Infrastructure: Partnering development

The government’s privatisation programme envisages expanding the role of the private sector in acquiring, financing and managing projects of national significance

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The private sector in Oman is expected to play an important role in infrastructure development in the coming years, in an apparent move to solve funding challenges in the wake of plunging oil revenues. Gone are the days when Oman could shell out billions of rials for developing its infrastructure projects like swanky airports, expressways and sea ports. And now, major infrastructure projects, which require investments worth billions of rials, are all proposed to be developed in public-private-partnership (PPP). In line with the Ninth Five-Year Development Plan, Oman government is in an advanced stage to enact a new law for public-private partnership, which will be the basic framework for private sector’s participation in developing basic infrastructure.

The new Public-Private Partnership Law envisaged in this year’s budget has the potential to attract investment in strategic projects and help the country to sustain its economic growth. Once the PPP Law comes into effect, an enterprise model for such partnership ventures will emerge, leading to joint investments by government and private entities.

Private investors, including foreign investors, are looking for a business environment where returns on capital will have to come fast and therefore, the amendments should ensure that licences and permits are issued quickly, besides reducing gestation period for projects. Also, the new law should ensure a robust return on investment by private sector entrepreneurs, who will invest in several sector, including infrastructure. In a way, this will ease the financial burden on the state budget and will help sustain investment to spur economic growth. According to the state budget, the purpose of the new law is to ensure the completion of all ongoing projects and implement strategically important ventures.

The government’s privatisation programme envisages expanding the role of the private sector in acquiring, financing and managing projects of national significance. Also, like other Gulf states, the Sultanate has been trying to prioritise projects after taking into account the maximum economic benefit for the country. However, an array of mega projects have already been completed or in an advanced stage of completion.  The Ministry of Transport and Communications has invested heavily in developing a national network of dual-carriage highways connecting different cities and to improve road links with the neighbouring United Arab Emirates (UAE) and Saudi Arabia. Batinah Expressway, Bidbid-Sur road and Adam-Thumrait dualisation projects are some of the major expressways that connect the nation.

 

NATIONAL RAILWAY PROJECT

The National Programme for Enhancing Economic Diversification (Tanfeed) has also suggested innovative ways of financing infrastructure projects and the transfer of current government assets to the private sector.  An important project that will be of national significance is the RO1 billion-Duqm-Shuwaymiyah rail corridor for transporting minerals to the port. The plan to develop Duqm-Shuwaymiyah rail project came up after freezing the much-talked about National Railway project in view of certain connectivity issues with other GCC states. The objective of the railway line is to transport limestone and gypsum and few other minerals to the port for exports. The Sultanate is now looking at private players to develop rail corridor connecting Dhofar mining areas with Duqm port. Oman Global Logistics Group, the infrastructure holding company of the government, is in talks with private sector mining companies to set up the 350km rail link in joint venture.

The preliminary design of the rail network done by Italian firm Italferr, includes lines between Shuwaymiyah and Manji to Duqm port. Metallic minerals found in Oman include chromite, copper, gold and silver, manganese, lead and zinc and laterite. Non-metallic minerals include limestone, dolomite, gypsum and silica sand.

Plans are also afoot to strengthen and upgrade the transport network of the country with better bus service, light rail network and sea taxis, as part of a long term transport strategy over the next eight years, until 2025. The country’s Ministry of Transport and Communications is also open to a light rail network in Muscat, if the private sector can fund the project. The national transport strategy, which was unveiled by the ministry recently, will be developed in two phases — the first phase of two to three years will focus on the bus network, organisation of taxis and establishment of a regulatory body for the sector.

The second phase, which will be after three to seven years, will continue with the introduction of more buses and the development of bus stations, while conducting studies on light rail network. The ministry is in the process of setting up a regulatory authority for transport sector, whose functions include organisation of public transport sector through proposed laws and regulations. It will identify trunk and feeder routes, spots for bus stations on the roads, grant licences to operators, establish terms and conditions to monitor their performance, and cooperate with regional and international public transport organisations.

The country’s national transport company Mwasalat has begun the process of developing the public transport following the launch of a new brand identity in 2015. Four new routes were added in Muscat and over 3.7 million passengers used the services in 2016 at the rate of over 10,000 passengers a day. Mwasalast will acquire 177 new buses between 2016-2018, including 12 new routes in Muscat and four inter-city transport lines. Five city routes will be opened in Sohar and Salalah, as well as the development of the cargo system, revenues through advertisements, AC bus stops and implementation of new technological features. In the second phase between 2019-2025, 173 new buses will be purchased and three new lines will be operated within Muscat Governorate.

The whole transport strategy, which is aimed at reducing a sizable number of private cars on the roads, will depend on detailed studies to be conducted by the ministry. This is also aimed at reducing environment pollution, which is a concern for the authorities.

Although some of the infrastructure projects are on hold, the government is determined to complete infrastructure development in Duqm and redevelopment of Muscat port, which are crucial for attracting the much-needed foreign investment necessary for diversifying the economy. Duqm Port, which started operation almost three years ago for receiving specialised project cargo for oil and gas industry, is investing heavily on all support infrastructure, gate, offices, roads and utilities. Of late, the Special Economic Zone Authority at Duqm (Sezad) has awarded several major contracts to complete the work of Duqm port and associated facilities. These include a fishing harbour, terminals, a bulk liquid terminal, gates, head office and associated facilities.

MUSCAT PORT GETS A FACE-LIFT

Re-development of Sultan Qaboos Port with a massive waterfront facility, and another terminal for Sohar port are other major initiatives to enhance port infrastructure. Muscat port is getting a makeover with the expected development of high-end marina, hotel facilities and retail outlets in its new focus on tourism and leisure destination. The development will follow the blueprints of already established and historic ports such as Cape Town, London and New York.

The Oman Tourism Development Company (Omran) has already launched the first phase of the Mina Al Sultan Qaboos Waterfront Project. The first phase of the integrated mixed-use waterfront destination is projected to be completed by 2020, and will transform the current commercial Port Sultan Qaboos area into a major tourism-based development, spanning 64-hectares area. The Mina Al Sultan Qaboos Waterfront will include business and residential zones, destination mall, six hotels (including three-, four- and five-stars), recreation amenities, tourist attractions as well as docking facilities for cruise liners and yachts.

The plan is to create a world-class waterfront development of outstanding beauty and interest that celebrates the maritime history of Muscat and showcases the very best of Omani culture, heritage and innovation to a global audience. Upon completion it will provide an extraordinary year round tourism hub that is rich in activities, entertainment and experiences, and is accessible to all. Destination shopping, waterside restaurants and cafes, boutiques, offices, entertainment and cultural facilities, as well as super yacht and leisure boat marina will also be featured in the first zone.

In another development in aviation infrastructure, the Muscat International Airport’s state-of-the-art terminal will be ready to receive passengers by the end of this year. Once Muscat International Airport starts operation, the civil aviation scene in the country will undergo a major change. The airport will be able to handle 12 million passengers per annum against its present capacity of 8-9 million passengers, while Salalah airport now handles one million passengers. The Muscat International Airport will have two runways and it is designed as class A, according to IATA standards. Another two regional airports – Duqm and Sohar – have also started operations, although terminal buildings are yet to be completed. However, Oman Air had to discontinue its operation in Muscat-Sohar route in less than a year after starting operation due to lack of passengers. Now the Ministry of Transport and Communication is contemplating various plans to start operation from Sohar airport. This could include attracting budget airlines to Sohar.


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