Oman will open its swanky airport in the capital city Muscat next year, giving a much needed fillip to the country’s tourism development and ambitious diversification programmes. A major runway and state-of-the-art airport traffic control facilities, which are part of the massive expansion programme, are already in operation and the passenger terminal building, which can handle around 12 million passengers, will be ready sometime towards the end of 2015. This can be easily scaled up to 24 million, 36 million, and even 48 million in different phases, depending on the growth in passenger traffic.
Like other Gulf countries, Muscat International Airport will have several facilities like better check-in counters, star hotel, duty free shops and massive parking space.
The government’s Vision 2020 relies heavily on diversification of the economy and infrastructure development is vital for achieving its goals. In a cautious move, Oman government retained its investment expenditure at RO3.2 billion (almost 22 per cent of total public expenditure), which will help develop infrastructure development. A major chunk of the investment expenditure is for developing transport infrastructure facilities like airports, seaports, roads and railway network.
The Muscat airport will have two parallel runways, 96 check-in counters, 29 passenger boarding bridges, 30 aircraft remote stands, a baggage processing capacity of 5,500 bags per hour, and a hotel with 90 rooms.
Similarly, Salalah airport is also set to open its state-of-the-art facilities this year, ahead of Muscat airport. With a new terminal and air traffic control facilities, the Salalah airport will be well-equipped to service the needs of a new wave of international tourists and business travellers. With the expansion to upgrade the airport to international standards, the airport’s capacity is expected to be raised to two million passengers and by the next phase it would be raised to six million. The airport will have a four kilometer long run way and huge parking facilities, besides large number of check-in counters.
Further, the completion of two Greenfield regional airports in Sohar and Al Duqm added one million passenger handling capacity per annum in the domestic sector. Early operations have already commenced from Sohar and Duqm, even before building new passenger terminal buildings. Also, work is progressing at Ras Al Hadd, the third regional airport, which will have a capacity to handle half-a-million passenger a year. The Sohar and Duqm airports are primarily used to meet the needs of industries situated in those regions, while Ras al Hadd will cater to promote tourism in the region.
Oman is also planning to boost activity at the airport by allowing a budget airline for both international and domestic sectors. The Public Authority for Civil Aviation (PACA) has invited bids for a low-cost commercial airline operator in Oman.
Oman Air, the national carrier, is also embarking on an ambitious expansion programme to enhance fleet strength to 55 planes by 2017. The new aircraft will be a mix of both narrow body and wide-body planes. The fleet expansion is part of a larger plan to strengthen the country’s national carrier, at a time when two international airports – Muscat and Salalah – are about to complete expansion. The country’s national airline is also eyeing to fly to various destinations, which include China and several cities of the Indian sub-continent. Of late, the national carrier started operation in Manila, Jakarta, Goa and Singapore.
The leitmotif of Oman’s future growth and economic diversification plan has been to reinvent the Sultanate as a regional logistic hub and explore its potential as an international freight gateway. The vision and strategy for Oman’s future economic growth has always pivoted around a few of its iconic infrastructure projects. Commercial ports and freezones in Sohar, Salalah and Duqm capable of handling large ships and significant volumes of international cargo; five airports and a sound network of roads that include express ways have been touted to represent a resurgent and futuristic Oman, which is ambitiously looking to diversify its economy away from hydrocarbons. And now comes the crowning glory of all these pillars – the national railway network that serves as the key to connect this entire infrastructure and will be instrumental in fostering one of the most sweeping development transition in modern Oman.
The Sultanate’s 2,135-km long national railway network will be rewriting the dynamics of logistics in the country. Overall, the project is divided into three phases. Phase one will connect the three ports-Sohar, Duqm, and Salalah-to the GCC network on Oman’s north-west border with the UAE, while the phase two will connect the other economic hubs and commercial centers. Phase three is a long-term development for connecting other cities and towns. However, for easy implementation, the project is divided into nine segments. The first segment includes a 135-km stretch from the Port of Sohar to the border with the UAE at Hafeet; a 34-km spur connecting Hafeet to Buraimi; and an additional 38-km spur connecting the port to a new railway yard in Sohar.
