year, the Company has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to other IFRS Standards that are mandatorily effective for an accounting period that begins on or after 1 January 2018. Transition provisions of IFRS 9 allow an entity not to restate comparatives.

Additionally, the Company adopted consequential amendments to IFRS 7 Financial Instruments Disclosures that were applied to the disclosures about 2018 and to the comparative period.

IFRS 9 introduced new requirements for:

The classification and measurement of financial assets and financial liabilities, Impairment of financial assets

Details of these new requirements as well as their impact on the Company’s financial statements are described below.

Business model assessment

The business model reflects how the Company manages the assets in order to generate cash flows, whether the Company’s objective is solely to collect contractual cash flows from the assets or is it to collect both the contractual cash flows and cash flows arising from the sale of the assets. If neither of these are applicable, then the financial assets are classified as other business model. Factors considered by the Company in determining the business model for a group of assets includes the past experience on how the cash flows for the asset were collected, how the asset’s performance was evaluated by the key management personnel, how risks are assessed and managed and how managers are compensated.

F-255

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 9 Financial Instruments (continued)

Contractual cash flows comprise of solely payment of principal and interest

Where the Company has a business model to collect contractual cash flows, the Company assesses whether the financial instrument cash flows represent solely payments of principal and interest (SPPI). ‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset. Interest is defined as consideration for time value of money and for the credit risk associated with the principal and for other basic lending risks and costs as well as a profit margin.

In making this assessment, the Company considers whether the contractual cash flows are consistent with the basic lending agreement which means the interest paid only includes the consideration for time value of money and credit risk. Financial instruments whose cash flows characteristics include elements other than time value of money and credit risk do not pass the test and are classified and measured at fair value through profit or loss.

The Company classifies its financial assets upon initial recognition into the financial assets carried at amortised cost. The accounting policy has been disclosed in note 3 to these financial statements.

The Company has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9.

(a) Classification and measurement of financial assets

The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and financial liabilities in terms of the requirements of IFRS 9) is 1 January 2018. Accordingly, the Company has applied the requirements of IFRS 9 to instruments that have not been derecognised as at 1 January 2018 and has not applied the requirements to instruments that have already been derecognised as at 1 January 2018.

All recognised financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortised cost or fair value on the basis of the Company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.

In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI criteria as measured at FVTPL.

The directors of the Company reviewed and assessed the Company’s existing financial assets as at 1 January 2018 based on the facts and circumstances that existed at that date and concluded that the initial application of IFRS 9 has no material impact on the Company’s financial assets as regards their classification and measurement. Financial assets classified as held-to-maturity and loans and receivables under IAS 39 that were measured at amortised cost continue to be measured at amortised cost under IFRS 9 as they are held within a business model to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding.

F-256

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 9 Financial Instruments (continued)

(b) Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires the Company to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

Specifically, IFRS 9 requires the Company to recognise a loss allowance for expected credit losses on:

(1) Trade and other receivables and

(2) Bank balances

In particular, IFRS 9 requires the Company to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial asset), the Company is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL. IFRS 9 also provides a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances.

As permitted by transitional provisions of IFRS 9, the Company elected not to restate the comparative figures. All adjustments to carrying amount of financial assets and financial liabilities at the date of transitions were recognised in opening retained earnings and other reserves of the current period.

Because the Company has elected not to restate comparatives, for the purpose of assessing whether there has been a significant increase in credit risk since initial recognition of financial instruments that remain recognised on the date of initial application of IFRS 9 (i.e. 1 January 2018), the directors have compared the credit risk of the respective financial instruments on the date of their initial recognition to their credit risk as at 1 January 2018.

F-257

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 9 Financial Instruments (continued)

The result of the assessment is as follows:

Items existing as at 1 January 2018 that are subject to the impairment provisions of IFRS 9

Credit risk attributes at 1 January 2018

Cumulative additional loss allowance recognised

Trade and other receivables

The Company applies the simplified approach and recognises lifetime ECL for these assets.

These includes receivables from OPWP and EPC contractor. The Company has determined that the application of IFRS 9’s impairment requirements has resulted in no material impact on the opening balances as of 1 January 2018.

Cash and bank balances All bank balances are assessed to have low credit risk at each reporting date as they are held with reputable international banking institutions.

The consequential amendments to IFRS 7 have also resulted in more extensive disclosures about the Company’s exposure to credit risk in the financial statements.

(c) Classification and measurement of financial liabilities

The application of IFRS 9 has had no impact on the classification and measurement of the Company’s financial liabilities.

F-258

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 9 Financial Instruments (continued)

(d) Disclosures in relation to the initial application of IFRS 9

The table below illustrates the classification and measurement of financial assets and financial liabilities under IFRS 9 and IAS 39 at the date of initial application, 1 January 2018.

Original measurement category under IAS 39

New measurement category under IFRS 9

Original carrying amount

under IAS 39

Additional loss allowance

recognised under IFRS 9 Retained

earning effect as at 1 January 2018

New carrying amount

under IFRS 9

RO RO RO

Trade and other receivables

Loans and receivables

Financial assets at amortised cost 4,299 - 4,299

Cash and bank balances

Loans and receivables

Financial assets at amortised cost 5,046 - 5,046

Trade and other payables

Financial liabilities at amortised cost

Financial liabilities at amortised cost 12,333 - 12,333

Senior facility loan

Financial liabilities at amortised cost

Financial liabilities at amortised cost 63,062 - 63,062

Loan from shareholders

Financial liabilities at amortised cost

Financial liabilities at amortised cost 6,539 - 6,539

F-259

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 9 Financial Instruments (continued)

IFRS 15 Revenue from Contracts with Customers

IFRS 15, ‘Revenue from Contracts with Customers’, has replaced IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The new standard provides enhanced detail and a five-step revenue recognition approach to reflect the transfer of goods and services to customers. The core principle of IFRS 15 is that an entity recognises revenue related to the transfer of promised goods or services when control of the goods or services passes to customers. The amount of revenue recognised should reflect the consideration to which the entity expects to be entitled in exchange for those goods or services. This differs from the principle under the current revenue standard that requires an assessment of when risks and rewards of goods and services are transferred rather than control of those goods or services.

The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise transitional adjustments in retained earnings on the date of initial application, i.e. without restating the comparative year. They will only need to apply the new rules to contracts that are not completed as of the date of initial application. The mandatory application date for IFRS 15 is 1 January 2018. The adoption of IFRS 15 has not resulted in a material impact on the opening balance as of 1 January 2018.

F-260

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.1 New and revised IFRSs applied with no material effect on the financial statements (continued)

IFRS 15 Revenue from Contracts with Customers (continued)

The application of following interpretation and amendments has had no impact on the Company’s financial statements:• IFRIC 22 Foreign Currency Transactions and Advance Consideration • Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS

2)• Transfers of Investment Property (Amendments to IAS 40)• Annual Improvements to IFRS Standards 2014–2016 Cycle (Amendments to IFRS 1 and IAS

28)• Amendments to IAS 28 Investments in Associates and Joint Ventures

Other than the above, there are no other significant IFRSs and amendments that were effective for the first time for the financial year beginning on or after 1 January 2018

2.2 New and revised IFRS in issue but not yet effective

The Company has not yet applied the following new and revised IFRSs that have been issued but are not yet effective:

New and revised IFRSs Effective for annual periods beginning on or after

Annual Improvements to IFRSs 2015–2017 Cycle amending IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing costs.

1 January 2019

IFRIC 23 Uncertainty over Income Tax TreatmentsThe interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers:• Whether tax treatments should be considered collectively;• Assumptions for taxation authorities’ examinations;• The determination of taxable profit (tax loss), tax bases,

unused tax losses, unused tax credits and tax rates; and• The effect of changes in facts and circumstances.

1 January 2019

Amendments to IFRS 9 Financial Instruments relating to prepayment features with Negative Compensation

1 January 2019

Amendments to IAS 28 Investments in Associates and Joint Ventures relating to long-term Interests in Associates and Joint Ventures

1 January 2019

Amendments to IAS 19 Employee Benefits relating to plan amendment, curtailment or settlement

1 January 2019

F-261

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (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

New and revised IFRSsEffective for annual periods beginning on or after

Amendments to References to the Conceptual Framework in IFRS Standards - amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32 to update those pronouncements with regard to references to and quotes from the framework or to indicate where they refer to a different version of the Conceptual Framework

1 January 2020

Amendment to IFRS 3 Business Combinations relating to definition of a business

1 January 2020

Amendments to IAS 1 and IAS 8 relating to definition of material 1 January 2020

IFRS 17 Insurance Contracts 1 January 2021

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) relating to the treatment of the sale or contribution of assets from and investor to its associate or joint venture.

Effective date deferred indefinitely. Adoption is still permitted.

The Directors anticipates that these new standards, interpretations and amendments will be adopted in the Company’s financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, except for IFRS 16 as highlighted in below paragraphs, may have no material impact on the financial statements of the Company in the period of initial application. Directors anticipates that IFRS 16 will be adopted in the Company’s financial statements for the annual period beginning 1 January 2019.

IFRS 16 Leases

General impact of application of IFRS 16 Leases

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements for both lessors and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related Interpretations when it becomes effective for accounting periods beginning on or after1 January 2019. The date of initial application of IFRS 16 for the Company will be 1 January 2019.

The Company has chosen the full retrospective application of IFRS 16 in accordance with IFRS 16:C5(a). Consequently, the Company will restate the comparative information.

In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17.

F-262

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (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)

IFRS 16 Leases (continued)

Impact of the new definition of a lease

The Company will make use of the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to apply to those leases entered or modified before 1 January 2019.

The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

• The right to obtain substantially all of the economic benefits from the use of an identified asset; and

• The right to direct the use of that asset.

The Company will apply the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or modified on or after 1 January 2019 (whether it is a lessor or a lessee in the lease contract). In preparation for the first-time application of IFRS 16, the Company has carried out an implementation project. The project has shown that the new definition in IFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for the Company.

Impact on Lessee Accounting

Operating leases

IFRS 16 will change how the Company accounts for leases previously classified as operating leases under IAS 17, which were off-balance sheet.

On initial application of IFRS 16, for all leases (except as noted below), the Company will:

a) Recognise right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;

b) Recognise depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of profit or loss;

c) Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated cash flow statement.

F-263

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (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)

IFRS 16 Leases (continued)

Impact on Lessee Accounting (continued)

Operating leases (continued)

Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease liability incentive, amortised as a reduction of rental expenses on a straight-line basis.

Under IFRS 16, right-of-use assets will be tested for impairment in accordance with IAS 36 Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous lease contracts.

For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office furniture), the Company will opt to recognise a lease expense on a straight-line basis as permitted by IFRS 16.

As at 31 December 2018, the Company has non-cancellable operating lease commitments towards Ministry of Housing. A preliminary assessment indicates this arrangements relate to leases other than short-term leases and leases of low-value assets, and hence the Company will recognise a right-of-use asset and a corresponding lease liability in respect of all this lease. The impact on profit or loss is to decrease other expenses, to increase depreciation and to increase interest expense.

Under IAS 17, all lease payments on operating leases are presented as part of cash flows from operating activities. The impact of the changes under IFRS 16 would be to reduce the cash generated by operating activities and to increase net cash used in financing activities by the same amount.

F-264

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies

Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and the Commercial Companies Law of 1974 of the Sultanate of Oman, as amended.

Basis of preparation

The financial statements are prepared under the historical cost convention. The financial statements have been presented in Rial Omani (“RO”) which is also the functional currency of the Company.

A summary of significant accounting policies, which are consistent with those used in the previous year except as those set out in note 2, are set out below.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any identified impairment loss.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Plant and machinery 40 years

Computer and office equipment 3 years

Furniture and fixtures 3 years

Motor vehicles 3 years

Capital spares shall be recognised in the carrying amount of the affected item of property, plant and equipment when it is put in use. The carrying amount of the replaced item is derecognised. When it is not practical to determine the carrying amount of the replaced part, the cost of the capital spares may be used as an indication of what the cost of the replaced part was at the time it was acquired.

Expenditure incurred to replace a component of an item of property, plant and equipment that is capitalised if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the statement of comprehensive income as the expense is incurred.

F-265

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3 Summary of significant accounting policies (continued)

Property, plant and equipment (continued)

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the year that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

When each major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied and the carrying amounts of the replaced components are written off to the profit or loss.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and other comprehensive income in the period the asset is derecognised.

The assets’ residual values, useful lives and methods are reviewed, and adjusted prospectively, if appropriate, at each financial year end.

Capital work-in-progress

Capital work-in-progress is stated at cost, less impairment, if any. When commissioned, capital work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Company’s policy.

Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash flows (cash generating units).

F-266

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership. All other leases are classified as operating leases.

Amounts receivable under operating leases, as lessor, are recognised as lease income on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. In accordance with IFRS, revenue stemming from (substantial) services in connection with the leased asset is not considered as lease revenue and is accounted for separately.

IFRIC 4 deals with the identification of services and take-or-pay sales or purchasing contracts that do not take the legal form of a lease but convey the rights to customers/suppliers to use an asset or a group of assets in return for a payment or a series of fixed payments. Contracts meeting these criteria should be identified as either operating leases or finance leases. This interpretation is applicable to the Company’s PPA.

