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Oman Review

Prudent progress

The sultanate probably has more big-ticket projects – right from new airports and ports to resort cities – on the anvil than it has had in the recent past. Despite the global economic downturn, the government continues to implement its Vision 2020 programme albeit at its customary steady pace

01 February 2010

Oman, which has traditionally adopted a prudent development policy, appears to have emerged relatively un-scathed by the effects of the global financial crisis.

While projects that have involved foreign investors have stalled, the government has been pushing ahead with its Vision 2020 plan for economic diversification and growth, by spearheading infrastructural projects. These include major airport and port schemes as well as associated industrial estates in a drive to diversify its economy away from oil – which currently accounts for 63 per cent of its revenue.

In these efforts, the sultanate has also launched development programmes to exploit the immense tourism potential of its mountainous topography and serene beaches. One such project is a new Olympic-standard athletes’ village in Musannah, which will host the second Asian Beach Games in December (see separate article). The project is being developed by Omran, the Government of Oman’s tourism development and investment arm, which last month inaugurated its latest resort – the 23-room Swiss-Belhotel Resort Masirah Island.

According to industry estimates, Oman’s construction industry is expected to hit $4 billion per year by 2013 on the strength of major projects in line with Vision 2020. Middle East research company Business Monitor International (BMI), which released the figure, also estimates the construction industry to have accounted for 5.2 per cent of the country’s GDP in 2009, representing real growth of 2.67 per cent year-on-year.

Infrastructure – particularly the marine, land and air transportation sectors – is a key area in which the sultanate has been striving to increase its investments, according to National Economy Minister Ahmed bin Abdulnabi Macki. Significant investments are to be made in developing new airports and ports and expanding existing ones – a key focal area now being Duqm.

Airports

Oman is investing several billions of dollars in modernising its international airports at Muscat and Salalah, as well as in the construction of greenfield domestic airports at Duqm, Sohar, Ras Al Hadd, Adam, and Musandam. The government believes new gateways will not only fuel socio-economic development, but also encourage tourist traffic into these areas.

Work is under way on the first phase of an ambitious plan to expand and modernise Seeb International Airport in Muscat, according to the Oman Airports Management Companies (OAMC). The project includes construction of a new passenger terminal building with 32 boarding air bridges, a second runway, control tower, a cargo terminal to handle 200,000 tonnes of cargo annually and a 6,000-slot car-parking facility.

The passenger terminal, a blend of modern airport design elements and traditional Omani motifs, will be built between two parallel runways. The bids submission deadline for the new terminal building is reported to have been extended till September this year.

The new terminal will have a net floor area of 290,000 sq m and a capacity for 12 million passengers a year. Further expansions planned in three subsequent phases will ultimately boost the airport’s capacity to 48 million passengers by 2050, OAMC says.

The project programme is to have the new control tower and second runway completed and operational by the end of 2010, and the passenger terminal and other buildings by the end of 2012.

TAV-CCC – a consortium of TAV Construction, a leading Turkish construction company, and Athens-based Consolidated Contractors Company (CCC) – secured a RO450 million ($1.17 billion) contract last May on the project involving electromechanical work, roads and ground improvement, chiller plants, substations, taxiways, a new runway and apron parking as well as surrounding land development.

Meanwhile, construction work is also in progress on Phase One of Sohar airport, with Strabag Oman currently engaged in the mass grading works necessary to prepare the site for the construction of a runway, taxiway, runway exits, aprons and buildings. The airport will be built in three phases. Phase One includes preparation of the site. Phase Two covers infrastructure such as roads, electricity and water networks, runway, taxiway, fire-fighting systems and lighting. Phase Three entails construction of passenger and cargo terminals and catering facility. The project includes a 500,000-passenger terminal, a full-length taxiway with high-speed exits and a 100,000-tonne air cargo terminal.

Ports

Oman’s ambitious plans to develop a port and industrial hub at Sohar are already bearing fruit and the sultanate is now keenly pursuing plans to set up another hub at Duqm.