To build the first 207-kilometre long Sohar-Buraimi segment, 18 consortiums for civil infrastructure and five for technology systems were pre-qualified. The qualification process was reviewed by a team of international rail development experts. The pre-qualified companies for civil infrastructure include some of the largest construction firms and industrial heavyweights from across the world while the consortia for technology systems include Ansaldo STS (Italian); Bombardier (Canadian); Siemens (German) and Thales and Alstom (French). On January 18, 2015, the pre-qualified companies submitted technical bids to build the first segment, while the commercial or financial bids for the same segment was submitted in March. The government plans to award an engineering, procurement and construction (EPC) contract for the first segment by the end of 2015.
The Tender Board has selected a consortium headed by Spanish engineering contractor Técnicas Reunidas to provide project management consultancy services for the construction of the future rail network. The consortium will review preliminary designs which are being prepared by Italferr, and provide contract management and supervision services during the construction and commissioning phase. It will also oversee the procurement of rolling stock, and the tendering later this year for an operations maintenance contract. The Técnicas Reunidas-led consortium submitted bids worth RO57·5mn for contract Option 1 and RO165·1mn for Option 2. A rival offer had been submitted by a consortium of Korea Rail Network Authority and Dohwa Engineering, which had reportedly priced its bids at 34·3m and 106·8m rial. Parsons International had also previously been shortlisted.
Meanwhile, Oman Rail is seeking an international rail operator with ‘extensive technical and commercial experience combined with local market knowledge’ to form a long-term partnership to operate and maintain the future network. Oman Rail’s partner would initially support the development of skills and institutional capabilities in Oman, and provide advice on ‘developing the right innovative products’ to meet the needs of future customers in Oman and the wider GCC region. Once the first stage of the network is completed, the partner would be responsible for freight operations and network management. Oman Rail envisages appointing a partner later this year, with operations scheduled to start in 2019.
HE Dr Ahmed bin Mohammed bin Salim al-Futaisi, Minister of Transport and Communications, said at GCC Rail and Metro Conference, hosted by Oman earlier this year, “We expect to announce the contractor for the first segment by the middle of this year. The other segments are still in the design stage, and we hope to float some additional segments within this year. It has been announced by the Minister of Finance that at least segment one is included in this year’s budget.”
According to Eng Abdulrahman al Hatmi, CEO, Oman Railway Company, an independent government-owned entity which came into being in early 2013 with a mandate to oversee and implement the design, tendering and construction of the rail network, two more tenders are expected by the end of 2015. “We are still trying to identify those segments. We want to learn from the current tendering process to prepare different segments for tendering,” he said. He also noted that the design of the remaining eight segments is going on. “Our target is to complete the entire network design by the end of the year.”
Italferr, an Italian engineering firm, is involved in designing routes for the entire network of national railway project. Says Roberto Liuzza, project director, Italferr, Oman branch, “Italferr started to work on the design of the first and second phases, on January 2, 2014. The company met the first deadline to supply the tender documents for the first priority segment, from Sohar to Buraimi, by delivering it on August 14, 2014. The tender is run and managed by Oman Railway Company.”He adds, “The first part is done; our work covers the technical design of tracks and civil works as well as very advanced technological systems for the centralised control traffic and safety (the ERTMS level 2 system, presently the most advanced in railway systems), technical specifications and tender documents suitable for international tendering. We were able to achieve an important milestone in a very short time (seven months), an achievement that seemed impossible.”
According to him, Oman and UAE networks are supposed to reach the border in 2018, connecting the first part. Liuzza says Oman’s will be a high-standard railway system. All lines will have double tracks and there will be no level crossing at all. The passenger train’s design speed is 220-km per hour, while the operation speed will be 200-km per hour. Freight trains will be able to run at a maximum speed of 120-km per hour. There will be heavy-load freight trains, which will be better than European quality and on a par with the US standards. The maximum axle load of the freight trains will be 32.4 tonnes, while in Europe it is only 22.5 to 25 tonnes. The higher standards will be maintained for transporting mineral products with heavy loads. The railway can accommodate freight trains of 2000-metre length, while in Europe it is only of 750 to 900 metres. He says particular attention has been given to freight transport, because Oman wants to be an international freight transport gateway and strategy hub, by connecting the ports. “We reviewed the transport study, collected data from different stakeholders, managed and processed the data in order to forecast the future transport demand, for the next 30 years,” adds Liuzza.