Financial instruments

Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are measured subsequently at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

F-267

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Company’s financial assets include trade and other receivable and cash at bank. These financial assets qualify for and are classified as debt instruments measured at amortised cost.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). The Company does not have any FVTOCI and FVTPL financial assets.

Amortised cost and effective interest rate method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

F-268

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

For purchased or originated credit-impaired financial assets, the Company recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

Interest income is recognised in profit or loss and is included in the “finance income - interest income” line item.

Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI and trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

(i) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Company’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations.

F-269

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

• an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;

• significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;

• significant increases in credit risk on other financial instruments of the same debtor;

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise.

Despite the aforegoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

(1) The financial instrument has a low risk of default,

(2) The borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and

(3) Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Company considers a financial asset to have low credit risk when the asset has external credit rating of ‘investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

For financial guarantee contracts, the date that the Company becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contracts, the Company considers the changes in the risk that the specified debtor will default on the contract.

The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

F-270

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

(ii) Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the counterparty; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collateral held by the Company).

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;

(b) a breach of contract, such as a default or past due event (see (ii) above);

(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

(e) the disappearance of an active market for that financial asset because of financial difficulties.

(iii) Write-off

The Company writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Company’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

F-271

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

(iv) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract, as the Company is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Company expects to receive from the holder, the debtor or any other party.

If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Company recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

Derecognition of financial assets

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

F-272

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity instrument which the Company has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.

However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Company, are measured in accordance with the specific accounting policies set out below.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL. The Company does not have financial liabilities at FVTPL.

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.

F-273

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the ‘other gains and losses’ line item in profit or loss (note 11) for financial liabilities that are not part of a designated hedging relationship. For those which are designated as a hedging instrument for a hedge of foreign currency risk foreign exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

When the Company exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification should be recognised in profit or loss as the modification gain or loss within other gains and losses.

F-274

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if:

• there is a currently enforceable legal right to offset the recognised amounts; and

• there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Trade and other receivables

Trade and other receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Trade and other payables

Trade and other payables are initially measured at their fair value and subsequently measured at amortised cost, using the effective interest method.

Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, 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 as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursements.

End of service benefits

End of service benefits for Omani employees are contributed in accordance with the terms of the Social Security Law of 1991.

Provision for end of service indemnity for non-Omani employees’ is made in accordance with the Oman labour law as amended and is based on current remuneration and cumulative years of service at the reporting date.

F-275

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Income tax

Taxation is provided for in accordance with Omani fiscal regulations.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised.

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

Income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss.

Delay liquidated damages

Delay liquidated damages paid to Oman Power and Water Procurement Company SAOC are recognised as other receivables. Delay liquidated damages receivable are recognized when they are determined to be virtually certain of recovery.

F-276

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank. Cash and cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash, which are subject to an insignificant risk of changes in value and have maturity of three months or less at the date of acquisition.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Interest bearing loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

F-277

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Revenue

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control of a product or service to a customer.

Revenue comprises tariffs for power capacity, electrical energy and fuel charges. Tariffs are calculated in accordance with the PPA.

Lease revenue

The PPA with OPWP is considered as a lease within the context of IFRIC 4 and has been classified as an operating lease under IAS 17. Under the PPA, the Company is entitled to the Capacity charges for each hour during which the plant is available for power generation. Capacity charge is treated as lease revenue under operating lease and is recognised on a straight line basis over the lease term.

Other revenue from the contracts with the customers

Revenue is measured based on the terms specified in the contract with a customer. The Company recognizes Electrical energy and fuel charges revenue when it transfers the control of a product or service to a customer i.e. when electricity is delivered and the customer has accepted the deliveries and the control has been transferred to the customer. Energy charge and fuel charge is determined based on the fuel and variable cost of power.

No revenue is recognised if it is not probable that the Company will collect the consideration to which the Company will be entitled in exchange for the goods or services that will be transferred to customers. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customers’ ability and intention to pay that amount of consideration when it is due.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing each product to its present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. As of reporting date, inventories consist of spares, diesel and lube oil.

Asset retirement obligation

The provision for asset retirement obligation is recognised when there is a present obligation as a result of assets constructed on land under usufruct contracts with the Ministry of Housing, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of provision can be measured reliably. The estimated future obligations include the costs of removing the facilities and restoring the affected areas. A corresponding asset is recognised as part of plant and machinery in property, plant and equipment and depreciated accordingly.

F-278

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

3. Summary of significant accounting policies (continued)

Asset retirement obligation (continued)

The provision for asset retirement obligation is a best estimate of the present value of expected costs required to settle the obligation, at the reporting date based on the current requirements of the Usufruct agreement, using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of profit or loss and other comprehensive income as a finance cost.

The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are dealt with prospectively and reflected as an adjustment to the provision and corresponding decommissioning asset recorded as property, plant and equipment.

If there is an indication that the new carrying amount of the asset is not fully recoverable, the asset is tested for impairment and an impairment loss is recognised where necessary.

Directors’ remuneration

The Board of Directors’ remuneration is accrued within the limits and the requirements of the Commercial Companies Law of the Sultanate of Oman.

Dividend on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders.

Earnings and net assets per share

The Company presents earnings per share (EPS) and net assets per share for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Net assets per share is calculated by dividing the net assets attributable to ordinary shareholders of the Company by the number of ordinary shares outstanding during the year. Net assets for the purpose is defined as total equity.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Project Director who manages the Company on a day-to-day basis, as per the directives given by the Board of Directors that makes strategic decisions.

F-279

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

4. Critical accounting judgments and key sources of estimation uncertainty

The presentation of financial statements, in conformity with IFRS, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, incomes and expenditures. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements

Management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Lease classification

The Company has entered into the Power Purchase Agreement (“PPA”) with Oman Power and Water Procurement Company SAOC (“OPWP”) to generate electricity and make available the power capacity from its Plant.

Management believes that IFRIC 12 is not applicable to the arrangement as the residual interest is borne by the Company and not OPWP. The estimated useful life of the power plant of 40 years takes into account the Company’s right to extend the land lease under a Usufruct Agreement for an additional term of 25 years. Furthermore, the residual value of the assets will have substantial value at the conclusion of the PPA and the Company will be able to continue to generate revenue through supply of power taking into account the government’s future plans to deregulate the power sector in Oman.

Management considers the requirements of IFRIC 4, “Determining Whether an Arrangement Contains a Lease”, which sets out guidelines to determine when an arrangement might contain a lease. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Once a determination is reached that an arrangement contains a lease, the lease arrangement is classified as either financing or operating according to the principles in IAS 17, Leases. A lease that conveys the majority of the risks and rewards of operation is a finance lease. A lease other than a finance lease is an operating lease.

F-280

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

4. Critical accounting judgments and key sources of estimation uncertainty (continued)

Lease classification

Based on management’s evaluation, the PPA with OPWP is considered as a lease within the context of IFRIC 4 and has been classified as an operating lease under IAS 17 since significant risks and rewards associated with the ownership of the plant lies with the Company and not with OPWP.

The primary basis for this conclusion is that the PPA is for a term of 15 years while the economic life of the power plant is estimated to be 40 years. The present value of minimum lease payments under the PPA do not substantially recover the fair value of the plant at the inception of the lease.

Key sources of estimation uncertainty

The following are the significant estimates used in the preparation of the financial statements:

Useful lives of property, plant and equipment

Depreciation is charged so as to write-off the cost of assets over their estimated useful lives. The calculation of useful lives is based on management’s assessment of various factors such as the operating life, the maintenance programs, and normal wear and tear using its best estimates.

Deferred tax

Uncertainties exist with respect to the interpretation of tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and nature of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of finalisation of tax assessments of the Company. The amount of such provisions is based on various factors, such as experience of previous tax assessments and differing interpretations of tax regulations by the taxable entity and the responsible tax authority.

Asset retirement obligation

Upon expiry of their respective Usufruct and Power Purchase agreements, the Company will have an obligation to remove the facilities and restore the affected area. The estimated cost, discount rate and risk rate used in the provision for decommissioning costs calculation is based on management’s best estimates.

F-281

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

5. Property, plant and equipment

Plant and machinery

Buildings and civil

works

Furniture and

fixtures

Computer and office

equipment

Motor vehicles

Capital work-in-

progress

Total

Cost RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

1 January 2017 - - - 4 - 59,494 59,498

Additions – restated 3,772 - 30 7 44 21,752 25,605

Transfers – restated 60,530 20,716 - - - (81,246) -

1 January 2018 – restated 64,302 20,716 30 11 44 - 85,103

Transfers / changes* (5,999) - - - - 7 (5,992)

31 December 2018 58,303 20,716 30 11 44 7 79,111

Depreciation

1 January 2017 - - - 3 - - 3

Charge for the year – restated 1,210 371 6 3 3 - 1,593

1 January 2018 – restated 1,210 371 6 6 3 - 1,596

Charge for the year 1,188 593 10 3 15 - 1,809

31 December 2018 2,398 964 16 9 18 - 3,405

Carrying value

31 December 2018 55,905 19,752 14 2 26 7 75,706

31 December 2017 – restated 63,092 20,345 24 5 41 - 83,507

* This represents reimbursement of certain costs from OPWP, changes on account of reassessment of asset retirement obligation and transfer to inventory from plant and machinery.

Musandam Power Company SAOC

F-282

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

5. Property, plant and equipment (continued)

The Company had achieved the commercial operation start date on 17 June 2017.

The Company’s power plant is constructed on land leased from Ministry of Housing. The future minimum lease commitments in relation to these are disclosed in note 20.

The depreciation charge has been allocated in the statement of profit or loss and other comprehensive income as follows:

2018 2017

RO 000 RO ‘000

Restated

Operating expenses (note 15) 1,791 1,588

General and administrative expenses (note 16) 18 5

1,809 1,593

Borrowing costs amounting to RO 3.75 million incurred during the plant construction period is capitalised.

The Company carried out the review of the estimated useful lives of its property, plant and equipment and noted that the useful life of plant and machinery were longer than the estimated useful lives used for depreciation purposes. As a result, effective 1 January 2018, the Company changed its estimates of the useful lives of its plant and machinery to better reflect the estimated periods during which these assets will remain in service. The estimated useful lives of the plant and machinery that was previously 30 years was increased to 40 years. In accordance with the requirements of IAS 8, the change in estimate has been recognised prospectively. The effect of this change in estimate was to reduce 2018 depreciation expense by RO 0.369 million and, therefore, increase in net profit for the year 2018 by RO 0.313 million.

6. Inventories

2018 2017

RO ‘000 RO ‘000

Stores and spares 1,555 -

Fuel and lube inventory 1,831 1,580

3,386 1,580

F-283

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

7. Trade and other receivables

2018 2017

RO ‘000 RO ‘000

Restated

Trade receivables 2,168 752

Prepaid expenses 111 103

2,279 855

Other receivables 850 3,444

Non-current portion (466) -

Allowance for impairment of other receivables (115) -

Other receivables - net 269 3,444

2,548 4,299

The Company has one customer (OPWP) which accounts for the trade receivables balance as at 31 December 2018. The ageing of trade receivables at the reporting date is disclosed in note 21.

The average credit period on sales of goods is 30 days. No interest is charged on outstanding trade receivables.

The Company always measures the loss allowance for trade receivables at an amount equal to lifetime ECL using the simplified approach. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The Company has not ECL against because OPWP is a government based entity historical experience has indicated that these receivables are generally recoverable.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have been written off is subject to enforcement activities.

F-284

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

7. Trade and other receivables (continued)

Other receivables also include reimbursement of RO 0.115 million (2017: NIL) claimed from OPWP in relation to fuel used during the testing stage. The Company has fully provided this amount as OPWP has disputed this balance. Movement in allowance for impairment of other receivables is as follows:

2018 2017

RO ‘000 RO ‘000

At 1 January - -

Charge for the year (note 16) 115 -

115 -

The Company achieved Commercial Operation Date (“COD”) on 17 July 2017 against the originally scheduled date of 18 December 2016 as stated in the Power Purchase Agreement (“the PPA”). In the year 2017, Oman Power and Water Procurement Company SAOC (“OPWP”) claimed liquidated damages (“LDs”) of RO 4.525 million from the Company and deducted them from invoices submitted to it by the Company. In turn the Company has taken the following steps:

• The Company has sought contractual relief from OPWP for liquidated damages being a Buyer Risk Event (“BRE”) under the PPA.

• The Company has imposed liquidated damages and claimed revenue losses from the EPC contractor in relation to the above delays.

In respect of BRE, OPWP has accepted 37 days as being a Buyer Risk Event due to non-readiness of the Rural Area Electricity Company SAOC (“RAECO”) transmission grid and allowed the relief for payment of LDs during this year and returned RO 0.925 million of LDs to the Company.

In relation to the LDs imposed on the EPC contractor, the Company withheld the milestone payment of 15% of the EPC Contract price amounting to RO 10.253 million (equivalent to US$ 26.6 million). This amount is equivalent to the maximum cap of delay LDs under the EPC Contract the Company is entitled to.

Based on above, management of the Company and external legal counsel believe that the final settlement of its disputes with EPC Contractor would not result in any outflow from the Company. Accordingly, management recorded RO 4.525 million in other receivables comprising of RO 0.925 million on account of BRE and RO 3.6 million on account of LDs imposed on EPC contractor as of 31 December 2017.

