China’s government-owned State Grid corporation, the biggest utility company in the world, announced on Tuesday it has purchased 49 percent of the power grid in the Persian Gulf nation of Oman.
The deal was presented as a means of improving Oman’s power distribution system with Chinese technology as part of Beijing’s Belt and Road infrastructure initiative.
The Associated Press (AP) reported that State Grid did not disclose the exact value of the deal, but described it as “the biggest Chinese investment to date in Oman.”
It will most likely prove to be State Grid’s largest investment outside of China. The company concentrated on work in China until recently, when it began making investments in countries such as Italy, Portugal, Greece, Australia, and Brazil. Other Chinese utility companies formed a consortium to buy a controlling position in Argentina’s power distribution system in early December.
In November, the head of the primary utility company in the Philippines informed the Philippine senate that China now owns over 40 percent of that country’s electrical grid and could switch off the power remotely if it wanted to, although the Senate also heard reassurances that Philippine technicians could restore the power within 48 hours.
“Companies and Chinese government entities try to link new projects to Belt and Road to earn favor with the ruling Communist Party and secure official financing and other support,” the AP noted.
The Oman side of the deal was handled by Oman Electricity Transmission Company and its parent Nama Holding, both of which are also state-run entities. The holding company estimated the value of the deal with China at roughly one billion dollars.
Technically the sale of such a massive stake in Oman’s power grid to a foreign company counts as partially “privatizing” the utility, even though the buyer is also a state entity, a detail Nama Holding touted in its statement: “Through this privatization program, Nama Holding will support the government’s objectives of attracting foreign direct investments into the country and promoting private-sector participation as part of the wider nation-building process.”
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