Oman


Sunday Beat: Transport and logistics hold promise in Oman


Saleh Al Shaibany

If you forget about the potential revenues from income tax and savings from subsidies, then the vital economic diversification has a fresh hope through transport and logistics.

With the future of Omani oil uncertain after a quarter of century from now, the government is already looking ahead to tap into a new wealth expected to be generated from what was perceived as highly unlikely ten years ago. 

The reality is fast dawning on our economic planners that our natural resources are finite and that we need both a neighbourly support and technology to boost business in the private sector. 

Tapping into the good relationship across the Strait of Hormuz with the Iranians, Oman is taking the advantage of its friendliness with Tehran to transport much needed gas to the country in a joint venture that will provide a feedstock to a number of projects across the nation. 

The ten billion cubic meters per year Iranian gas, is expected to flow in by 2017 through the massive pipeline logistics across the Gulf of Oman. The one billion dollar project, to be entirely funded by Oman, will not only resurrect many projects on anvil in the Sohar Free Trade Zone but create a niche liquefied natural gas (LNG) export market for Oman.  

At the moment, Oman produces less than 10 million tonnes of LNG per year. The Iranian gas will double up Oman's LNG exports by 2020 to significantly expand Oman's revenues.  

The economy will receive a further shot in the arm with the planned construction of the 2,250 km long railway across the length of the country.  

The estimated $6 billion project will serve over 50 stations along the way to transport a variety of goods. It will create a whole new industry in logistics and supply chain management. 

The marine gas pipeline and the railway, in theory, will create new business opportunities in the construction phases and thousands of jobs for nationals.  However, sometimes theories have a way of evaporating into the thin air. 

From certain quarters in the government, there are already murmurs that Oman has no experience in executing a massive railway project. When the red flags are going up, it is common for any country to overlook certain aspects of implementation that will turn out to be disastrous to the investment strategy. 

Bad implementation in the planning stages usually takes a big chunk away from the expected revenues. 
Consider the current airports projects which started with modest budgets but ballooned to something far more substantial.

I really hope that lessons of the past have been learned and the ghosts of mismanagement will not haunt the state coffers again. 

With world class consultations from experienced international project managers and the eventual awarding of the contracts to deserving companies, these two projects should be the flagships of the economic diversification plans. 

Rural economy booster
Transport and logistics will benefit the rural communities where it is mostly needed. The expensive overhead and running costs of the ports and airports will be finally justified. It will fit like hand in glove with the infrastructural diversity in towns outside Muscat. 

Salalah has been forced to be the second city for many years with no significant developments. Sohar is on the verge of stagnation with no major projects of international scale in sight. Duqm, after the current project mania is over, will probably follow the footsteps of the other two towns.  

However, the Iranian gas and the railway will not only give these strategic towns new impetus but other towns neglected by the past economic expansion.   Is it too soon to start spelling out a new economic revolution in Oman? I am thinking of historical towns that once were the drivers of the nation's economy such as Sur, Musandam and Buraimi. 

Those days, owing to the seafaring powers of Omani sailors, transport and logistics depended on the maritime business.  Today it seems only the capital has any real power of driving the economy. But here is now the opportunity to share of the economic spoils with every corner of the country.

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