In the current year, the EPC contractor and the Company entered into the settlement of deed to resolve all matters relating to the LDs and claims levied by the Company and the claims levied by the EPC Contractor in the prior year. As per the settlement deed, the EPC contractor has accepted liquidated damages of RO 3.6 million and also agreed to settle an additional amount of RO 1.5 million in respect of the Company’s claims relating to losses and other expenditure incurred.

F-285

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

7. Trade and other receivables (continued)

As per the settlement deed an amount of RO 4.2 million has been settled by the EPC contractor in the current year and RO 0.807 million will be settled by the EPC contract over the period of three years and has been recognised in the current and non-current portion as follows:

2018 2017

RO ‘000 RO ‘000

Current portion 254 -

Non-current portion 466 -

720 -

8. Cash and bank balances

Cash in hand 2 2

Cash at bank 7,054 5,044

7,056 5,046

Balances with banks are assessed to have low credit risk of default since these banks are highly regulated by the central banks of the respective countries. Accordingly, the management of the Company estimates the loss allowance on balances with banks at the end of the reporting period at an amount equal to 12 month ECL. None of the balances with banks at the end of the reporting period are past due and taking into account the historical default experience and the current credit ratings of the bank, the management of the Company have assessed that there is no impairment, and hence have not recorded any loss allowances on these balances.

Bank balances includes the restricted funds of RO Nil (2017: RO 3.47 million) which represents the amount to be maintained under the DSRA as disclosed in noted 20. Accordingly, unrestricted cash and cash equivalent amounted to RO 7.056 million (2017: RO 1.578 million).

9. Share capital

2018 2017

RO ‘000 RO ‘000

Authorised share capital

20,000,000 shares of RO 1 each 20,000 20,000

Issued and paid up share capital

7,039,000 shares (2017: 7,039,000 shares) of RO 1 each 7,039 7,039

F-286

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

9. Share capital (continued)

In the year 2017, the shareholders of the Company authorised the conversion of RO 6.54 million payable by the Company to the shareholders, into share capital of the Company. The amount was registered as share capital on 29 November 2017.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

10. Statutory reserve

As per the Commercial Companies Law of the Sultanate of Oman, 10% of the profit for the year is required to be transferred to a statutory reserve until the reserve is equal to one third of the issued share capital. Accordingly, during the year 2018, RO 372 thousands [2017: 70 thousands (restated)] of Company’s profit was transferred to the legal reserve. The reserve is not available for distribution.

11. Senior facility loan

2018 2017

RO ‘000 RO ‘000

At 1 January 63,985 42,172

Add: Proceed from drawdowns during the year 10,253 24,250

Less: Repayments made during the year (3,475) (2,437)

31 December (gross) 70,763 63,985

Less: deferred financing charges (1,090) (1,090)

Amortisation of deferred financing charges 229 167

At 31 December (net) 69,902 63,062

Less: current portion (3,407) (2,549)

Non-current portion 66,495 60,513

The senior facility loan is denominated in Rials Omani and carries an interest rate of 4.6% (2017: 4.6%) per annum. The loan is to be repaid in half yearly instalments commencing on 30 June 2017, with the last instalment scheduled on 17 December 2031. Due to the delay in commencement of commercial operations, the first instalment was deferred to 29 December 2017 and repaid on 29 December 2017. The instalment due on 30 June 2018 has been repaid on 27 June 2018. The instalment due on 31 December 2018 has been repaid on 31 December 2018. The loan is subject to applicable financial covenants and DSRA requirements. The loan is secured by:

• Legal mortgage over the Company’s immovable assets.

• Pledge over the owner’s shares.

• Pledge over the project accounts.

• Assignment / charge over all of the Company’s rights, titles and interest in and to the project documents, the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

F-287

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

11. Senior facility loan (continued)

A reconciliation between opening and closing balances in the statement of financial position for liabilities that result in financing cash flows is presented below:

1 January 2018

Proceeds during the

year

Repayments during the

year

Non-cash changes

31 December

2018

RO’000 RO’000 RO’000 RO’000 RO’000

Senior facility loan 63,985 10,253 (3,475) (861) 69,902

12. Trade and other payables

2018 2017

RO ‘000 RO ‘000

Trade payable 2,613 11,482

Accrued expenses and provisions 477 851

3,090 12,333

13. Provision for asset retirement obligation Under the Usufruct Agreement, the Company has an obligation to remove the plant and restore the

land. The provision for asset retirement obligation has been calculated using an expected present value technique. This technique reflects assumptions such as costs, plant useful life, inflation and profit margin that third parties would consider to assume the settlement of the obligation. In estimating the costs an inflation rate is applied until the retirement obligations expire in order to determine the value of the future obligation and a discount rate is applied to determine the present value of the obligation. The costs to be incurred in the future may differ from the estimates in terms of their nature and timing of payment. The provisions may be subsequently adjusted in line with changes in the above-mentioned inputs.

During the year, the Company appointed an independent external firm with relevant expertise to reassess the estimated asset retirement obligation provision. Based on the expert’s report, the provision was reduced by RO 3.631 million and a corresponding adjustment was made in the de-commissioning asset as at 31 December 2018. The movement in provision for asset retirement obligation is as follows:

2018 2017

RO ‘000 RO ‘000

At 1 January 3,979 -

Additions - 3,772

Change during the year on reassessment (3,838) -

Unwinding of discount 11 207

At 31 December 152 3,979

F-288

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

14. Revenue

2018 2017

RO ‘000 RO ‘000

Restated

Lease revenue

Capacity charges 11,250 7,264

Other revenue from the contracts with the customers

Energy charges 1,858 885

Other charges 3,388 1,143

5,246 2,028

16,496 9,292

15. Operating costs

Fuel cost 3,763 2,193

Operating and maintenance expenses 3,251 1,715

Depreciation (note 5) 1,790 1,588

Connection fees 317 157

Insurance costs 196 88

Others 292 66

9,609 5,807

16. General and administrative expenses

Professional charges 89 127

Staff costs 326 177

Provision against other receivables (note 6) 115 -

Office expenses 45 12

Others 6 2

Depreciation (note 5) 18 5

599 323

17. Finance costs - net

Finance costs primarily includes the interest on senior facility loan, loan from shareholders and other finance related charges.

F-289

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

18. Related parties transaction

Related parties comprise the shareholders, directors, key management personnel and business entities in which they have the ability to control or exercise significant influence in financial and operating decisions. Terms of these transactions are approved by the Company’s management. Government of Sultanate of Oman (the Government), indirectly owns 70% of the Company shares. The Company has applied the exemptions in IAS 24 related to transaction with the Government and other entities controlled, jointly controlled or significantly influenced by the Government. In this respect, the Company has disclosed certain information, to meet the disclosure requirements of IAS 24, in this note.

Balances with related parties included in the statement of financial position are as follows:

Loan from shareholders

Loan from shareholders includes amounts payable to Oman Oil Company SAOC (69.9%) and its subsidiary, Oman Energy Trading Company Limited (0.1%) amounting to RO 2.139 million (2017: RO 4.577 million) and LG International Corp. amounting to RO 0.917 million (2017: RO 1.962 million) as at the reporting date. This also includes accrued interest of RO 0.01 million.

In the year 2016, the Company received advances from the shareholders amounting to RO 13.08 million, which was utilised to repay the equity bridge loan obtained from commercial bank. In year 2017, the shareholders have resolved to convert one half of these advances into share capital of the Company and the remaining half has been classified as unsecured loan from shareholders. The loan carries an interest rate of 4.6% (2017: 4.6%) per annum. In the current year the shareholder loan of RO 3,483 million has been repaid. The loan from shareholders are payable on demand and have been presently classified as a current liability.

2018 2017

Amounts due to related parties RO ‘000 RO ‘000

Oman Oil Marketing Company SAOG - 187

Oman Gas Company SAOC 40 153

Oman Oil Company SAOC 18 20

LG International Corp. 7 8

65 368

The amounts outstanding are unsecured and are settled in cash during the normal course of Company’s business.

F-290

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

18. Related parties transaction (continued)

Transactions

Transactions with related parties included in the financial statements are as follows:

2018 2017

RO ‘000 RO ‘000

Purchase of fuel from Oman Oil Marketing Company SAOG 2,264 3,211

Purchase of fuel / gas from Ministry of Oil and Gas 3,384 1,682

Support services provided by Oman Gas Company SAOC 326 153

Interest on loan from shareholders 287 28

6,261 5,074

Key management compensation

Salaries and other benefits 78 56

19. Taxation

The tax rate applicable to the Company is 15% (2017: 15%). For the purpose of determining the taxable result for the period, the accounting profit has been adjusted for tax purposes. Adjustments for tax purposes include items relating to both income and expense. The adjustments are based on the current understanding of the existing tax laws, regulations and practices.

No provision for the current tax been made in these financial statements in view of cumulative taxable losses incurred by the Company as at 31 December 2018. No deferred tax asset has been recognized on the cumulative tax losses up to 31 December 2018 in the amount of RO 10.3 million (2017 - RO 8.4 million) as the Company does not expect to have sufficient taxable profits in the future years against which such tax losses will be adjusted.

The deferred tax on all temporary differences have been calculated and dealt with in the statement of profit or loss and other comprehensive income.

a) The taxation charge for the year is comprised of:

2018 2017

RO ‘000 RO ‘000

Restated

Statement of profit or loss and other comprehensive income:

Deferred tax for current year 1,014 588

F-291

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

19. Taxation (continued)

b) Tax reconciliation

The following is a reconciliation of income taxes calculated on accounting profits at the applicable tax rate with the income tax expense for the year. The reconciliation of the accounting profit with the taxation charge in the financial statements is as follows:

2018 2017

RO ‘000 RO ‘000

Restated

Profit before tax 4,735 1,285

Taxation @ 15% [(2017: 15%)] 710 193

Add tax effect of:

Non-deductable expenses 43 -

Deferred tax not recognized on tax losses 313 -

Deferred tax – prior year (52) -

Others - 395

Tax expense 1,014 588

c) Deferred tax liability

As at 1 January 2018

Recognised during the year

As at31 December

2018RO ‘000 RO ‘000 RO ‘000

RestatedDeferred tax liability

Effect of accelerated tax depreciation (588) (1,014) (1,602)As at

1 January 2017Recognised

during the yearAs at

31 December 2017

RO ‘000 RO ‘000 RO ‘000

Restated Restated

Deferred tax liability

Effect of accelerated tax depreciation - (588) (588)

d) Tax status

As of 31 December 2018, none of the Company’s tax assessments have been completed by the Omani taxation authorities. Management of the Company believe that additional taxes, if any in respect of open tax years, would not be significant to the Company’s financial position as at 31 December 2018.

F-292

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

20. Commitments

Operating leases

The Company has entered into a lease agreement on 9 February 2015 with the Government of the Sultanate of Oman, represented by the Ministry of Housing in respect of the land used for project site and temporary areas. The lease agreement for land used for project site is for an initial term of 25 years, renewable for further periods.

At 31 December 2018, the Company had lease commitments as follows:

2018 2017

RO ‘000 RO ‘000

Due within one year 10 10

Due after one year but within five years 41 41

Due after five years 174 164

225 215

Operation and maintenance commitment

As per the O&M Agreement, Wärtsilä Muscat LLC will operate and maintain the Company’s plant at Musandam until 16 June 2022. Under the O&M agreement, the Company has to pay the fixed operating fee.

All fees are subject to 3% indexation. The minimum future payments under the O&M agreement (excluding indexation) are as follow:

2018 2017

RO ‘000 RO ‘000

Due within one year 1,083 1,083

Due after one year but within five years 3,249 3,791

4,332 4,874

As per the LTSA Agreement, Wärtsilä Muscat LLC will operate and maintain the Company’s plant at Musandam until 16 June 2032. Under LTSA agreement, the Company has to pay the fixed operating fee.

All fees are subject to 3% indexation. The minimum future payments under the O&M agreement (excluding indexation) are as follow:

2018 2017

RO ‘000 RO ‘000

Due within one year 431 431

Due after one year but within five years 1,723 1,723

Due after five years 3,876 4,092

6,030 6,246

F-293

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

20. Commitments (continued)

Other commitments

Under the terms of the debt financing agreement, the Company is required to maintain a debt service reserve amount (DSRA) equal to its next repayment instalment for the half-year till the final instalment of the term loan. Thus, at 31 December 2018, the bank balances includes DSRA of RO 3.47 million (2017: RO 3.47 million).

21. Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk (including price risk, foreign currency risk and interest rate risk), liquidity risk and credit risk. However, the Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has entrusted the Management with the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Price risk

The permitted tariff (prices) for the generation of electricity are determined in accordance with the Power Purchase Agreement with OPWP. Hence, the Company is not subject to significant price risk.

Foreign currency risk

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Company is exposed to foreign 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 other currencies linked to the US Dollar management believes that exchange rate fluctuations would have an insignificant impact on the Company’s pre-tax profit.

F-294

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

21. Financial risk management (continued)

Market risk (continued)

Interest rate risk

The Company is not exposed to interest rate risk on its loan from shareholders and senior facility loan as these carry fixed interest rate. At the reporting date the interest rate risk profile of the Company’s interest bearing financial instruments were:

2018 2017

RO ‘000 RO ‘000

Senior facility loan 69,902 63,062

Loan from shareholders 3,067 6,539

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s receivables from customers and cash balances held with banks.