Owing to the challenging geographic terrain in the country, Oman’s rail network requires complex engineering solutions such as tunnels, bridges, and viaducts. Al Hatmy says the network is five times more expensive per kilometre than that of any other GCC state. Italferr which has done a lot of projects in Italy, Saudi Arabia, Emirates, Egypt, Qatar and Syria etc. says the design of Oman’s project has been technically challenging and very different from other neighbouring countries, because of the mountainous terrains in the country, especially in the first segment from Sohar to UAE boarder. “But we are very used to it in Italy, which is a mountainous country,” says Liuzza. “From Sohar to the border, there are a number of important structures and tunnels. Tunnels are unavoidable when you have to cross mountainous terrains. There are 4.5- km of tunnel in this route in addition to a lot of viaducts for a total length of about 20 kilometers. In fact, this is a very costly infrastructure.”
The next phases from Buraimi to Ibri and to Thumrait cross the desert and there will be no tunnels and very few viaducts. The connection to Duqm will also be through the desert. But there will be a very challenging connection from Thumrait to Salalah, because it involves connecting the desert to the mountain and then going down sharply to the sea level. “We already have a solution to the alignment. We are carrying out the preliminary design for the project with a lot of tunnels, bridges and viaducts.”
The railway will help Oman to tap fully its potential as a strategic location outside the Strait of Hormuz. Despite being projected as a freight and passenger railway, Oman’s railway network will initially focus on developing cargo capacity. In the phase one of the project, there will be two adjacent tracks designed to carry double-stacked intermodal shipping container cars. As observed by Liuzza, “The first priority phase of Oman’s railway project is to connect all the main ports in the country. Starting form Sohar, which is very close to the UAE boarder, the rail network will be connected to Duqm and Salalah. Connecting ports is part of the national strategy to make Oman an international and intercontinental freight gateway. It will also help Omani economy by boosting exports from the country. Now Oman has also an ambition to be an exporting country.”
Jamal T Aziz, CEO, Sohar Freezone and deputy CEO of Sohar Industrial Port Company corroborates, saying, “Oman has got a very strategic location on the Arabian Sea. Having different means to connect itself with the regional and international market will enhance the Sultanate’s value proposition as a regional and international gateway. Currently, the country is depending on roads which have a limited capacity to carry goods, but the advent of rail will create economies of scale, enabling us to transport huge volumes across the region and beyond”. The railway network offers abundance of opportunities for importers and exporters who are looking into different means of reducing transport costs. Adds Aziz, “No doubt that it is going to be of high economic value for the country. When we make the logistic chain, it can attract business and create job opportunities.”
Railway is coming at a time when Sohar is on the cusp of a major industrial transformation. The new road, air, and rail links are going to strengthen Sohar’s potential as a regional gateway. Railway will open up new vistas in freight transport and help further explore Oman’s immediate markets in the Middle East. A combination of shipping cargo and on-dock rail services can do wonders for re-exporting commodities. Dockside rail yards move cargo efficiently from container terminals and help reduce the number of trucks on city streets and highways. Being an industrial zone that generates huge volumes of cargo, Sohar can export massive volumes via rail, once it is in place. In addition, railway will help re-exports, which the port is currently focusing on in a big way, especially for automotive and other consumer products to various GCC and Middle East markets.
Ports and shipping
Port development is another focused area for the Sultanate’s government. Redevelopment of Sultan Qaboos Port in Muscat, development of remaining super infrastructure facilities at Duqm and another massive terminal for Sohar port are the major initiatives. Container ships, general cargo vessels and ships carrying vehicles have been shifted to Sohar last year and Muscat port will continue to allow vessels carrying grains, cement and bitumen.
Muscat port is getting a makeover with the expected development of high-end marina and hotel facilities, 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 on-going multi-billion investment in port development is also expected to help Oman to attract more and more transshipment trade, in a bid to make the country a regional hub.
Duqm Port, which started operations last year for receiving specialised project cargo for oil and gas industry, is investing heavily on all support infrastructure, gate, offices, roads and utilities. The entire work will be completed either by the end of this year or early next year. The early operations phase centres on a 300 meter-long quay wall, which is part of a 2.2 kilometer-long commercial quay, whose substructure is substantially complete. The commercial quay is divided into three main areas – 300 meters of cargo terminal, 1.6 kms of container terminal and 300 meters for a dedicated break bulk terminal for mining and mineral companies.
