A consortium led by ACWA Power and Mitsui has started construction work on the second phase of Salalah IPP, the gas-fired combined cycle power plant in Oman.

The consortium signed an agreement with the Oman Power and Water Procurement Company (OPWP) to develop phase 2 at a cost of SR2.32 billion ($620 million), which will have a capacity of 445MW once fully operational.

The plant is planned to be commercially operated by the beginning of 2018, a statement said.

It said the new natural gas-fired combined cycle power plant will be connected to the existing Salalah grid, generating a total capacity of 718MW, adding that the consortium will acquire the existing Dhofar Power Plant, which has an output of 273MW.

Additionally, OPWP will have the right to buy the generated electricity over a period of 15 years.

Thamer Al Sharhan, managing director ACWA Power, said: "Today's breaking of ground for the second phase of the Salalah IPP reflects ACWA Power's commitment to providing our customers with end to end power solutions swiftly; while holding true to our focus on both efficiency and sustainability.

"Salalah 2 IPP is a key milestone in ACWA Power's portfolio that reflects the company's commitment in developing the Omani power and water sector, and provides job vacancies and train and develop Omani youth and workforce."

Naif Alawiad, CEO, Dhofar Generating Company, added: "Oman has a reputation as a trendsetter in the region's power and water sector, having pioneered the deregulation and liberalization of the industry to make it attractive for international developers to invest in this strategically vital sector.

"Salalah 2 IPP is a solid proof of Oman's strident efforts to make energy production more efficient to meet the country's industrial sector and growing population's demand for energy."