Under the terms of the PPA, the Company’s sales are billed wholly to OPWP which is indirectly owned wholly by the Government. Therefore, the Company’s credit risk on receivables from OPWP is limited.

The age of trade and other receivables and related impairment loss at the reporting date is:

Gross Impairment Past due but not impaired

RO ’000 RO ’000 RO ’0002018Not past due - - -Less than 1 month - - -1 month to 3 months - - -3 months to 1 year 2,168 115 2,053

2,168 115 2,0532017 - restated

Not past due 4,080 - -

Less than 1 month - - -

1 month to 3 months 116 - -

3 months to 1 year - - -

4,196 - -

F-295

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

21. Financial risk management (continued)

Credit risk (continued)

For trade receivables, the Company has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Company determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Management believe that no provision is required on the balances past due but not impaired as these amounts have been agreed / accepted by OPWP and EPC contactor as disclosed in note 6.

Bank balances

The Company limits its credit risk with regard to bank balance deposits by only dealing with reputable banks and financial institutions with strong credit ratings. The Company’s bank accounts are placed with reputed financial institutions with a minimum credit rating of P-2 as per the recently ratings issued by Moody’s Investors Service.

2018 2017

RO ‘000 RO ‘000

Bank Muscat SAOG 7,056 5,046

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2018 2017

RO ‘000 RO ‘000

Restated

Trade and other receivables - net 2,365 4,196

Cash at bank 7,056 5,044

9,109 9,240

Liquidity risk

The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Further, the Company maintains sufficient bank balances.

F-296

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

21. Financial risk management (continued)

Liquidity risk (continued)

The table below summarises the maturities of the Company’s undiscounted financial liabilities at the reporting date:

Less than 3 months

3 to 12 months

1 to 5years

more than 5 years

Total

At 31 December 2018 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Trade and other payables 1,321 1,769 - - 3,090Senior facility loan - 6,684 23,886 77,327 107,897Loan from shareholders - 3,067 - - 3,067Amounts due to related parties 65 - - - 65

1,386 11,520 23,886 77,327 114,119

Less than 3 months

3 to 12 months

1 to 5years

more than 5 years

Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

At 31 December 2017

Trade and other payables 12,333 - - - 12,333

Senior facility loan - 6,514 26,373 81,497 114,384

Loan from shareholders - 6,539 - - 6,539

Amounts due to related parties - 368 - - 368

12,333 13,421 26,373 81,497 133,624

Categories of financial instruments

2018 2017

RO ‘000 RO ‘000Restated

Financial assetsCash at bank 7,056 5,044

Trade and other receivables 2,365 4,196

9,421 9,240

Financial liabilitiesFinancial liabilities held at amortised costSenior facility loan 69,902 63,062

Amount due to related parties 65 368

Loan from shareholders 3,067 6,539

Trade and other payables 3,090 12,333

76,124 82,302

F-297

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

21. Financial risk management (continued)

Liquidity risk (continued)

Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to provide an adequate return to shareholders.

The Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. The capital structure of the Company comprises share capital, reserves and retained earnings. Debt comprise of senior loan facility. The Company is not subject to external imposed capital requirements except those under the Commercial Companies Law of 1974, as amended.

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. During the year there is no change in the capital management policy of the Company.

Gearing ratio

Gearing ratio at the end of the reporting year was as follows:

2018 2017

RO ’000 RO ’000

Restated

Debt 72,969 63,062

Cash and bank balances (7,056) (5,046)

Net debt 65,913 58,016

Equity 11,313 7,557

Net debt to equity ratio 582.63% 767.71%

22. Fair values of financial instruments

Financial instruments comprise of financial assets and financial liabilities.

Financial assets consist of cash in hand, cash at bank and trade and other receivables. Financial liabilities consist of trade and other payable, loan from shareholders, senior facility loan and amounts due to related parties.

The fair values of financial instruments are not materially different from their carrying values.

F-298

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

23. Earnings per share: basic and diluted

2018 2017

RO ‘000 RO ‘000

Restated

Profit attributable to ordinary shareholders of the

Company for basic and diluted earnings per share 3,721 697

Weighted average number of shares 7,039 500

Earnings per share 0.529 1.394

There is no difference between basic and diluted earnings per share because the Company has not issued any instruments which would have an impact on earnings per share when exercised.

24. Net assets per share

Net assets per share is calculated by dividing the equity attributable to the shareholders of the Company at the reporting date by the number of shares outstanding as follows:

2018 2017

RO ‘000 RO ‘000

Restated

Net assets 11,278 7,557

Number of shares outstanding at year end 7,039 7,039

Net assets per share 1.602 1.074

25. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic decisions maker. The Company’s operating activities are disclosed in note 1 to the financial statements. The strategic business unit offers similar products and services and is managed as one segment. For the strategic business unit, the Project Director reviews internal management reports on a monthly basis. Performance is measured based on the profit before income tax, as included in the internal management reports. The Project Director considers the business of the Company as one operating segment and monitors accordingly. The requirements of IFRS 8, paragraphs 31 to 34 relating to entity wide disclosures have been covered under statements of financial position, profit and loss and other comprehensive income and also in notes 1 to 4 to these financial statements.

F-299

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

26. Operating lease arrangement where the Company acts as a lessor

As disclosed in note 1 of these financial statements, the Company has entered into a PPA with OPWP for a substantial element of the production of power with 100% ‘take-or-pay’ arrangement. As disclosed in note 4, management has determined that the PPA with OPWP is covered under International Financial Reporting Interpretation Committee (IFRIC 4) and such arrangement in substance represents an operating lease under IAS-17 Leases. The lease commenced on 17 June 2017. The following is the total of future minimum lease receipts expected to be received under the PPA:

2018 2017

RO ‘000 RO ‘000

Due within one year 12,068 12,514

Due after one year but within five years 50,056 50,056

Due after five years 120,968 125,140

183,092 187,710

27. Prior period adjustment

The corresponding figures for the year 2017 have been restated in these financial statements to rectify the following in the accounting records of previous year:

The liquidated damages claim receivable of RO 4.5 million in the year 2017 was capitalized in property, plant and equipment. As a result, property, plant and equipment for the year 2017 had increased by RO 4.5 million with a corresponding decrease in other receivable by the same amount. Further, depreciation for the year 2017 had increased by RO 75 thousands. Accordingly, retained earnings and net profit for the year 2017 had been reduced by RO 75 thousands.

Deferred tax asset of RO 0.9 million had been recognized in the year 2017 in respect of unused tax losses despite non-availability of future taxable profits. As a result, deferred tax expense and deferred tax liability for the year 2017 were decreased by RO 0.9 million. Accordingly, retained earnings and net profit for the year 2017 had been increased by RO 0.9 million.

Invoice disputes notes amounting to RO 1.1 million were received in 2017 from OPWP and had not been recorded in the same year due to management’s expectation of possible recovery. The resolution of such disputes was notified by OPWP in the year 2018. As a result, revenue and other receivable for the year 2017 has increased by RO 1.1 million. Accordingly, retained earnings and net profit for the year 2017 were increased by RO 1.1 million.

Tax depreciation for the year 2017 was not proportionally reduced to period from PCOD of 17 June 2017 to 31 December 2017. As a result, deferred tax expense and deferred tax liability had been increased by RO 0.7 million for the year ended 31 December 2017 and retained earnings and net profit for the year 2017 had been decreased by RO 0.7 million.

F-300

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2018 (continued)

27. Prior period adjustment (continued)

The restated corresponding figures presented for comparative purposes are as follows:

Reference Originally reported

Effect of prior period adjustment

As restated

RO ‘000 RO ‘000 RO ‘000

31 December 2017

Statement of financial position

Property, plant and equipment (i) 87,957 (4,450) 83,507

Trade and other receivables (i),(ii) 867 3,432 4,299

Retained earnings (i), (ii), (iii), (iv) 1,590 (1,142) 448

Legal reserve (i), (ii), (iii), (iv) 197 (127) 70

Deferred tax liability (ii), (iv) 337 251 588

Net assets per share (in RO) 1.254 (0.180) 1.074

Statement of profit or loss and other comprehensive income

Revenue (iii) 10,385 (1,093) 9,292

Tax expense (ii), (iv) (337) (251) (588)

Depreciation (i) (1,668) 75 (1,593)

Profit and total comprehensive income for the year (i), (ii), (iii), (iv) 1,966 (1,269) 697

Basic and diluted earnings per share (in RO) 1.881 (0.487) 1.394

Statement of cash flows

Profit before tax (i), (iii) 2,303 1,018 1,285

Depreciation (i) 1,668 (75) 1,593

Trade and other receivables (i), (ii) 5,990 3,432 2,558

Payment for purchase of property, plant and equipment (i) (26,358) 4,525 (21,833)

28. Approval of financial statements

The financial statements were approved by the Board and authorized for issue on 25 February 2019.

F-301

PROSPECTUS

Musandam Power Company SAOC

Report and financial statements

for the period ended 30 June 2019

F-302

MUSANDAM POWER COMPANY SAOC

Report and financial statements

for the year ended 31 December 2018

Pages

Independent auditor’s report F303 - F304

Statement of financial position F305

Statement of profit or loss and other comprehensive income F306

Statement of changes in equity F307

Statement of cash flows F308

Notes to the financial statements F309 - F351

F-303

PROSPECTUS

F-304

F-305

PROSPECTUS

30 June 2019

31 December 2018

Notes RO ‘000 RO ‘000ASSETSNon-current assetsProperty, plant and equipment 5 74,858 75,706Other receivables 7 373 466Total non-current assets 75,231 76,172• Current assets• Inventories 6 3,039 3,386• Trade and other receivables 7 8,320 2,548Cash and bank balances 8 3,040 7,056Total current assets 14,399 12,990Total assets 89,630 89,162EQUITY AND LIABILITIESEquityShare capital 9 7,039 7,039Legal reserve 10 511 442Retained earnings 2,034 3,797Total equity 9,584 11,278Non-current liabilitiesSenior facility loan - non-current portion 11 64,585 66,495Lease liability - non-current portion 14 110 -Deferred tax liability 20 1,990 1,602Provision for asset retirement obligation 13 155 152Provision for end of service benefits 6 6Total non-current liabilities 66,846 68,255Current liabilitiesSenior facility loan - current portion 11 3,492 3,407Lease liability – current portion 14 3 -Loan from shareholders 19 3,056 3,067Trade and other payables 12 5,633 3,090Amounts due to related parties 19 1,016 65Total current liabilities 13,200 9,629Total liabilities 80,046 77,884Total equity and liabilities 89,630 89,162Net assets per share 24 0.136 0.160

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

Statement of financial position at 30 June 2019

F-306

30 June 2019

30 June 2018

Notes RO ‘000 RO ‘000

Revenue 15 8,722 7,634

Operating costs 16 (5,408) (3,935)

Gross profit 3,314 3,699

General and administrative expenses 17

(502) (506)

Finance costs – net 18

(1,739) (1,460)

Profit before tax 1,073 1,733

Tax expense 20 (388) (518)

Profit and total comprehensive income for the period 685 1,215

Basic and diluted earnings per share for the period 23 0.010 0.017

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

Statement of profit or loss and other comprehensive incomefor the six month period ended 30 June 2019

F-307

PROSPECTUS

Share capital

Legal reserve

Retained earnings

Total

RO ‘000 RO ‘000 RO ‘000 RO ‘000

At 1 January 2018 7,039 70 448 7,557

Profit and total comprehensive income for the period

- - 1,215 1,215

Transfer to legal reserve - 122 (122) -

At 30 June 2018 7,039 192 1,541 8,772

At 1 January 2019 7,039 442 3,797 11,278

Profit and total comprehensive income for the period

- - 685 685

Transfer to legal reserve (note 10) - 69 (69) -

Transactions with owners in their capacity as owners:

Dividends paid (note 28) - - (2,379) (2,379)

At 30 June 2019 7,039 511 2,034 9,584

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

Statement of changes in equityfor the six month period ended 30 June 2019

F-308

Notes 30 June 2019

30 June 2018

RO ‘000 RO ‘000

Cash flows from operating activities

Profit before tax 1,073 1,733

Adjustments for:

Finance costs – net 18 1,739 1,460

Provision for impairment of other receivables 7 - 115

Depreciation 5 1,004 839

Operating cash flows before working capital changes 3,816 4,147

Inventories 347 64

Trade and other receivables (5,765) (2,204)

Trade and other payables 2,543 905

Amounts due to related parties 951 (341)

Net cash from operating activities 1,892 2,571

• Cash flows from investing activities

Payment for purchase of property, plant and equipment (43) -

Reimbursement of costs - 654

Net cash (used in) / from investing activities (43) 654

Cash flows from financing activities

Proceeds from senior facility loan 11 - 10,253

Repayment of senior facility loan 11 (1,861) (2,164)

Repayment of shareholders’ loan 19 (11) -

Dividends paid 28 (2,379) -

Finance costs paid (1,614) (1,473)

• Net cash (used in) / from financing activities (5,865) 6,616

Net (decrease) / increase in cash and cash equivalents (4,016) 9,841

Cash and cash equivalents at beginning of the period 7,056 5,046

Cash and cash equivalents at the end of the period 3,040 14,887

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

Statement of cash flows for the six month period ended 30 June 2019

F-309

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019

1. Corporate information and activities

The Musandam Power Company SAOC (the “Company”) is a closed joint stock company registered and incorporated in the Sultanate of Oman on 18 November 2014. The Company is engaged in the design, construction, ownership, financing, operation and maintenance of a dual fuel power plant (the “Plant”) with natural gas as the primary fuel and diesel oil as the alternative fuel with a capacity of 120 Mega Watt (MW) located in Wilayat Bukha in the Musandam Governorate, Sultanate of Oman (the “Project”). The registered address of the Company is Muscat, P O Box 261, Postal code 118, Sultanate of Oman. The Company is a subsidiary of Oman Oil Facilities Development Company LLC (the “Parent Company”) which is owned by Oman Gas Company SAOC (the “Intermediate Parent Company”) and ultimately owned by Oman Oil Company SAOC (the “Ultimate Parent Company”), a closely held joint stock Company incorporated in the Sultanate of Oman, whose registered address is P O Box 261, Postal Code 118, Sultanate of Oman. The Parent Company holds 69.9% of the Company’s issued share capital.

