Focused on industry
The Sultanate continues to focus on gas-based industries with moves having being made on an oil refinery, an aluminium smelter and a fertiliser plant.
01 December 2001
Economic diversification - which in effect means an industrial thrust - is at the core of the Sultanate's development plan for the coming years.
Oman's current sixth five-year plan launched this year emphasises on economic diversification and privatisation. In line with this plan, new gas-based industries are to be set up in the Sultanate. And at the heart of the country's industrial plans is Sohar. These plans envisage mega projects such as the construction of an oil refinery, an aluminium smelter and a fertiliser plant, which will all be set up in the industrial city along will a number of other industrial venture. A major port is under construction to facilitate these projects.
Oman has made considerable headway in its plans for privatisation especially in the power sector. Following the success of its first independent power project, the Sultanate launched three others - in Sharqiya, Salalah and at Barka - work on which is now in progress.
Similar success with privatisation has been achieved with the Seeb and Salalah airports and this will translate into the construction of a new terminal at Seeb International Airport.
In the wastewater sector, however, its privatisation initiatives have run into difficulties with the Muscat wastewater project.
The year has seen increases in government expenditure and a moderate recovery in construction activities. Major efforts continue to be made to upgrade the infrastructure especially in Muscat and the interior regions, with roads, water pipelines, houses, hospitals and health centres, and schools being built across the Sultanate.
Power
Construction work on the 200 MW private power plant in Salalah is proceeding on schedule for completion in March 2003.
The Dhofar Power Company - 81 per cent owned by PSEG Global with the rest held by local firms - will operate and manage the plant. India's Larsen & Toubro is building the plant under a $233 million contract.
Two European banks and a local financial institution have extended a $225 million loan to finance the construction of the gas-fired plant in Salalah.
"BankMuscat has provided $40 million of the loan, while BNP Paribas of France and Germany's WestLB (Westdeutsche Landesbank Girozentrale) each extended $92.5 million," C M Raman, managing director of Dhofar Power Company, said.
Oman signed the 20-year concession agreement last March with PSEG Global, a subsidiary of US-based Public Services Enterprise Group for the development of the plant..
The second private power project under way is located at Al Kamil in Sharqiya. The project is now moving ahead with AIC Egypt having replaced South Korean Hyundai Engineering and Construction Company as subcontractor.
The entire $95 million EPC (engineering, procurement and construction) contract had been subcontracted to Hyundai but the financially-troubled firm was forced to pull out of the venture.
The Al Kamil Power Company (AKPC) - set up by the developer the UK-based International Power (IP) - entered into an agreement last April with AIC Egypt to execute the contract. AKPC will build, own and operate the 285.5 MW natural gas and fuel oil-fired electricity-generating plant at a cost of $130 million.
The project, slated for commercial operation next year, is expected to replace a series of diesel-run power stations in the Sharqiya region.
Work is also in progress on the $415 million Barka power and desalination plant.
AES Barka, a subsidiary of AES Corporation of the US, has secured $348.6 million to finance for the plant that will supply 427 MW of power and 20 million gallons per day (gpd) of desalinated water.
The power plant is being designed and built by a consortium of Enelpower of Italy and Hitachi Zosen of Japan. Commercial operations are expected in April 2003.
Among other power projects, Civil Contracting Company (Civilco) is building a power plant for Petroleum Development Oman (PDO) at Haima in central Oman.
Civilco, as the selected engineering, procurement and construction (EPC) contractor, will construct a natural gas-fired plant capable of generating 67 MW of electricity, Commercial operation of the new plant is scheduled to begin by June 2002.
The Haima power station will be PDO's 11th such facility in the Sultanate, boosting its combined generation capacity to around 600 MW.
Water
Oman plans to privatise two water projects worth a total of $200 million as a first step towards opening the water sector to local and foreign firms. The water networks are under construction in the western Massarat region and the eastern Sharqiyah region.
The projects involve management of power stations and water reservoirs to supply drinking water to some 250,000 people.
Last year, the Sultanate awarded Egypt's Societe Egyptienne d'Enterprises the contract for the construction of the $69 million Massarat water project. It also selected France's Sade and local firm Galfar Engineering & Contracting to undertake the $57.43 million Sharqiyah water project.
The first phase of Al Massarat project, which is under way, is expected to be completed in the first quarter of next year, while the Sharqiyah project is expected to be completed in 2003.