Plans are also afoot to set up an integrated public transport system for Muscat to help reduce traffic congestions seen in the city in recent years. The road projects that are being executed now in the capital of Muscat are not able to absorb the increase in population without development of a mass transit system. The whole plan envisages a massive expansion of urban bus service, integration of different modes of public transport, regulation of taxi services to enhance quality, integration of the proposed railway with other modes of transport, formation of a public transport authority and a nation-wide campaign to create awareness on the advantages of public transport, which calls for use of private cars.
A Spanish consultant, INECO, which is advising the government on developing an integrated public transport network in Muscat, submitted its initial findings to a high-powered steering committee of the Ministry of Transport and Communications in 2014. It is aimed at transforming the capital city’s public transportation landscape, as well as set the stage for a gradual rollout of public transport across the Sultanate.
The master plan is aimed at establishing a public transport system that contributes to the mobility needs and quality of life in Muscat, like any other developed cities in the world. The masterplan, which takes into account the peculiar nature of Oman, provides a clear roadmap for the implementation of a well-integrated public transport in Muscat. As part of the move, Oman National Transport Company will acquire as many as 400 new buses, including low floor buses, to enhance service in Muscat.
A recently released annual report called ‘GCC Powers of Construction 2015 Construction-the Economic Barometer for the region’ from Deloitte Middle East, forecasts that infrastructure and capital projects are powering growth in the region.
The year 2015 stands to be another key indicator of economic development as the Gulf Cooperation Council (GCC) continues to invest in infrastructure and capital projects. The forecast for projects planned and underway in the GCC in 2015 is $172 billion, the highest on record to date. This is according to Deloitte Middle East’s newly released annual report – “GCC Powers of Construction 2015: Construction – the economic barometer for the region”. Issued annually, the Deloitte Middle East Powers of Construction report serves as a comprehensive review of the construction industry for leaders.
The Deloitte report is based on data gathered from surveys and supported by interviews with some of the most prominent construction industry leaders from the region. According to the Deloitte report, key drivers for diversiﬁcation include job creation given that 50 per cent of the GCC population is under the age of 25. In the Kingdom of Saudi Arabia (KSA) alone it is forecast that four million jobs will be needed in the next ﬁve years. GCC population growth is forecast to grow from 35 million to 60.2 million by 2050, all driving the GCC countries’ strategies to provide education, healthcare, infrastructure and support to communities. This growth will require energy and water – a 34 percent increase in electricity generation capacity and a further 2.2 billion litres desalination capacity are required by 2020.
“The forecast of $172 billion worth of projects are against a backdrop of lower oil prices, continuing political unrest and reduced International Monetary Fund (IMF) growth forecasts across the GCC,” said Cynthia Corby, audit partner and leader of the Construction industry for the Middle East.“However the GCC countries have the beneﬁt of reserves, which they have built up as a buffer and which they can continue to use to achieve their outlined strategies. Therefore, they are expected to continue to spend on infrastructure and capital projects in order to achieve their strategies for diversiﬁcation of their economies,” she added.
Highlights of the report include:
The dwarﬁng infrastructure project of the region is of course DWC: Al Maktoum International Airport expansion, currently budgeted at $32 billion and anticipated to be the biggest airport in the world. This is followed by a massive industrial project in Abu Dhabi for Tacaamol – Al-Gharbia Chemicals Industrial City, planned at $20 billion. There are other sectors with several billions being planned on capital projects, with the top sector for 2015 being mixed-use and residential projects amounting to $24 billion.
The largest project in pre-execution phase in KSA is Al Mozaini – Riyadh East Sub Centre, for $15 billion. The second largest project in pre-execution phase is Khozam Development in Jeddah for $13.3 billion. This mixed-use development located in the south east of the center of Jeddah is expected to develop the area economically, culturally and socially. There are a number of other sectors with several billions being planned on capital projects, with the top sectors for 2015 represented by healthcare projects amounting to $19 billion, infrastructure projects (roads and bridges) at $35 billion, and power plants at $13 billion.