The Company commenced commercial operations on 17 June 2017. The electricity generated from the Project is sold to Oman Power and Water Procurement Company SAOC under a 15 year Power Purchase Agreement. Natural gas required for the Project is supplied by the Ministry of Oil & Gas under a 15 year gas supply agreement.

The shareholders at the Company’s Extraordinary General Meeting held on 28 May 2019 approved the conversion of the Company from a Closed Joint Stock Company (SAOC) to a Public Joint Stock Company (SAOG) by offering its shares for the public subscription.

The Company has entered into the following significant agreements:

i) An Engineering, Procurement and Construction (EPC) contract with Wartsila Muscat LLC (‘the contractor’) to carry out and complete all design, engineering, procurement and construction of the power plant and implement the Project.

ii) A Long Term Services Agreement (“LTSA”) with Wartsila Muscat LLC.

iii) A Power Purchase Agreement (“PPA’) with Oman Water and Power Procurement Company SAOC (‘OPWP’) to sell the electricity generated from the Plant.

iv) A Natural Gas Sales Agreement (“NGSA”) with Ministry of Oil & Gas (“MoG”) to supply and purchase natural gas to and for the Plant.

v) An operation and maintenance agreement with Wartsila Muscat LLC to operate and maintain the Plant.

vi) An electrical connection agreement with Rural Areas Electricity Company SAOC (“RAECO”) for the evacuation of the generated electricity from the Plant.

vii) Usufructs Agreement with Ministry of Housing for the project site, temporary areas and RAECO substation Area.

viii) A senior facility loan agreement with Bank Muscat SAOG as the lead banker to fund the costs of the Project.

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NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

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 statements

The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2019, have been adopted in these financial statements.

IFRS 16 Leases (“IFRS 16”)

The Company applied, for the first time, IFRS 16 Leases (“IFRS 16”). IFRS 16 supersedes IAS 17 Leases (“IAS 17”), IFRIC 4 Determining whether an Arrangement contains a Lease (“IFRIC 4”), SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 is effective for annual periods beginning on or after 1 January 2019.

Impact on Lessee Accounting

IFRS 16 introduces significant changes to the lessee accounting and it changes how the Company accounts for leases previously classified as operating leases under IAS 17, which were off-balance-sheet. IFRS 16 stipulates that all leases and the associated contractual rights and obligations should generally be recognize in the Company’s financial Position, unless the term is 12 months or less or the lease for low value asset. Thus, the classification required under IAS 17 into operating or finance leases is eliminated for the lessees.

For each lease, the lessee recognizes a liability for the lease obligations incurred in the future. Correspondingly, a right to use the leased asset is capitalized, which is generally equivalent to the present value of the future lease payments plus directly attributable costs and which is amortized over the useful life. Also, lessee recognises depreciation of right-of-use assets and interest on lease liabilities in the statement of profit or loss.

Applying IFRS 16 separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the statement of profit or loss.

Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts.

For short-term leases (lease term of 12 months or less) and leases of low-value assets, the Company will opt to recognise a lease expense on a straight-line basis as permitted by IFRS 16.

The Company has made use of the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to be applied to those leases entered or modified before 1 January 2019.

Details of these new requirements are described below and in note 3. The impact of the adoption of IFRS 16 on the Company’s financial statements as a lessee are described below.

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.3 New and revised IFRSs applied with material effect on the financial statements

IFRS 16 Leases (“IFRS 16”) (continued)

Impact on Lessee Accounting (continued)

The Company has opted for the modified retrospective application permitted by IFRS 16 upon adoption of the new standard. During the first time application of IFRS 16 to operating leases, the right to use the leased assets was generally measured at the amount of lease liability, using the interest rate at the time of first time application. IFRS 16 transition disclosures also requires the Company to present the reconciliation. The off-balance sheet lease obligations as of 31 December 2018 are reconciled as follows to the recognized the lease liabilities as of 1 January 2019.

RO ‘000

Operating lease commitments disclosed as of 31 December 2018 225

Effect of discounting operating lease commitment using the lessee’s incremental borrowing rate at the date of initial application of IFRS 16

(112)

Lease liability recognised as at 1 January 2019 113

Of which are:

Current lease liabilities 3

Non-current lease liabilities 110

113

The Company has elected to apply the transition approach as set out in para C5(b) of IFRS 16 whereby the cumulative effect of initially applying the standard recognised at the date of initial application in accordance with paragraphs C7-C13 of IFRS 16. The detailed methodology adopted by the Company for transition of operating leases where Company is a lessee is highlighted below:

Lease liability accounting treatment upon transition:

The lease liability measurement at the date of initial application is done in accordance with para C8 (a) which requires the Company to recognize a lease liability at the date of initial application for leases previously classified as an operating lease applying IAS 17. The Company has measured that lease liability at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate at the date of initial application.

Right of use asset accounting treatment upon transition:

The right of use assets have been measured by the Company in accordance with para C8(b)(ii) of IFRS 16 which requires the Company to recognize the right of use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of initial application.

F-312

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.3 New and revised IFRSs applied with material effect on the financial statements (continued)

IFRS 16 Leases (“IFRS 16”) (continued)

Impact on Lessee Accounting (continued)

The impact of adoption of IFRS 16 Leases on the Company financial statements is described below:

• The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located (if any), less any lease incentives received.

• The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits.

• The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. Lease terms is 25 years. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurement of the lease liability.

Practical expedient

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

• the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases, and

• the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The change in accounting policy affected the following items in the financial statements on 1 January 2019 and the Company has:

• Recognised right of use asset and lease liability initially measured at the present value of future lease payments amounting to RO 114 thousands.

• Recognised depreciation of right of use assets and interest on lease liabilities amounting to RO 3 thousands and RO 4 thousands respectively.

• Presented depreciation on right-of-use-assets and interest on lease liability as adjustment to cash flow from operating activity.

There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS) (continued)

2.3 New and revised IFRSs applied with material effect on the financial statements (continued)

IFRS 16 Leases (“IFRS 16”) (continued)

Impact on Lessee Accounting (continued)

The recognised right-of-use assets relate to the following type of asset:

30 June 2019 1 January 2019

RO’000 RO’000

Properties 110 113

Impact on Lessor Accounting

In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently. However, IFRS 16 has changed and expanded the disclosures required.

IFRIC 4 dealt with the identification of services and take-or-pay sales or purchasing contracts that do not take the legal form of a lease but convey the rights to customers/suppliers to use an asset or a group of assets in return for a payment or a series of fixed payments. Contracts meeting these criteria should be identified as either operating leases or finance leases. This interpretation was applicable to the Company’s PPA. As a practical expedient, IFRS 16 does not require the Company to reassess the contract that has already been assessed as a lease under IFRIC 4, i.e. whether or not a contract existing at transition is, or, contains lease.

The application of following interpretation and amendments has had no impact on the Company’s financial statements:

• Annual Improvements to IFRSs 2015–2017 Cycle amending IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing costs.

• IFRIC 23 Uncertainty over Income Tax Treatments

• Amendments to IFRS 9 Financial Instruments relating to prepayment features with Negative Compensation

• Amendments to IAS 28 Investments in Associates and Joint Ventures relating to long-term Interests in Associates and Joint Ventures

• Amendments to IAS 19 Employee Benefits relating to plan amendment, curtailment or settlement

Other than the above, there are no other significant IFRSs and amendments that were effective for the first time for the financial year beginning on or after 1 January 2019.

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NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (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

The Company has not yet applied the following new and revised IFRSs that have been issued but are not yet effective:

New and revised IFRSsEffective for annual periods beginning on or after

Amendments to References to the Conceptual Framework in IFRS Standards - amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32 to update those pronouncements with regard to references to and quotes from the framework or to indicate where they refer to a different version of the Conceptual Framework

1 January 2020

Amendment to IFRS 3 Business Combinations relating to definition of a business

1 January 2020

Amendments to IAS 1 and IAS 8 relating to definition of material 1 January 2020

IFRS 17 Insurance Contracts 1 January 2021

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) relating to the treatment of the sale or contribution of assets from and investor to its associate or joint venture.

Effective date deferred indefinitely. Adoption is still permitted.

The Directors anticipates that these new standards, interpretations and amendments will be adopted in the Company’s financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments may have no material impact on the financial statements of the Company in the period of initial application.

3. Summary of significant accounting policies

Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and the Commercial Companies Law of 1974 of the Sultanate of Oman, as amended.

Basis of preparation

The financial statements are prepared under the historical cost convention. The financial statements have been presented in Rial Omani (“RO”) which is also the functional currency of the Company.

A summary of significant accounting policies, which are consistent with those used in the previous period except as those set out in note 2, are set out below.

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PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any identified impairment loss.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Plant and machinery 40 years

Computer and office equipment 3 years

Furniture and fixtures 3 years

Motor vehicles 3 years

Capital spares shall be recognised in the carrying amount of the affected item of property, plant and equipment when it is put in use. The carrying amount of the replaced item is derecognised. When it is not practical to determine the carrying amount of the replaced part, the cost of the capital spares may be used as an indication of what the cost of the replaced part was at the time it was acquired.

Expenditure incurred to replace a component of an item of property, plant and equipment that is capitalised if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the statement of comprehensive income as the expense is incurred.

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the year that is required to complete and prepare the asset for its intended use. All other finance costs are charged to the statement of comprehensive income using the effective interest method.

When each major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied and the carrying amounts of the replaced components are written off to the profit or loss.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and other comprehensive income in the period the asset is derecognised.

The assets’ residual values, useful lives and methods are reviewed, and adjusted prospectively, if appropriate, at each financial year end.

F-316

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Capital work-in-progress

Capital work-in-progress is stated at cost, less impairment, if any. When commissioned, capital work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Company’s policy.

Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash flows (cash generating units).

Leases

Upon adoption of IFRS 16 – applicable from 1 January 2019

The Company as a lessee

The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-liñe basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the interest rate implicit in the lease or, if that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

F-317

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Leases (continued)

Upon adoption of IFRS 16 – applicable from 1 January 2019 (continued)

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;

• uses a build-up approach that starts with a risk-free interest rate; and

• makes adjustments specific to the lease, e.g. term, country, currency and security.

Lease payments included in the measurement of the lease liability comprise:

• fixed lease payments (including in-substance fixed payments), less any lease incentives; and

• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

The lease liability is presented as a line item in the statement of financial position.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease li ability is remeasured by discounting the revised lease payments using a revised discount rate.

The Company did not make any such adjustments during the periods presented.

F-318

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Leases (continued)

Upon adoption of IFRS 16 – applicable from 1 January 2019 (continued)

Right-of-use asset

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cast of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented as a separate note line item in the property, plant and equipment. The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any Identified impairment loss as described in the ‘Property, plant and equipment’ policy.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line ‘Operating expenses” in the statement of profit or loss.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement- The Company has not used this practical expedient.

The Company as lessor

The Company has entered into a Power Purchase Agreement (“PPA”) with Oman Power and Water Procurement Company SAOC (“OPWP”) on take or pay arrangement for the sale Electricity Generated by the Company to OPWP. PPA do not take the legal form of a lease but convey the rights to OPWP to use the Company’s power generation plant in return for a payment or a series of fixed payments. Contracts meeting these criteria are identified as either operating leases or finance leases.

Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

When a contract includes lease and non-lease components, the Company applies IFRS 15 to allocate the consideration under the contract to each component.

F-319

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Leases (continued)

Leases under IAS 17, applicable before 1 January 2019

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership. All other leases are classified as operating leases.

Amounts receivable under operating leases, as lessor, are recognised as lease income on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. In accordance with IFRS, revenue stemming from (substantial) services in connection with the leased asset is not considered as lease revenue and is accounted for separately.

IFRIC 4 deals with the identification of services and take-or-pay sales or purchasing contracts that do not take the legal form of a lease but convey the rights to customers/suppliers to use an asset or a group of assets in return for a payment or a series of fixed payments. Contracts meeting these criteria should be identified as either operating leases or finance leases. This interpretation is applicable to the Company’s PPA.

Financial instruments

Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are measured subsequently at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

F-320

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Company’s financial assets include trade and other receivable and cash at bank. These financial assets qualify for and are classified as debt instruments measured at amortised cost.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). The Company does not have any FVTOCI and FVTPL financial assets.