Meanwhile, under the second phase of the Al Massarat water supply project, Galfar Engineering and Construction Company, Civilco and Hassan Juma Backer Trading and Contracting, are installing the water supply networks connecting the wilayats of Ibri, Yanqul and Dhank.
The second phase of the Sharqiya project will involve installation of a series of secondary pipelines which will connect main towns and villages in the region to the supply network. Some 250 km of distribution lines will be laid during this phase.
Wastewater
Oman has broken off negotiations with the preferred bidder for a estimated RO100 million ($260 million) private wastewater project in Muscat after failing to reach an agreement.
"There was a (May) deadline for negotiations to be completed but it was then extended to the end of June. When no agreement was reached with the consortium, the government ceased negotiations," a project source said.
The government is now understood to be making a decision on whether to implement the project through the public or private sector. "The most likely route is that the government will build the network itself, then corporatise it and finally privatise it," the source said.
Negotiations over the Muscat project have been taking place since 1994, when a group headed by the local Galfar Engineering and the UK/US Ogden Yorkshire Water was selected as the preferred bidder. Ogden was subsequently taken over by the US' Coventa Energy, which in early 2001 pulled out of the project citing a change in corporate strategy. It was replaced by Cascal, part of the UK's Biwater group. Since then, the consortium has lost another member, Bank Muscat, which had a small stake in the project.
The project called for a private investor to build, operate and finance the wastewater treatment plant and associated network serving the capital. The two-phase project would serve 600,000 people in the Muscat governorate. The first phase would take up to eight years to complete and the second phase another seven years.
Work on the Salalah wastewater scheme is currently under way at an estimated cost of RO31 million ($80.51 million). The project involves the construction of a network of around 570 km of collector and lateral sewer lines connecting some 10,000 homes in Salalah town.
Galfar Engineering & Contracting Construction is executing the construction of the network on behalf of the Salalah Sanitary Drainage Services Company SAOC (SSDSC), a statutory body wholly-owned by the government.
A consortium of international consultants has been appointed advise Oman on the commercialisation of the Salalah wastewater collection and conveyance system, indicating the government's effort to place the operation and management of the scheme in private hands.
Ports & fishing harbours
Work on the second phase of the Sohar Industrial Port will begin shortly. The port will serve the adjacent Sohar Industrial Area which will house a number of mega-projects including the aluminium smelter, fertiliser plant, a methanol scheme, ferrochrome-ferrosilicon project, and the Sohar Refinery and associated polypropylene plant.
The second phase of the project involves the construction of a further 800 m of quay wall and dedicated berths, which will be earmarked for the planned fertiliser and smelter ventures in Sohar, port director Khalid Mirza said. It will also include development of the port's infrastructure, administrative buildings and sheds and the provision of power, water and telecommunication services.
This new quay is in addition to an 850-m quay currently being built by Turkey's STFA Construction under the $181 million first phase of the project.
Of the 800 m of new quay, a 250-m length will be allocated to the Bahwan Trading Company, which is developing the ammonia/urea fertiliser project. A further 550-m length of quay will be set aside for the aluminium smelter.
Two liquid berths - one for Sohar Refinery Company (SRC) and the other berth SRC and the Sohar methanol scheme - are being built under the current phase.
Work is progressing on the 850-m-long quay which - save for a short 150-m stretch reserved for government vessels - will be used to berth ships serving the Sohar Industrial Area. Further, a floating pontoon for mooring small boats such as coastguard craft will be established at the port as well, according to Mirza.
The port, work on which was launched in 1999, will have two LNG cargo berths, two bulk berths, two general cargo berths and one container berth.
Oman is building a new multipurpose port in Duqm in the Wusta region. A 3.5-km-long breakwater, along with a 500-m-long quay for commercial and government vessels, is to be built during the first phase of the port development project.
The harbour basin would be dredged to 10 m while a drydock would be constructed to initially accommodate 25,000-30,000 DWT ships. The facility will also incorporate a modern fishing jetty.
Four new fishery harbour projects are being developed at key places along Oman's coast at Al Ashkara - a construction contract for which was signed in August - Saham, Liwa and Sohar.
Construction of the RO26 million fishing port in Sohar began in September. The port is being built over a 7,000 sq m area and the length of the breakwater will be 610 m. Fish storing and processing facilities and fish shops in the port complex will be open to private investment.
Industry
Five foreign consortia have been shortlisted to bid for a contract to build the $750 million oil refinery in Sohar.