In Qatar, the two largest projects in pre-execution phase and expected to be awarded in 2015 are from QRail, namely the “QIRP: Passenger & Freight Rail”, budgeted at $15 billion, and from QIRP, whose “Passenger & Freight Rail: Phase 2” is budgeted at $3 billion. This is followed by two projects, one for the new Qatar Economic Zone budgeted at US$3 billion, which is one of the three new planned economic zones mainly focusing on logistics and air freight companies (expected to be the biggest of the three), and Occidental Petroleum Corporation (Oxy) – Idd e Shargi North Dome Expansion Phase 5, again budgeted for $3 billion. So in Qatar a clear focus on infrastructure continues as expected.
Rest of the GCC
Out of the total $2.8 trillion projects which are in execution and pre execution phases, 40 percent of this value relates to residential, leisure and hospitality buildings and mixed-use developments, totaling an anticipated budget value of $1.1 trillion. These projects are the most sensitive in terms of balancing supply and demand in each of the GCC countries, with timing of delivery balanced alongside a sensible return on investment likely impacting the awards of these projects speciﬁcally. GCC countries are hence expected to manage their economic growth and planned capital projects to create diversiﬁed economies with effective debt and capital funding in the coming years. “What seems clear is that the necessity to move away from oil-based economies has never been greater and that in the race to diversify, there will be winners and runners-up. Quite how this will play out is too early to say, but the gap is likely to grow, providing a regional hotspot of investment and development,” concludes Andrew Jeffery, managing director, Capital Projects Advisory, Deloitte Middle East.
Oman has been investing heavily on infrastructure development for quite some time with an aim to spur economic growth, and it hasn’t missed an opportunity to upgrade existing facilities that can match the best in the world and introduce novel concepts that will eventually bring more business to the country.
While the Sultanate is set to reap benefits from some of the projects in 2015, it is busy sowing the seeds of many other ambitious plans to ensure a prosperous future. Topping the chart is the much-awaited road link to Saudi Arabia, as the 700-kilometre stretch that passes through the Empty Quarter has the potential to enhance business between the two countries. The Saudi Arabia stretch of the 256km Oman-Saudi highway project is nearly 85 per cent complete, with a few months of construction remaining. The Omani side of the road is complete and work on the ROP border check post is nearly done. The highway begins at a site near Shaybah Oil Field owned by Saudi Aramco, and once complete, will run to the Saudi-Oman border. Work is being undertaken in one of the world’s hottest, driest, and most unforgiving environments with day time temperatures rising to 50°C, while plummeting sharply at night.
At present, the project is approximately 85 per cent complete, with 121mn m3 of sand having been excavated, transported and compacted thus far. Some 10mn m3 of related materials required to stabilise the surrounding sand have also been deployed. The contract stipulates that the road must be monitored for one year following its completion. This will involve crews driving up and down the length of the highway with graders to clear the shifting sand. The Oman Convention and Exhibition Centre will make the country the World’s meeting place, while Kempinski Hotel is expected to provide a major boost to the tourism industry. But the game changer will be the Public Transport Master Plan that will chalk out methods to ease traffic in major road networks in the Sultanate.
Road networks all over the Sultanate are undergoing a major overhaul. But the country is eagerly waiting for the new road that connects Oman with Saudi Arabia to open up in 2015. The road, which will cut down the distance between Oman and Saudi Arabia by 800 kms, passes through the Empty Quarter and Saudi’s Eastern province of Ihsa. Oman has 160 kms of the total stretch while Saudi has 519 kms of the road. The new road will reduce travel time, as people from Oman do not have to pass through UAE to reach Saudi Arabia. The road is expected to usher in economic development in Dhahirah Governorate.
The work on the high profile Oman Convention and Exhibition Centre (OCEC), which will promote Oman worldwide as a quality destination, will be put on fast track this year to meet the 2016 deadline. The state-of-the art structure, located just four kilometers from the Muscat International Airport, will ensure meeting space to suit the most discerning conference and exhibition organisers in the world. The centre will feature an elaborate lyric-style tiered auditorium to seat 3,200 people while the exhibition halls will feature 22,000 square meters of column-free exhibition space. Hall 1 has a superior fit-out with specialised acoustic treatment, advanced lighting and rigging requirements. Halls 1 and 2 combined can act as a multi-purpose space for larger plenary, concert or performances seating up to 10,000 theatre style.