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	Oman		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Current and Projected Projects General In May 1994, the government announced its intention to give priority to development of a US$ 9 billion liquefied natural gas (LNG) project. The government hopes to start exporting LNG by the year 2000. In addition, a number of industrial estates are being set up throughout the country to provide subsidized services for investors in plants for light manufacturing. Other development initiatives include a focus on developing the infrastructure of Oman's interior in order to provide services and employment for Oman's growing population as much of that growth is centered in those rural, interior areas. China's participation in the aluminum smelter project in Sohar was an example of fruitful industrial cooperation involving a Chinese government corporation which undertook to supply the project with raw materials and purchase its product. Another project in petrochemicals is also planned for Sohar. The first phase, with a capacity of 240,000 tons a year, is expected to come on stream in 2000. This is to be followed by a second phase which will double capacity by 2003. Both the smelter and the petrochemical projects are closely linked. Each would be located at Sohar, could share gas infrastructure, and even their use of the gas would be complementary. The power plant for the smelter will use lean gas, while the petrochemicals complex will use rich gas, both from the same source. Power supply may also tie the projects together. The smelter will include the construction of a power and desalination plant with a capacity of 1,800 MW and thirty million gallons a day. A surplus will be available to local industry, likely to include the petrochemicals plant. Whether any of the surplus could be made available beyond the Sohar industrial zone is still an open question. The government has yet to clarify the situation on the privatization of the power sector. Until this is done, it will remain unclear who would be in charge of transmission and distribution by the time the smelter will come on stream. The connection between the two Sohar projects is so strong that the success of each is dependent on the other. The recent appointment of BP Chemicals as the government's partner in the petrochemicals complex shows that Oman is well aware of the need to move ahead decisively. Based on concerns of supply, the government dropped plans for a submarine pipeline to export gas to India and for a pipeline to export to the UAE. The financing package will consist of export credit and commercial bank facilities, deferred equipment purchase arrangements and equity participation. An international syndicated loan is unlikely. Oman is keen to encourage local involvement with all its planned large-scale projects and the Sohar Aluminum Smelter Company expects to float an equity stake on the Muscat Securities Market within two years. China National Non-Ferrous Metals Industry Corporation and Charus Enterprises will be the leading investors in the Sohar Aluminum Smelter Company (SASCO). Negotiations are currently taking place with the UK-based National Power concerning a substantial stake in the project and the US-based Kaiser Aluminum, technology provider for the smelter, may also take an equity portion. The government is not expected to be a major equity holder, as it is in the other gas-based industries. Oman's Department of Financial Support within the Directorate of Industry offered grants for two factories outside Muscat and provided finance for a study on an iron pipelines project. Fourteen projects received industrial loans, totaling US$ 57.2 million. Oman is especially interested in joint ventures to produce polyvinyl chloride (PVC) pipe and other plastic products. Build Operate Transfer Italy's Renardet is carrying out a feasibility study on the establishment of several toll roads, to be constructed on a BOT basis. The Manah power station came on stream in April 1996, making Oman the first Gulf Arab state to use a build own operate transfer (BOOT) scheme for an infrastructure project. Oman also plans to use BOOT in Muscat and Salalah wastewater projects. A number of other private sector projects, ranging from an aluminum smelter to a sugar refinery, are also planned. Ports at Raysut and Sohar are set to be developed too. The biggest project, however, is a US$ 6 billion partnership between the government and foreign firms to produce 6.6 million tons a year of liquefied natural gas by the year 2000. The management of the entire wastewater project for Salalah, the capital of the southern province of Dhofar, has been won by the Salalah Environmental Treatment Company (SETCO), a consortium consisting of two local firms Shanfari Trading & Contracting Company and the Tawoos Group-as well as the Omani-UK joint venture of Yahya Costain and North West Water International of the UK. The award includes a thirty-year concession and two phases of expansion for the wastewater conveyance systems as well as a new US$ 30 million sewerage plant due to be built in Salalah. The sewerage plant is expected to be built by a US firm, Abu Susa, which presented the lowest bid for the project earlier this year. A second large wastewater project for Muscat, the capital of the Sultanate, is likely to go to another international/Omani consortium. This consists of the local company, Galfar Engineering & Contracting, along with two UK firms Babcock Water Engineering and John Laing International, Ogden Yorkshire (a joint venture of the Ogden Corporation of the US and Yorkshire Water of the UK) and Auscon Consultants International of Australia. The work includes the construction of a wastewater treatment facility, related networks and operation and maintenance of the capital's wastewater conveyance systems on a BOOT basis. The consortium is expected to take a majority 51 percent of the total equity, which is expected to amount to about US$ 104 million. Additional finance is to be raised through a public offering, foreign loans and local private investment. An Omani institution, the Bank Muscat ae Ahli Al Omani, is helping the consortium to raise the funds. Bidding for a third project, also being built on a BOOT basis, closed August 1996. It concerns the construction of a large aquifer in the Ibri area of Dhahira for the Ministry of Water Resources capable of supplying up to 200,000 people for fifty years. The award will include a thirty-year concession and will cover the establishment of pumping stations and a transmission and distribution network consisting of some 100 kilometers of pipelines. Altogether, the project is expected to cost US$ 104 million. Furthermore the government is considering selling off the 222-MW power station at Wadi Al-Jizzi, one of the largest in the Sultanate. Private investment is also being considered by the Ministry of Electricity and Water (MEW) for the construction of a major new power generation complex at Sur, in the Sharqiya region. Feasibility studies for the complex have been completed, but no decision on how it will be built has been taken. Sources close to MEW say that the huge Barqa private power and desalination complex will go ahead by the end of the year with the issue of a tender and the selection of a developer. A contract is expected to be awarded in the first three months of 1997. The plant is to be built on a BOOT basis over four phases, according to the sources. and will have a total capacity of 1,800 MW and fifty-six million gallons of water a day. The first phase will involve the construction of a 388 MW power plant, with a capacity of fourteen million gallons of desalinated water a day. Previous Chapter Contents Menu Next Chapter

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