Duqm is expected to host major developments such as a new airport and a new port, as well as other industrial developments including a refinery and a petrochemical plant. Abu Dhabi’s International Petroleum Investment Company (IPIC) has recently inked a memorandum of understanding (MoU) with the Oman Oil Company (OOC) for the possible development of the refinery and petrochemical complex – a feasibility study on which is under way.

The Duqm port project is targeted for completion by 2012, while the dry dock is due to be ready by the end this year.

Meanwhile, the port of Sohar – a rapidly-expanding industrial port, situated 240 km northwest of the capital, Muscat – marked a major milestone last December when the 1,000th vessel in 2009 docked at the container terminal.

This signifies the massive growth of the facility since it received its first commercial vessel in April 2004. This is the first time that the port, operated by Oman International Container Terminal (OICT), has reached this number during a year. About $12 billion have been invested in industries, infrastructure and utilities in Sohar. In two years’ time, the port will house three fully-developed clusters – petrochemical, metal and logistics.

The port is pushing ahead with plans to become a major iron ore trans-shipment hub for the Middle East. Last September, a $200-million contract to build a deepwater iron ore jetty was awarded to an Indo-Italian joint venture of Saipem and Asia Foundations and Construction Limited (Afcons). The companies will build the jetty, designed to cater for Very Large Ore Carriers (VLOCs). The jetty will cater for the needs of the Brazilian mining company Vale, which is currently building a huge iron ore pelletising plant and distribution centre at the industrial port.

The jetty will be completed in the first quarter of 2011. With the addition of this 1,380 m-long and 25-m-deep jetty, the port will join a select handful of ports in the world with the capability to receive very large ore carriers of 400,000 dwt.

Power & water

The sultanate, which has been a regional pioneer in involving private investment in its power and water sector, is expecting work to start shortly on the much-delayed independent water and power project (IWPP) at Taqah in the Governorate of Dhofar. The private sector of Oman accounts for more than 50 per cent of the country’s total power generation capacity.

With a power generation capacity of 450 MW and a desalinated water output of 15 million gallons per day (gpd), the project will help secure electricity and potable water supplies to the Dhofar region.

A key city in the region is Salalah, which continues to attract sizeable investments in the tourism and industrial sectors. The large-scale industrial projects under development or planned in the Salalah Free Zone, as well as population growth in the governorate, has boosted demand for electricity and water.

Singapore-based Sembcorp Utilities, a leading provider of utility services, along with joint venture partner Oman Investment Corporation, has been selected by the government to develop, finance, own and operate the estimated $1-billion facility on an initial 15-year generation and desalination licence.

The new IWPP is slated to be operational in two phases during the 2011-12 timeframe.

Oman has also invited expressions of interest this month (by February 10) for the Al Ghubrah IWPP, which will have a electricity production capacity of 450 to 600 MW and a water production capacity of 30 million gpd.

Meanwhile, the new Sohar II IPP, which will have a capacity of 650 MW, is expected to be operational this year. The project is expected to meet growing demand for electricity from Sohar industrial area.

Real estate

As in other parts of the region, the real estate sector of Oman has undoubtedly been hit and little or no progress has been achieved on several of the major developments planned for the country.

One project that deserves a mention is the sultanate’s landmark real estate project The Wave, Muscat, which has created waves, by winning top accolades at Homes Overseas (one of UK’s leading international property magazines) Awards held in London and the CNBC International Residential Property Awards in the US.

The first project in the sultanate to offer freehold status to all purchasers, The Wave, Muscat incorporates more than 4,000 new homes, a marina, golf course, three premier hotels, an 18-hole green links-style golf course – designed by Greg Norman – and its golf academy, and new retail, leisure and dining facilities.

More than 900 new homes have already been completed at the development, the construction of the marina is under way and work is set to start on the golf course. The project will include a Fairmont and a Kempinski hotel, construction tenders for which are expected to be issued this year.