Oman to privatise six state-owned enterprises
January 2, 2018 | 10:29 PM
by Syed Haitham Hasan/[email protected]
The first phase of the Batinah Coastal Road project, including compensation for the people affected by the project, has been completed.

Muscat: Six state-owned enterprises (SOEs) that are currently carrying out projects worth OMR3 billion will be privatised this year, the Ministry of Finance said in its detailed analysis of the budget.

This will be in addition to the government’s OMR2.7 billion set aside for the implementation of investment projects in the oil and gas, and infrastructure sectors.

These projects include oil and gas production, transport infrastructure, and other plans that will yield benefits to the Omani economy in the future. The SOEs will be an important source of funding to continue these projects.

While the analysis does not name the companies that are to be privatised, the Ministry made its intentions clear on its expectation from the private sector in the development of Oman.

“Most companies normally privatise through listing at the stock exchange or selling to a foreign partner. The main purpose is to raise money for development, improve operational efficiencies and restructuring the labour force. This can be with one large company selling a part of its stake, and five smaller companies being completely privatised.

It completely depends on the government’s intentions and what they wish to achieve with the privatisation,” said Fabio Scacciavillani, chief economist at the Oman Investment Fund.

The contribution of private sector investments reached 60 per cent of the total investment in 2016 as a result of the government’s continuous reforms, to enable a better business environment. The government is currently working towards enacting a Foreign Investment Law, a Public-Private Partnership (PPP) law, and a Bankruptcy Law.

This is also the government’s Tanfeedh programme, which seeks 80 per cent of funding to be pumped in by the private sector for 91 initiatives underway.

According to the budget 2018, oil prices, estimated at $50 per barrel, will produce 70 per cent of the OMR12.5b in revenues. The deficit has been kept the same as last year by increasing expenditure on important projects.

“The most important aspect of budget is that revenues and current expenditures are in line with each other or nearly the same. So borrowing is done only to implement infrastructure projects that will produce a return. This is what is applying the golden rule, that is, to pay for current expenditures from revenues, and pay for return yielding projects by financing it,” Scacciavillani explained.

He added that Oman’s budget is not just prudent, but it tells lenders that ‘you are not lending money, but financing growth, from which returns are evident.’

The new Muscat International Airport will be operational in 2018. This airport, as one of the strategic projects, will bring about a shift within tourism and logistics in Oman.

The first phase of the Batinah Coastal Road project, including compensation for the people affected by the project, has been completed.

Additionally, the Batinah Expressway project is on-going.

Further, the Bidbid-Sur dual carriageway project, including four tunnels in Wadi Al Uqq, has been completed.

The implementation of the 240-km Adam-Thumrait road dualization project is ongoing. The current road projects shall contribute in reaching the goals of the Oman Logistics Strategy 2040 (SOLS 2040), which seeks to enhance the contribution of the logistic sector to the GDP.

The Liwa Housing project is underway. Water networks are being built in various wilayats.

In partnership with the private sector, agreements have been signed to construct three new hospitals, namely the Sultan Qaboos Hospital at Salalah, the Al Suwaiq Hospital, and the Khasab Hospital. Also, work is being performed to provide allocations for scholarships and grants for Omani students.

Provision for allocations for new schools. As for investment projects in Duqm, some projects have commenced, such as the Duqm Refinery, the crude oil storage terminal, Karwa Motors, the Sino-Omani Industrial City, and the Sebacic Oman Bio-Refinery for production of derivatives of castor oil.

This is in addition to a number of real estate development projects, including the little India Tourism Complex.

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