These are reported to be South Korea's LG Engineering and global engineering firm Foster Wheeler Corporation, Samsung Engineering bidding with France's Technip, Japan's JGC Corporation with Chiyoda Corporation, Hyundai Engineering with Toyo and Germany's MG Engineering bidding with SK Engineering of South Korea.
The five groups have until May 2002 to submit their bids.
The 75,000 barrels per day (bpd) catalytic cracker refinery - Oman's second - is being developed by Sohar Refinery Company and expected to go onstream in the first quarter of 2004.
Another project on the cards for Sohar is a 5,000 tonnes per day (tpd) methanol plant which is estimated to cost $426 million.
Five multinational companies were expected submit bids last month for the $534-582 million ammonia/urea fertiliser project also in Sohar.
Bahwan Trading Company is developing the project which is expected to have a capacity of 2,000 tpd of ammonia and 3,500 tpd of granular urea. Production is planned to start in 2004.
Bahwan Trading Company recently issued invitations for bids to the prequalified EPC (engineering, procurement and construction) contractors - namely, Kellogg Brown & Root (US), Krupp Uhde (Germany), Mitsubishi Heavy Industries (Japan), Snamprogetti (Italy) and Toyo Engineering Corporation (Japan).
The company is expected shortlist one or two bidders for the EPC contract next month. A new company is being formed under the name of Sohar International Urea & Chemical Industries to develop the project.
Besides the dedicated urea berth for the project at Sohar port, the government is also developing common sea water intake and outfall system, which will cater to all the industries at the Sohar industrial area.
The Sultanate is planning to set up the $2.5 billion aluminium smelter by 2005 in partnership with Abu Dhabi, as well as international investors, according to Commerce Ministry officials. The smelter is expected to have an annual production capacity of 530,000 tonnes.
The third and fourth sector of the Sohar Industrial Estate will be expanded to set up more projects, according to Hamad bin Salim Al Mahdali, director-general of the Omani industrial estate. An airport is planned, while Sohar Port is to be developed concurrently.
More than RO12 million ($31 million) has already been spent on the first and second phases of infrastructure development at Sohar, spread over 3 million sq m, with 1.3 million sq m set aside for industrial projects.
The official said of the 28 new applicants for various projects, three have been granted construction permits, and 10 allotted plots, the remaining 15 being under assessment.
Oman's LNG plant was inaugurated in October last year and has become an important source of revenue for the Sultanate. Plans have also been mooted to build at third liquefaction train supplement capacity at the two-train facility.
Oman Cables Industry (OCI), located in Rusayl Industrial Estate, has launched an expansion and modernisation project to boost its production capacity for power cables and overhead conductors. The RO3 million ($7.8 million) expansion is being carried out in two phases with the first phase now due for completion.
The expansion will raise OCI's annual production capacity to 24,000 tonnes of copper and 6,000 tonnes of aluminium power cables and overhead conductors.
The second phase of expansion work will be completed by June next year.
National Aluminium Products Company (Napco) is looking at doubling its capacity (see Page 87).
The RO5 million Al Khaleej quarry opened last month.
Airports
Oman has signed a deal with a consortium led by BAA, Britain's largest airport operator, for the privatisation of Seeb and Salalah airports.
Under the 25-year contract which will go into effect next year, BAA and its partners - local firm Suhail Bahwan Group and ABB Equity Ventures - will take a 75 per cent stake in the privatised company. The Oman government would retain 20 per cent and Oman Aviation Services Company five per cent.
The new company will invest 130 million pounds ($190.2 million) in developing a new terminal at Seeb, which serves the capital. The terminal is due to be completed by 2007.
The existing Seeb airport is expected to be knocked down in four phases over the next four years to build the new terminal. The new airport with three levels on the airside and two levels on the landside will be able to handle 15 flights at a time, including seven of the largest Airbus A380s and three smaller aircraft.
Major changes planned in the airport area include new approach roads which will eliminate the Clock Tower roundabout. The three existing car-parks in Seeb airport will be combined in one area to facilitate parking facilities for 3,000 vehicles.
After 15 years, the second phase of expansion at Seeb International Airport will be taken up at an additional investment of RO60 million. At this stage, the terminal will be further expanded to handle 11 million passengers annually. The hangars will be relocated to a new site and a state-of the-art cargo terminal will also be built to complement the new airport.