Amortised cost and effective interest rate method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

F-321

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

For purchased or originated credit-impaired financial assets, the Company recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

Interest income is recognised in profit or loss and is included in the “finance income - interest income” line item.

Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI and trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

(i) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Company’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations.

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NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

(i) Significant increase in credit risk (continued)

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:• an actual or expected significant deterioration in the financial instrument’s external (if available)

or internal credit rating;• significant deterioration in external market indicators of credit risk for a particular financial

instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;• significant increases in credit risk on other financial instruments of the same debtor;• an actual or expected significant adverse change in the regulatory, economic, or technological

environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise.

Despite the aforegoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:(1) The financial instrument has a low risk of default, (2) The borrower has a strong capacity to meet its contractual cash flow obligations in the near

term, and (3) Adverse changes in economic and business conditions in the longer term may, but will not

necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Company considers a financial asset to have low credit risk when the asset has external credit rating of ‘investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

For financial guarantee contracts, the date that the Company becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contracts, the Company considers the changes in the risk that the specified debtor will default on the contract.

The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

F-323

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

(ii) Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the counterparty; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collateral held by the Company).

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;

(b) a breach of contract, such as a default or past due event (see (ii) above);

(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

(e) the disappearance of an active market for that financial asset because of financial difficulties.

(iii) Write-off

The Company writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Company’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

F-324

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

(iv) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract, as the Company is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Company expects to receive from the holder, the debtor or any other party.

If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Company recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

Derecognition of financial assets

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

F-325

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial instruments (continued)

Derecognition of financial assets (continued)

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity instrument which the Company has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.

However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Company, are measured in accordance with the specific accounting policies set out below.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL. The Company does not have financial liabilities at FVTPL.

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.

F-326

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Financial liabilities (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the ‘other gains and losses’ line item in profit or loss (note 11) for financial liabilities that are not part of a designated hedging relationship. For those which are designated as a hedging instrument for a hedge of foreign currency risk foreign exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

When the Company exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification should be recognised in profit or loss as the modification gain or loss within other gains and losses.

F-327

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if:

• there is a currently enforceable legal right to offset the recognised amounts; and

• there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Trade and other receivables

Trade and other receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Trade and other payables

Trade and other payables are initially measured at their fair value and subsequently measured at amortised cost, using the effective interest method.

Provisions

Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, 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 as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursements.

End of service benefits

End of service benefits for Omani employees are contributed in accordance with the terms of the Social Security Law of 1991.

Provision for end of service indemnity for non-Omani employees is made in accordance with the Oman Labour Law as amended and is based on current remuneration and cumulative years of service at the reporting date.

F-328

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Income tax

Taxation is provided for in accordance with Omani fiscal regulations.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.

Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised.

The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

Income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank. Cash and cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash, which are subject to an insignificant risk of changes in value and have maturity of three months or less at the date of acquisition.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.

F-329

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Fair values

The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Interest bearing loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Deferred financing costs

The cost of obtaining equity bridge loan and senior facility loan is deferred and amortised over the term of the respective loans using the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of equity bridge loan and senior facility loan.

Revenue

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. Revenue comprises tariffs for power capacity, electrical energy and fuel charges. Tariffs are calculated in accordance with the PPA.

Capacity revenue

The PPA with OPWP is considered as a lease within the context of IFRS 16 (2018: IFRIC 4) and has been classified as an operating lease under IFRS 16 (2018: IAS 17). Under the PPA, the Company is entitled to the Capacity charges for each hour during which the plant is available for power generation. Power capacity investment charge is treated as lease revenue under IFRS 16 and is recognised on a straight line basis over the lease term. Fixed O&M charge is recognised based on the capacity made available in accordance with contractual terms stipulated in PPA.

F-330

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Other revenue from contracts with customers

Revenue is measured based on the terms specified in the contract with a customer. The Company recognizes electrical energy and fuel charges revenue when it transfers the control of a product or service to a customer i.e. when electricity is delivered and the customer has accepted the deliveries and the control has been transferred to the customer. Energy charge and fuel charge is determined based on the fuel and variable cost of power.

No revenue is recognised if it is not probable that the Company will collect the consideration to which the Company will be entitled in exchange for the goods or services that will be transferred to customers. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customers’ ability and intention to pay that amount of consideration when it is due.

The Company has a long term agreement with OPWP which determines performance obligation, transaction price and allocates the transaction price to each of the separate performance obligations. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.

The Company does not adjust any of the transaction prices for time value of money as the period between the transfer of the promised goods or services to the customer and payment by the customer does not exceed one year and the sales are made with agreed credit terms which is in line with the industry practice.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing each product to its present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. As of reporting date, inventories consist of spares, diesel and lube oil.

Asset retirement obligation

The provision for asset retirement obligation is recognised when there is a present obligation as a result of assets constructed on land under usufruct contracts with the Ministry of Housing, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of provision can be measured reliably. The estimated future obligations include the costs of removing the facilities and restoring the affected areas. A corresponding asset is recognised as part of plant and machinery in property, plant and equipment and depreciated accordingly.

The provision for asset retirement obligation is a best estimate of the present value of expected costs required to settle the obligation, at the reporting date based on the current requirements of the Usufruct agreement, using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the asset retirement obligation. The unwinding of the discount is expensed as incurred and recognised in the statement of profit or loss and other comprehensive income as a finance cost.

F-331

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

3. Summary of significant accounting policies (continued)

Asset retirement obligation (continued)

The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are dealt with prospectively and reflected as an adjustment to the provision and corresponding decommissioning asset recorded as property, plant and equipment. If there is an indication that the new carrying amount of the asset is not fully recoverable, the asset is tested for impairment and an impairment loss is recognised where necessary.

Directors’ remuneration

The Board of Directors’ remuneration is accrued within the limits and the requirements of the Commercial Companies Law of the Sultanate of Oman.

Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders.

Earnings and net assets per share

The Company presents earnings per share (EPS) and net assets per share for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Net assets per share is calculated by dividing the net assets attributable to ordinary shareholders of the Company by the number of ordinary shares outstanding during the year. Net assets for the purpose is defined as total equity.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Project Director who manages the Company on a day-to-day basis, as per the directives given by the Board of Directors that makes strategic decisions.

F-332

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

4. Critical accounting judgments and key sources of estimation uncertainty

The presentation of financial statements, in conformity with IFRS, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, incomes and expenditures. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements

Management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Lease classification

The Company has entered into the Power Purchase Agreement (“PPA”) with Oman Power and Water Procurement Company SAOC (“OPWP”) to generate electricity and make available the power capacity from its Plant.

Management believes that IFRIC 12 is not applicable to the arrangement as the residual interest is borne by the Company and not OPWP. The estimated useful life of the power plant of 40 years takes into account the Company’s right to extend the land lease under a Usufruct Agreement for an additional term of 25 years. Furthermore, the residual value of the assets will have substantial value at the conclusion of the PPA and the Company will be able to continue to generate revenue through supply of power taking into account the government’s future plans to deregulate the power sector in Oman.

Management considers the requirements of IFRS 16 Leases (2018: IFRIC 4, “Determining Whether an Arrangement Contains a Lease”), which sets out guidelines to determine when an arrangement might contain a lease. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Once a determination is reached that an arrangement contains a lease, the lease arrangement is classified as either financing or operating according to the principles in IFRS 16 Leases (2018: IAS 17, Leases). A lease that conveys the majority of the risks and rewards of operation is a finance lease. A lease other than a finance lease is an operating lease.

F-333

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

4. Critical accounting judgments and key sources of estimation uncertainty (continued)

Lease classification

Based on management’s evaluation, the PPA with OPWP is considered as a lease within the context of IFRIC 4 and has been classified as an operating lease under IFRS 16 Leases (2018: IAS 17 Leases) since significant risks and rewards associated with the ownership of the plant lies with the Company and not with OPWP.

The primary basis for this conclusion is that the PPA is for a term of 15 years while the economic life of the power plant is estimated to be 40 years. The present value of minimum lease payments under the PPA does not substantially recover the fair value of the plant at the inception of the lease.

Fuel incremental costs

The Company and Ministry of Oil and Gas (“MoG”) have entered into a Natural Gas Sales Agreement (“NGSA”), which includes a clause for reimbursement of the incremental fuel oil costs which represents amount by which the cost of Fuel Oil is more than the cost of Natural Gas. Due to the shortage of the gas supply the Company has incurred additional fuel oil costs to maintain the operations of the Plant (since the commercial operation date). The Company had received correspondence from MoG, wherein it has established a mechanism whereby it would be reimbursing the Company for the additional fuel oil costs incurred on account of shortage of the gas supply. The Company has recognised reimbursement of incremental fuel oil cost in view of the correspondence with MoG and OPWP in respect of this matter and the confirmation from OPWP that the parameters used by the Company in the calculation of the fuel oil incremental does not materially differ from their basis.

Subsequent to the period end, OPWP has sent the aforesaid confirmation to MoG and the Company believes that the amount receivable would be settled in the 2nd half of the current financial years.

Key sources of estimation uncertainty

The following are the significant estimates used in the preparation of the financial statements:

Useful lives of property, plant and equipment

Depreciation is charged so as to write-off the cost of assets over their estimated useful lives. The calculation of useful lives is based on management’s assessment of various factors such as the operating life, the maintenance programs, and normal wear and tear using its best estimates.

Asset retirement obligation

Upon expiry of their respective Usufruct Agreement (in relation to land lease) and Power Purchase agreements, the Company will have an obligation to remove the facilities and restore the affected area. The estimated cost, discount rate and risk rate used in the provision for decommissioning costs calculation is based on management’s best estimates.

F-334

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

5. Property, plant and equipment

Plant and machinery

Buildings and civil

works

Furniture and

fixtures

Computer and office

equipment

Motor vehicles

Right of use assets

Capital work-in-

progress

Total

Cost RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

1 January 2018 64,302 20,716 30 11 44 - - 85,103

Transfers / changes* (5,999) - - - - - - (5,999)

30 June 2018 58,303 20,716 30 11 44 - - 79,104

1 January 2019 58,303 20,716 30 11 44 - 7 79,111

Impact of application of IFRS 16 (note 2) - - - - - 113 - 113

Additions - - - - - - 43 43

30 June 2019 58,303 20,716 30 11 44 113 50 79,267

Depreciation

1 January 2018 1,210 371 6 6 3 - - 1,596

Charge for the period 578 248 5 1 7 - - 839

30 June 2018 1,788 619 11 7 10 - - 2,435

1 January 2019 2,398 964 16 9 18 - - 3,405

Charge for the period 752 236 5 1 7 3 - 1,004

30 June 2019 3,150 1,200 21 10 25 3 - 4,409

Carrying value

30 June 2019 55,153 19,516 9 1 19 110 50 74,858

31 December 2018 55,905 19,752 14 2 26 - 7 75,706

* This represents reimbursement of certain costs from OPWP, changes on account of reassessment of the asset retirement obligation and transfer to inventory from plant and machinery.

F-335

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

5. Property, plant and equipment (continued)

The Company achieved the commercial operation start date on 17 June 2017.

The Company’s power plant is constructed on land leased from Ministry of Housing. In this respect, the Company has recognised right of use asset in the current period upon adoption of IFRS 16. The future minimum lease commitments in relation to prior period are disclosed in note 21.

The depreciation charge has been allocated in the statement of profit or loss and other comprehensive income as follows:

30 June 2019

30 June 2018

RO 000 RO 000

Operating expenses (note 16) 992 830

General and administrative expenses (note 17) 12 9

1,004 839

6. Inventories

Stores and spares 1,381 1,555

Fuel and lube inventory 1,658 1,831

3,039 3,386

7. Trade and other receivables

Trade receivables (note 19) 8,068 2,168

Prepaid expenses 18 111

8,086 2,279

Other receivables 722 850

Non-current portion (373) (466)

Allowance for impairment of other receivables (115) (115)

Other receivables - net 234 269

8,320 2,548

F-336

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

7. Trade and other receivables (continued)

The Company has one customer (OPWP) which accounts for the trade receivables balance as at 30 June 2019. The ageing of trade receivables at the reporting date is disclosed in note 22. The average credit period on sale of electricity is 30 days. No interest is charged on outstanding trade receivables. Further, the Company has billed MoG the incremental fuel oil costs due to the shortage of the gas supply (as disclosed in note 4).

Other receivables also include reimbursement of RO 0.115 million (31 December 2018: RO 0.115 million) claimed from OPWP in relation to fuel used during the testing stage. The Company has fully provided this amount as OPWP has disputed this balance. Movement in the allowance for impairment of other receivables is as follows:

30 June 2019

31 December 2018

RO ‘000 RO ‘000

At 1 January 115 -

Charge for the period / year (note 17) - 115

At 30 June / 31 December 115 115

In the prior year, the EPC contractor and the Company entered into the settlement of deed to resolve matters relating to the LDs and claims levied by the Company and the claims levied by the EPC Contractor. As per the settlement deed, the EPC contractor accepted liquidated damages of RO 3.6 million and also agreed to settle an additional amount of RO 1.5 million in respect of the Company’s claims relating to losses and other expenditure incurred. As per the settlement deed, EPC contractor settled an amount of RO 4.2 million in the prior year out of which RO 0.807 million will be settled by the EPC contractor over the period of three years and has been recognised as follows:

30 June 2019

31 December 2018

RO ‘000 RO ‘000

Current portion 234 254

Non-current portion 373 466

607 720

8. Cash and bank balances

Cash in hand 2 2

Cash at bank 3,038 7,054

3,040 7,056

Unrestricted cash and cash equivalent amounted to RO 3.040 million (2018: RO 7.056 million).

