Dear Shareholders,
On behalf of the Board of Directors of Phoenix Power Company SAOG (“PPC” or the “Company”), I have the pleasure to present the Directors` Report together with the unaudited financial statements of the Company for the six month period ended 30th June 2020.
Health, Safety and Environment (HSE)
The health and safety performance to date has been excellent, with no Lost Time Accidents (LTAs). The Operations and Maintenance Contractor (“POMCo”) has completed 2039 days without a Lost Time Accident since commercial operation of the power plant commenced. Similarly there have been no environmental incidents.
Company Response to COVID-19 Pandemic
As the COVID-19 virus continues to spread, I wish to take this opportunity to update Shareholders of the business continuity and safeguarding measures the Company has in place to protect against the impact of the virus since the onset of the outbreak in Oman:
The Company continues to maintain an ongoing review of developments and guidance issued by the Oman Supreme Committee to ensure our plans and actions remain current and relevant.
The safety and health of our staff are our top priority. We are taking all necessary precautions to continue with our daily operations and ensure the safety of our employees, families and the community.
In April 2020 the Company initiated an Isolation Plan to “lockdown” and secure a core team of 35 staff and contractors living and working on the Sur IPP asset until such time that it is considered safe to return to normal operations. This provides a COVID-19 free work environment at Sur IPP and supports the continuing safe and reliable generation of electricity to the Sultanate of Oman.
Logistics and supply chains remain under continuous review to assure required levels of support to the Sur IPP are available, and regulatory compliance is maintained.
The Company envisages no disruption in the continuity of our operations for the foreseeable future.
Operations
During the first six months of 2020, the Company has achieved an excellent level of operational performance with the Sur Power Plant demonstrating a commercial availability of 99.76%, the key parameter to be considered when assessing the revenues generated during the period. This is a slight improvement in performance to that of the same period of 2019 (98.80%) and remains in line with Company expectation.
The net power exported during the first six months of 2020 was 3779 GWhrs compared with 3457 GWhrs during the same period in 2019, reflecting higher dispatch by the Oman Power & Water Procurement Company SAOC (“OPWP” or the “Buyer”).
Financial Results
The Company generated a net profit of RO 7.25 million for the six months of 2020. Net revenues for the period were RO 65.9 million and costs were RO 48.0 million, the largest of which is the purchase of fuel gas for the power plant. The financial results of the first six months of 2020 compare favorably with the first six months of the previous year, 2019, where the net profit was RO 6.94 million.
The share price of PPC was 55 Baizas at the close of the first six months of the year.
Corporate Governance
To comply with the requirements of the Oman Capital Markets Authority (CMA) the 2020 AGM was held by virtual meeting on 20th May, delayed from 23rd March due to COVID-19.
Significant effort continues to be placed on policy and process review to ensure the highest standards of corporate governance in compliance with local regulatory requirements as well as with international best practices.
Corporate Social Responsibility
The Company continues to support Corporate Social Responsibility (CSR) in the areas of health and safety, environment, welfare and education, particularly in the local Sur community. For the remainder of 2020 the initially planned CSR expenditure will remain flexible to accommodate the impact of COVID-19 on local communities.
Future Outlook
All reasonable and prudent measures will be taken by the Management of the Company to ensure high standards of health, safety, environmental compliance reliability and availability are maintained over the remaining months of 2020 and that the possible effects of the COVID-19 virus is effectively managed to assure no impact to our operations.
Finally, on behalf of the Board of Directors, I would like to extend our deep appreciation and gratitude to the visionary leader, His Majesty Sultan Haitham bin Tariq Al Said and His Government for their support and co-operation extended to Phoenix Power in achieving its highest goals.
Khalid Jolo
Chairman of the Board