Grand Mosque
The Sultan bin Said Grand Mosque in Muscat was inaugurated in May. Work on the mosque - built at the Omani ruler's personal expense - began in 1995.
Located in the wilayat of Bausher, the site covers an area of 416,000 sq m and the complex is built over an area of around 40,000 sq m.
Commercial complexes
Concerted efforts are being made to construct large shopping centres, which have been noticeably lacking in the Sultanate.
The first to open is the City Centre Muscat, which was opened in October. It was built by one of the UAE's leading business houses Majid Al Futtaim (MAF) (see page 77).
The Ajay Group of Companies is building the RO10 million ($26 million) Markaz Al Bahja hypermarket project at Ma'awaleh, near the Seeb International Airport. It will feature the world-famous Ripley's Believe It or Not entertainment sensation which is due to open shortly.
The three-level Markaz Al Bahja is being built on a 33,000 sq m area and will have 80 shops, offering the latest in fashion, luxury, cosmetics, household and other goods. The complex, which will have ample car-parking, will be havetwo family theatres, food courts and El Paradiso (the jeweller's paradise).
Infrastructure
Major infrastructure works, including the construction of roads, houses and public utilities are in progress in Sharqiya, Shinas, Wusta and Liwa.
The Muscat Municipality is also carrying out several key projects in the Seeb region, including new roads and beautification of public utilities.
Earlier this year, Muscat Municipality signed key agreements worth RO17.9 million ($46.74 million) with top companies for the construction of dual carriageways, bridges and for the maintenance and development of some roads.
The Wadi Adai-Amerat road project was awarded to Galfar Engineering and Contracting Company. The project involves alterations to the Wadi Adai roundabout, improvement works at the entry and exit of Wadi Adai road and completion of a 8 km dual carriageway from Wadi Adai to Al Amerat roundabout. It also entails the construction of a 2-km third track between the roundabouts of Watayyah and Wadi Adai.
Another agreement was signed with the Consolidated Contractors Company (CCC) to construct bridges and roads in Al Khuwair area. The project will be completed by early 2003.
CCC will also carry out maintenance work on the 10 km road between Seeb Palace roundabout and Bait Al Baraka roundabout which will take 345 days to complete.
Hotels
The Marriott/Ramada group is likely to enter the Oman market shortly with a luxury aparthotel coming up near the Qurum Beach.
Ramada will be the first tourist and business site in the top range in the Sultanate to offer service apartments on a longer lease as well as rooms by the night. It will have 65 rooms and 34 apartment suites, a 24-hour restaurant with both international and Indian cuisine, a business centre, and a health club.
A tourism village that includes 46 villas and various facilities has opened in Salalah. The village also includes recreational programmes and games. A hotel is also under construction there and will be completed by the beginning of next year.
The Al Sharqiya Sands Hotel, the first major hotel project in Ibra-Sur region, will open its doors soon. Al Sharqiya Sands, promoted by Al Sawadi Beach Resort, is on the outskirts of Ibra, 180 km from Muscat and halfway to the coastal town of Sur. The hotel will have 12 guest rooms and three suites.
According to the Ministry of Commerce and Industry sources, plans are being drawn up for two more hotels in the interior - a four-star hotel in Daba and a three-star property in the Wilayat of Khasab. An area of 5,000 sq m has been allocated for the Daba project.
The ministry is also promoting the Al Sawadi project in the wilayat of Barka among specialised international investors. The Al Sawadi project has been allocated a total area of 34 sq km in Barka. The ministry has supervised a detailed feasibility report and master plan for the project.
Oman's showpiece Al Bustan Palace Inter-Continental Hotel in Muscat was reopened in October following four months of extensive renovations.
The refurbishment covered all the hotel's 198 guest rooms, 44 suites and deluxe suites. A fifth restaurant has been opened and business guests now have access to a new and larger business centre. A luxury spa is expected to be opened next March.
The Crown Plaza Muscat, regarded as a popular conference and business meeting venue, has also completed refurbishment, additions and equipment enhancements to its conference facilities. Renovation work has transformed the hotel's Al Mandaloun Conference area and created the new Al Khanjar boardroom.
Other projects
- City Centre opens in Muscat
- Focused on industry
- Jotun celebrates 16 colourful years
- MajeLite clinches major projects
- Napco to double extrusion capacity
- Oasis Trading builds on Cat's prowess
- STC climbs into limelight with innovative technique