F-337

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

9. Share capital

30 June 201931 December

2018

RO ‘000 RO ‘000

Authorised share capital

200,000,000 shares of RO 0.1 each (31 December 2018: 20,000,000 shares of RO 1 each) 20,000 20,000

Issued and paid up share capital

70,390,000 shares of RO 0.1 each (31 December 2018: 7,039,000 shares of RO 1 each) 7,039 7,039

In the year 2017, the shareholders of the Company authorised the conversion of RO 6.54 million payable by the Company to the shareholders, into share capital of the Company. The amount was registered as share capital on 29 November 2017. In the Extra Ordinary General Meeting on 28 May 2019, the value of the Company shares was split between Baisas 100 each and to convert the Company to become a Public Joint Stock company (SAOG).

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

10. Statutory reserve

As per the Commercial Companies Law of the Sultanate of Oman, 10% of the profit for the period is required to be transferred to a statutory reserve until the reserve is equal to one third of the issued share capital. Accordingly, during the period 30 June 2019 RO 69 thousands (30 June 2018: RO 122 thousands) of Company’s profit was transferred to the legal reserve. The reserve is not available for distribution.

11. Senior facility loan

30 June 2019 31 December 2018

RO ‘000 RO ‘000

At 1 January 70,763 63,985

Add: Proceeds from drawdowns during the period / year - 10,253

Less: Repayments made during the period / year (1,861) (3,475)

At 30 June / 31 December (gross) 68,902 70,763

Less: Deferred financing charges (1,090) (1,090)

Amortisation of deferred financing charges 265 229

At 30 June / 31 December (net) 68,077 69,902

Less: current portion (3,492) (3,407)

Non-current portion 64,585 66,495

F-338

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

11. Senior facility loan (continued)

The senior facility loan is denominated in Rials Omani and carries an interest rate of 4.6% (31 December 2018: 4.6%) per annum. The loan is to be repaid in half yearly instalments commencing on 30 June 2017, with the last instalment scheduled on 17 December 2031. Due to the delay in commencement of commercial operations, the first instalment was deferred to 29 December 2017 and repaid on 29 December 2017. The instalment due on 30 June 2018 was repaid on 27 June 2018. The instalment due on 30 June 2019 and 31 December 2018 was repaid on 30 June 2019 and 31 December 2018 respectively. The loan is subject to applicable financial covenants and DSRA requirements. The loan is secured by:

• Legal mortgage over the Company’s immovable assets.

• Pledge over the owner’s shares.

• Pledge over the project accounts.

• Assignment / charge over all of the Company’s rights, titles and interest in and to the project documents, the insurances and reinsurance’s, the consents and any other material agreements to which the Company is a party and other material property, asset and revenue of the Company.

A reconciliation between opening and closing balances in the statement of financial position for liabilities that result in financing cash flows is presented below:

Senior facility loan At 1 January

Proceeds during the

period

Repayments during the

period

Non-cash changes

At 30 June

RO’000 RO’000 RO’000 RO’000 RO’000

30 June 2019 69,902 - (1,861) 36 68,077

30 June 2018 63,062 10,253 (2,164) 34 71,185

12. Trade and other payables

30 June 2019

31 December 2018

RO ‘000 RO ‘000

Trade payables 4,962 2,613

Accrued expenses and provisions 671 477

5,633 3,090

F-339

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

13. Provision for asset retirement obligation

Under the Usufruct Agreement with the Ministry of Housing, the Company has an obligation to remove the plant and restore the land to its original condition. The provision for asset retirement obligation has been calculated using an expected present value technique. This technique reflects assumptions such as costs, plant useful life, inflation and profit margin that third parties would consider to assume the settlement of the obligation. In estimating the costs an inflation rate is applied until the retirement obligations expire in order to determine the value of the future obligation and a discount rate is applied to determine the present value of the obligation. The costs to be incurred in the future may differ from the estimates in terms of their nature and timing of payment. The provisions may be subsequently adjusted in line with changes in the above-mentioned inputs.

During 2018, the Company appointed an independent external firm with relevant expertise to reassess the estimated asset retirement obligation provision. Based on the expert’s report, the provision was reduced by RO 3.631 million and a corresponding adjustment was made in the de-commissioning asset as at 31 December 2018. The movement in the provision for asset retirement obligation is as follows:

30 June 2019

31 December 2018

RO ‘000 RO ‘000

At 1 January 152 3,979

Change during the period / year on reassessment - (3,838)

Unwinding of discount 3 11

At 30 June / 31 December 155 152

14. Lease liability

Gross lease liability related to right-of-use assets 119 -

Future finance charges on finance leases (6) -

Present value of lease liabilities 113 -

The maturity of finance lease liabilities is as follows

Not later than 1 year 3 -

Later than 1 year 110 -

113 -

Interest expense on lease liability (included in finance cost) was RO 4 thousand (30 June 2018: Nil). For the disclosure related to the liquidity please refer to note 22.

F-340

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

15. Revenue

30 June 2019 30 June 2018

RO ‘000 RO ‘000

RevenueCapacity charges 5,980 5,398

Revenue from the contracts with the customersEnergy charges 994 758

Other charges 1,748 1,478

2,742 2,236

8,722 7,634

16. Operating costs

Fuel cost 2,371 1,277

Operating and maintenance expenses 1,590 1,485

Depreciation (note 5) 992 830

Connection fees 125 145

Insurance costs 88 102

Others 242 96

5,408 3,935

17. General and administrative expenses

Professional charges 104 183

Staff costs 218 114

Provision against other receivables (note 7) - 115

Office expenses 154 71

Others 14 14

Depreciation (note 5) 12 9

502 506

18. Finance costs - net Finance costs primarily includes the interest on senior facility loan amounting to RO 1.613 million

(June 2018: RO 1.482 million).

19. Related parties transaction Related parties comprise the shareholders, directors, key management personnel and business

entities in which they have the ability to control or exercise significant influence in financial and operating decisions. Terms of these transactions are approved by the Company’s management. Government of Sultanate of Oman (the Government), indirectly owns 70% of the Company shares. The Company has applied the exemptions in IAS 24 : Related Parties - related to transaction with the Government and other entities controlled, jointly controlled or significantly influenced by the Government. In this respect, the Company has disclosed certain information, to meet the disclosure requirements of IAS 24, in this note.

F-341

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

19. Related parties transaction (continued) Balances with related parties included in the statement of financial position are as follows:

Loan from shareholders

Loan from shareholders includes amounts payable to Oman Oil Facilities Development Company LLC (69.9%) and its subsidiary, Oman Energy Trading Company Limited (0.1%) amounting to RO 2.139 million (31 December 2018: RO 2.147 million) and LG International Corp. amounting to RO 0.917 million (31 December 2018: RO 0.920 million) as at the reporting date.

In the year 2016, the Company received advances from the shareholders amounting to RO 13.08 million, which was utilised to repay the equity bridge loan obtained from commercial bank. In year 2017, the shareholders have resolved to convert one half of these advances into share capital of the Company and the remaining half has been classified as unsecured loan from shareholders. The loan carries an interest rate of 4.6% (31 December 2018: 4.6%) per annum. In the current period, the shareholder loan of RO 11 thousands (2018: RO 3.483 million) has been repaid. The loan from shareholders are payable on demand and have been presently classified as a current liability.

Amounts due to related parties 30 June 2019 31 December 2018

(entities under common control) RO ‘000 RO ‘000

Oman Oil Marketing Company SAOG 937 -

Oman Gas Company SAOC - 40

Oman Oil Facility Development Co 35 -

Oman Oil Company SAOC 2 18

LG International Corp. 42 7

1,016 65

The amounts outstanding are unsecured and are settled in cash during the normal course of Company’s business.

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Due from government and other state controlled entities (note 7) 8,068 2,168

Due to government and other state controlled entities 4,694 2,060

Amounts due from / (due to) government and other state controlled entities mainly include balances receivable / payable from Oman Power and Water Procurement Company SAOC and Ministry of oil and Gas in relation the revenue and incremental cost receivables and gas payables.

F-342

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

19. Related parties transaction (continued)

Transactions

Transactions with related parties included in the financial statements are as follows:

30 June 2019 30 June 2018

Transactions with entities under common control RO ‘000 RO ‘000

Purchase of fuel from Oman Oil Marketing Company SAOG 1,113 2,264

Support services provided by Oman Gas Company SAOC 147 326

Interest on loan from shareholders 70 287

Transactions with government and state common entities

Purchase of fuel / gas from Ministry of Oil and Gas (net of fuel incremental costs) 1,608 3,384

Revenue from Oman Power and Water Procurement Company SAOC 8,722 7,634

Connection charges to Rural Areas Electricity Company SAOC 125 145

Directors’ remuneration and sitting fees 64 7

Key management compensation

Salaries and other benefits 52 42

20. Taxation The tax rate applicable to the Company is 15% (2018: 15%). For the purpose of determining the

taxable result for the period, the accounting profit has been adjusted for tax purposes. Adjustments for tax purposes include items relating to both income and expense. The adjustments are based on the current understanding of the existing tax laws, regulations and practices.

No provision for the current tax been made in these financial statements in view of cumulative taxable losses incurred by the Company as at 30 June 2019. No deferred tax asset has been recognized on the cumulative tax losses up to 30 June 2019 in the amount of RO 6.1 million (31 December 2018 - RO 4.5 million) as the Company does not expect to have sufficient taxable profits in the future years against which such tax losses will be adjusted.

The deferred tax on all temporary differences have been calculated and dealt with in the statement of profit or loss and other comprehensive income.

a) The taxation charge for the period is comprised of:

30 June 2019 30 June 2018

RO ‘000 RO ‘000

Statement of profit or loss and other comprehensive income:

Deferred tax - current period 419 518

Deferred tax – prior year (31) -

388 518

F-343

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

20. Taxation (continued)

b) Tax reconciliation

The following is a reconciliation of income taxes calculated on accounting profits at the applicable tax rate with the income tax expense for the period. The reconciliation of the accounting profit with the taxation charge in the financial statements is as follows:

30 June 2019 30 June 2018

RO ‘000 RO ‘000

Profit before tax 1,073 1,733

Taxation @ 15% [(2018: 15%)] 161 260

Add: Tax effect of:

Non-deductible expenses 11 -

Deferred tax not recognized on tax losses 247 277

Deferred tax – prior period (31) -

Others - (19)

Tax expense 388 518

c) Deferred tax liability

As at 1 January

2019

Recognised during the

period

As at30 June 2019

RO ‘000 RO ‘000 RO ‘000

Deferred tax liability

Effect of accelerated tax depreciation (1,602) (388) (1,990)

As at 1 January

2018

Recognised during the

year

As at31 December

2018

RO ‘000 RO ‘000 RO ‘000

Deferred tax liability

Effect of accelerated tax depreciation (588) (1,014) (1,602)

d) Tax status

As of 30 June 2019, none of the Company’s tax assessments have been completed by the Omani taxation authorities. Management of the Company believe that additional taxes, if any in respect of open tax years, would not be significant to the Company’s financial position as at 30 June 2019.

F-344

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

21. Commitments Operating leases

The Company has entered into a lease agreement on 9 February 2015 with the Government of the Sultanate of Oman, represented by the Ministry of Housing in respect of the land used for project site and temporary areas. The lease agreement for land used for project site is for an initial term of 25 years, renewable for further periods.

At 30 June 2019, the Company had lease commitments as follows:

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Due within one year - 10

Due after one year but within five years - 41

Due after five years - 174

- 225

During the period, the operating lease has been recognized as a lease liability under IFRS 16 (note 14).

Operation and maintenance commitment As per the O&M Agreement, Wartsila Muscat LLC will operate and maintain the Company’s plant

at Musandam until 16 June 2022. Under the O&M agreement, the Company has to pay the fixed operating fee.

All fees are subject to 3% indexation. The minimum future payments under the O&M agreement (excluding indexation) are as follow:

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Due within one year 1,149 1,083

Due after one year but within five years 2,298 3,249

3,447 4,332

As per the LTSA Agreement, Wartsila Muscat LLC will operate and maintain the Company’s plant at Musandam until 16 June 2032. Under the LTSA agreement, the Company has to pay the fixed operating fee.

All fees are subject to 3% indexation. The minimum future payments under the O&M agreement (excluding indexation) are as follow:

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Due within one year 438 431

Due after one year but within five years 1,753 1,723

Due after five years 3,505 3,876

5,696 6,030

F-345

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management The Company’s activities expose it to a variety of financial risks: market risk (including price risk,

foreign currency risk and interest rate risk), liquidity risk and credit risk. However, the Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has entrusted the Management with the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them.

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates

and prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Price risk The permitted tariff (prices) for the generation of electricity are determined in accordance with the

Power Purchase Agreement with OPWP. Hence, the Company is not subject to significant price risk.

Foreign currency risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities

are denominated in a currency that is not the entity’s functional currency. The Company is exposed to foreign 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 other currencies linked to the US Dollar management believes that exchange rate fluctuations would have an insignificant impact on the Company’s pre-tax profit.

Interest rate risk The Company is not exposed to interest rate risk on its loan from shareholders and senior facility

loan as these carry fixed interest rate. At the reporting date the interest rate risk profile of the Company’s interest bearing financial instruments were:

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Senior facility loan 68,077 69,902

Loan from shareholders 3,056 3,067

71,133 72,969

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss.

F-346

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management (continued)

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s receivables from customers and cash balances held with banks.

As at reporting date, the Company’s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, which will cause a financial loss to the Company due to failure to discharge an obligation by the counterparties arises from the carrying amount of the respective recognised financial assets as stated in the statement of financial position.

The Company has significant concentration of credit risk with the Government of the Sultanate of Oman represented by the MoG and OPWP. Under the terms of the PPA and NGSA, the Company’s sales and fuel incremental costs are billed wholly to OPWP (indirectly owned wholly by the Government) and MoG (as disclosed in note 4) respectively. Therefore, the Company’s credit risk on receivables from OPWP and MoG is limited.

In order to minimise credit risk, the management develop and maintain the Company’s credit risk gradings to categorise exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the Company uses other publicly available financial information and the Company’s own trading records to rate its major customers and other debtors. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

The Company’s current credit risk grading framework comprises the following categories:

Category Description Basis for recognising expected credit losses

Performing The counterparty has a low risk of default and does not have any past-due amounts

12-month ECL

Doubtful Amount is >30 days past due or there has been a significant increase in credit risk since initial recognition

Lifetime ECL – not credit-impaired

In default Amount is >90 days past due or there is evidence indicating the asset is credit-impaired

Lifetime ECL – credit-impaired

Write-off There is evidence indicating that the debtor is in severe financial difficulty and the Company has no realistic prospect of recovery

Amount is written off

The tables below detail the credit quality of the Company’s financial assets and contract assets, as well as the Company’s maximum exposure to credit risk by credit risk rating grades:

30 June 2019 External credit rating

Internal credit rating

12-month or ifetime

ECL

Gross carrying amount

Loss allowance

Net carrying amount

Trade and other receivables Ba1 - Lifetime 8,068 - 8,068Cash at bank Ba1 - 12 month 3,038 - 3,038Other receivables - - 12 month 722 (115) 607

11,828 (115) 11,713

F-347

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management (continued) Credit risk (continued)

31 December 2018 External credit rating

Internal credit rating

12-month or

lifetime ECL

Gross carrying amount

Loss allowance

Net carrying amount

Trade receivables Baa3 - Lifetime 2,168 - 2,168

Cash at bank A1 - 12 month 7,054 - 7,054

Other receivables - - 12 month 850 (115) 735

10,072 (115) 9,957

As at the reporting date, the status of past due balances of financial assets is as follows:

Past due30 June 2019 Carrying

amountNot due Upto 90

daysUpto 180

daysOver 365

daysTotal

RO RO RO RO RO RO

Gross carrying amount:30 June 2019Trade and other receivables

8,068 5,661 333 1,259 815 8,068

Cash at bank 3,038 3,038 - - - 3,038Other receivables 722 607 - - 115 722

11,828 9,306 333 1,259 930 11,82831 December 2018

Trade receivables 2,168 1,272 78 818 - 2,168

Cash at bank 7,054 7,054 - - - 7,054

Other receivables 850 735 - - 115 850

10,072 9,061 78 818 115 10,072

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECL using the simplified approach. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The Company has not accounted for ECL against OPWP and MoG because these are government and/or government owned entities and taking into account the historical default experience and the current credit ratings of the Government, the management of the Company have assessed that there is no significant impairment loss. In relation to receivable from MoG further details are disclose in note 4.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have been written off are subject to enforcement activities.

F-348

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management (continued)

Credit risk (continued)

Bank balances

Balances with bank are assessed to have low credit risk of default since these banks are highly regulated by the central banks of the respective countries. Accordingly, the management of the Company estimates the loss allowance on balances with bank at the end of the reporting period at an amount equal to 12 month ECL. None of the balances with bank at the end of the reporting period are past due and taking into account the historical default experience and the current credit ratings of the bank, the management of the Company have assessed that there is no impairment, and hence have not recorded any loss allowances on these balances.

The Company limits its credit risk with regard to bank balance deposits by only dealing with reputable bank and financial institution with strong credit ratings. The Company’s bank accounts are placed with reputed financial institutions having credit rating of Ba1 (P-3) as per the recently ratings issued by Moody’s Investors Service.

Liquidity risk

The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Further, the Company maintains sufficient bank balances. The table below summarises the maturities of the Company’s undiscounted financial liabilities at the reporting date:

Less than 3 month

3 to 12 month

1 to 5years

more than 5 years

Total

At 30 June 2019 RO ‘000 RO ‘000 RO ‘000 RO ‘000 RO ‘000

Trade and other payables - 5,633 - - 5,633

Senior facility loan - 6,541 24,669 63,754 94,964

Loan from shareholders - 3,056 - - 3,056

Lease liabilities - 10 51 154 215

Amounts due to related parties - 1,016 - - 1,016

- 16,256 24,720 63,908 104,884

At 31 December 2018

Trade and other payables 1,321 1,769 - - 3,090

Senior facility loan - 6,684 23,886 77,327 107,897

Loan from shareholders - 3,067 - - 3,067

Amounts due to related parties 65 - - - 65

1,386 11,520 23,886 77,327 114,119

F-349

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management (continued)

Categories of financial instruments 30 June 2019 31 December 2018

RO ‘000 RO ‘000

Financial assets (at amortised cost)

Cash and bank balances 3,040 7,056

Trade and other receivables 8,675 2,903

11,715 9,959

Financial liabilities (at amortised cost)

Senior facility loan 68,077 69,902

Amount due to related parties 1,016 65

Loan from shareholders 3,056 3,067

Lease liability 113 -

Trade and other payables 5,633 3,090

77,895 76,124

Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to provide an adequate return to shareholders.

The Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. The capital structure of the Company comprises share capital, reserves and retained earnings. Debt comprise of senior loan facility, loan from shareholder and lease liability. The Company is not subject to external imposed capital requirements except those under the Commercial Companies Law of 1974, as amended.

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. During the year there is no change in the capital management policy of the Company.

Gearing ratio

The gearing ratio at the end of the reporting period was as follows:

30 June 2019 31 December 2018

RO ’000 RO ’000

Debt 71,246 72,969

Cash and bank balances (3,040) (7,056)

Net debt 68,206 65,913

Equity 9,584 11,278

Net debt to equity ratio 711.66% 584.44%

F-350

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

22. Financial risk management (continued)

Fair value of financial instruments

Financial instruments comprise financial assets and financial liabilities.

Financial assets consist of cash in hand, cash at bank and trade and other receivables. Financial liabilities consist of trade and other payable, loan from shareholders, senior facility loan and amounts due to related parties.

The fair values of financial instruments are not materially different from their carrying values.

23. Earnings per share: basic and diluted

30 June 2019 30 June 2018

Profit attributable to ordinary shareholders of the Company for basic and diluted earnings per share (RO ‘000) 685 1,215

Weighted average number of shares (in thousands) (note 24.1) 70,390 70,390

Earnings per share (RO) (note 24.1) 0.010 0.017

There is no difference between basic and diluted earnings per share because the Company has not issued any instruments which would have an impact on earnings per share when exercised.

24. Net assets per share

Net assets per share is calculated by dividing the equity attributable to the shareholders of the Company at the reporting date by the number of shares outstanding as follows:

30 June 2019 31 December 2018

Net assets (RO in ‘000) 9,584 11,278

Number of shares outstanding at period / year end (in thousands) (note 24.1) 70,390 70,390

Net assets per share (RO) (note 24.1) 0.136 0.160

24.1 As disclosed in note 9, the Company has changed the number of ordinary shares denomination from RO 1 per share to RO 0.100 or 100 baisa per share. As a result, the number of ordinary shares issued have been increased from 7,039,000 to 70,390,000 shares in the current period. Accordingly, earnings per share for the comparative period and net assets per share as of prior year end have been restated.

25. Non-cash financing and investing activities

The right of use asset and related lease liabilities recognised on the adoption of IFRS 16 in the current period were non-cash financing and investing activities and therefore not presented in the statement of cash flows.

F-351

PROSPECTUS

NOTES TO THE FINANCIAL STATEMENTSfor the period ended 30 June 2019 (continued)

26. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic decisions maker. The Company’s operating activities are disclosed in note 1 to the financial statements. The strategic business unit offers similar products and services and is managed as one segment. For the strategic business unit, the Project Director reviews internal management reports on a monthly basis. Performance is measured based on the profit before income tax, as included in the internal management reports. The Project Director considers the business of the Company as one operating segment and monitors accordingly. The requirements of IFRS 8 : Operating Segments - paragraphs 31 to 34 relating to entity wide disclosures have been covered under statements of financial position, profit and loss and other comprehensive income and also in notes 1 to 4 to these financial statements.

27. Operating lease arrangement where the Company acts as a lessor

As disclosed in note 1 of these financial statements, the Company has entered into a PPA with OPWP for a substantial element of the production of power with 100% ‘take-or-pay’ arrangement. As disclosed in note 4, management has determined that the PPA with OPWP is covered under IFRS 16 Leases (2018: International Financial Reporting Interpretation Committee IFRIC 4) and such arrangement in substance represents an operating lease under IFRS 16 Leases (2018: IAS-17 Leases). The lease commenced on 17 June 2017. The following is the total of future minimum lease receipts expected to be received under the PPA:

30 June 2019 31 December 2018

RO ‘000 RO ‘000

Due within one year 12,068 12,068

Due after one year but within five years 50,056 50,056

Due after five years 110,968 120,968

173,092 183,092

28. Dividend

On 24 March 2019, the Board of Directors proposed a dividend of RO 3.351 million, RO 0.476 per share (46.6% of issued share capital) out of which a dividend of RO 2.379 million has been paid to the shareholders of the Company on 9 April 2019 and the remaining amount of RO 0.971 has been deferred for future payment.

The above arrangement was approved by the shareholders in an Annual General Meeting held on 24 March 2019.

29. Approval of financial statements

The financial statements were approved by the Board and authorized for issue on 29 July 2019.

30 June 2019

352

Chapter XXII

Undertakings

(1) Musandam Power Company SAOG (under transformation)

The Board of Directors of Musandam Power Company SAOG (under transformation) jointly and severally hereby confirm that:

• The information provided in this Prospectus is true and complete.

• Due diligence has been taken to ensure that no material information has been omitted, the omission of which would render this Prospectus misleading.

• All the provisions set out in the Capital Market Law, the CCL, and the rules and regulations issued pursuant to them have been complied with.

On behalf of the Board of Directors (Authorised Signatories):

Name Signature

Ahmed Tufail Al Rahman Mujeeb Al Rahman Sd/-

Mansoor Ali Al-Abdali Sd/-

353

PROSPECTUS

(2) Issue Manager

Pursuant to our responsibilities under Article 3 of the Capital Market Law, Article 13 of the Executive Regulations of the Capital Market Law, issued under CMA Decision No. 1/2009 (as amended), and the directives issued by the CMA, we have reviewed all the relevant documents and other material required for the preparation of this Prospectus pertaining to the issue of the shares of Musandam Power Company SAOG (under transformation).

The Board of Directors of Musandam Power Company SAOG (under transformation) will bear the responsibility with regard to the correctness of the information provided for in this Prospectus, and they have confirmed that they have not omitted any material information from it, the omission of which would render this Prospectus misleading.

We confirm that we have undertaken the due diligence required by our profession with regard to this Prospectus which was prepared under our supervision and, based on the reviews and discussions with Musandam Power, its directors, officers and other related parties, we confirm the following:

• We have undertaken reasonable due diligence to ensure the information given to us by Musandam Power and included in this Prospectus is conformant with the facts in the documents and other material of the Offer.

• To the best of our knowledge and from the information available from Musandam Power, Musandam Power has not omitted any material information, the omission of which would render this Prospectus misleading.

• This Prospectus and the Offer to which it relates, is conformant with all the rules and terms of disclosure stipulated for in the Capital Market Law, the Executive Regulations of the Capital Market Law, the prospectus models applied by the CMA, the CCL and the directives and decisions issued in this regard.

• The information contained in this Prospectus in the Arabic language (and the unofficial translation into the English language) is true, sound and adequate to assist the investor to take the decision as to whether or not to invest in the securities offered.

Financial Adviser & Issue Manager

Sd/-

bank muscat SAOG

354

(3) Legal Adviser to Musandam Power Company

The legal adviser whose name appears below, hereby confirms that all the procedures taken for the offering of the securities as described in this Prospectus are in line with the laws and legislations related to Musandam Power’s business and the CCL, the CML and the regulations and directives issued pursuant to them, the requirements and rules for the issue of shares issued by the CMA, the Articles of Musandam Power, and the resolutions of the general meeting and Board of Directors of Musandam Power. Musandam Power has obtained all the consents and approvals of the official authorities required to carry out the activities described in this Prospectus.

Legal Adviser to Musandam Power Company

Sd/-

Al Busaidy, Mansoor Jamal & Co.Barristers and Legal Advisors

PO Box 799, PC 118, Al Khuwair, Muscat, Sultanate Of Oman.www.musandampower.com