Oman’s multi-pronged efforts to attract foreign investment to develop the country’s special zones have started bearing good results

Oman’s government has taken several bold steps to strengthen privatisation programmes within industrial estates across the country. As part of the strategy, the Public Establishment for Industrial Estates (PEIE) has formed a new holding company to manage the establishment’s assets in different industrial estates across the Sultanate. The move is expected to strengthen the role of the private sector in attracting investment in the manufacturing sector in a more flexible and easy manner.

PEIE will own 51 per cent stake in the newly-formed Oman Investment and Development Holding Company, while 49 per cent will be offered to the private sector. The new company will manage PEIE’s 100 million square metre industrial land and other assets in different industrial estates, which will help bring in flexibility and easy implementation of the privatisation strategy.

The holding company, which is expected to start operation in the second half of this year, will promote companies for development, management and operation of the existing industrial estates through partnership.

Industrial estates

The country’s industrialisation drive was mostly facilitated by the PEIE, which manages more than six industrial estates spread across the country. PEIE, which acts as a one-stop-shop for new entrepreneurs, manages Rusayl, Raysut, Sohar, Sur, Nizwa and Buraimi.

Plans are also afoot to transfer the existing industrial estates to the holding company gradually, while taking into consideration that the offered services to companies, investors, and clients are not adversely affected. In line with the strategy, the role of PEIE will be limited to planning, regulating, monitoring, and following up till 2022, while the role of the Oman Investment and Development Holding Company will be to develop, manage and operate industrial estates. Apart from forming a holding firm, PEIE has adopted a programme to strengthen partnership with the private sector in building, managing, and operating industrial estates belonging to the establishment.

The first step is to attract major developers to all new industrial estates and PEIE will not invest directly in the development process. The second initiative is related to opening the way for the private sector to work under the umbrella of PEIE as owners and developers of industrial areas for a variety of investment activities. For implementation of the first part, PEIE will provide investment opportunities in new industrial estates located in a number of wilayats in 2018 and 2019 for the local and foreign private sector.

As far as the second initiative is concerned, in order to expand the industrial areas, work is underway to provide approvals for the private sector to establish areas owned by it or areas where it owns the rights to use the land outside the lands of PEIE. The PEIE is planning to build new industrial estates in several locations, besides expanding existing ones to meet the growing demand for industrial plots. The PEIE plans to build three industrial estates – one each in Thumrait, Shinas and Al Mudhaibi.

There are also ongoing expansion projects for further developing existing industrial estates, which will help diversify the country’s economy and create employment opportunities for Omani youths. Apart from projects within the industrial estates, several mega ventures are in different stages of planning and implementation. Several industries, including the Salalah Ammonia Plant, Salalah Liquefied Petroleum Gas, an acetic acid project, an automobile body-building unit and several petrochemical ventures are in different stages of planning and implementation. For instance, the state-owned Oman Oil Company (OOC) started work on two major projects – Salalah Ammonia Plant and Salalah Liquefied Petroleum Gas (SLPG) – in Dhofar. These projects are strategically important for strengthening the industrial sector and enhancing economic diversification plans in the Sultanate.

SLPG will have a capital expenditure of $826 million, and will be developed on a 20 hectare-plot within Salalah Free Zone. LPG and Condensate Storage Facilities will be built at Salalah port on an area of around eight hectares. The project, which has LPG extraction facilities at Salalah Free Zone, is developed by Oman Gas Company – a subsidiary of Oman Oil Company. Petrofac of UK own the engineering, procurement and construction (EPC) contract to build the project.

The main LPG Extraction Plant will have a processing capacity of around 8.8 million standard cubic metres per day. The plant will have local LPG truck loading facilities catering to domestic demand in Dhofar region. Together with a dedicated export jetty, Salalah Port will become an international LPG and condensate export hub beginning in 2020 when the project is fully operational.

The estimated cost for the ammonia Project, developed by Salalah Methanol Company, a subsidiary of Oman Oil Company, is $463 million. The project will span over 12 hectares at Salalah Free Zone and will include facilities for manufacturing, storing and exporting ammonia. The construction work of the plant, which will produce 1,000 tonnes of ammonia per day, is expected to be completed by 2020. The plant will enhance the sustainability, increase the profitability and diversify the company’s product portfolio, through targeting its main market in India, Vietnam, Thailand, South Korea and Japan. The two projects are part of Oman Oil Company’s growth strategy aimed at strengthening value addition in oil and gas sector.

In yet another development, energy major BP is in discussion with the Oman government, its energy investment arm Oman Oil Company (OOC) as well as a potential partner, to press ahead with the implementation of its world-scale acetic acid plant in Duqm — a project involving an investment of around $1 billion.

The proposed Duqm Acetic Acid project, first unveiled few years ago, envisions a large-scale petrochemical project based on BP’s proprietary SaaBre technology. Oman Oil Company, which is a 50 per cent equity partner in the $7 billion Duqm Refinery project, is also expected to play a key role in the venture.

Projects in Duqm

In another major initiative, foundation stone for a bus manufacturing and assembling unit developed by Karwa Motors project was laid in the Special Economic Zone in Duqm (SEZD) recently. Karwa Motors is a joint venture partnership between Mowasalat Qatar – the national transport company of Qatar (with a 70 per cent equity stake) and OIF, a sovereign wealth fund of the Sultanate (with the remaining 30 per cent stake).

Together, the partners will invest around $90 million in the initial phase of the project – a venture with the potential to underpin the growth of a bus hub at Duqm over the long-term. Karwa Motors will leverage Oman’s existing automotive supply chain network to gain a foothold in the Oman and Qatar markets, which is tipped to become the region’s largest by 2022.

This plant will enable Karwa Motors to sell buses in the largest market of the Mena region while providing greater flexibility for Oman and Qatar. Demand for buses across the world is growing and this is the first step towards becoming a leading regional bus manufacturer. The first stage of the project will be on a 220,000 square metre site located not far from a world-scale multipurpose port currently being developed at Duqm. The plant is initially planned for a production capacity of 1,000 buses a year, which can increase up to 3,000 buses per annum in a phased expansion based on market demand. The first Sebacic acid plant, which has a capacity to manuafactur 30,000 tonnes of sebacic acid per annum, also started production at Duqm. The 100 per cent export-oriented unit of Sebacic Oman was established with a capital expenditure of $62.7 million. This is the first sebacic acid manufacturing project in the entire Middle East and North Africa (Mena) region. Indian and Omani investors have promoted the state-of-the-art export-oriented sebacic acid project with a capital expenditure of $62.7 million.

The government has also succeeded in marketing Duqm as an attractive investment destination for Chinese investors, who were looking for a manufacturing and transhipment base for exports to South East Asia, West Asia and the entire Middle East and North Africa (Mena) regions. It is a win-win situation for both China and the Sultanate as Oman could strengthen its manufacturing base and thereby create employment opportunities for its young population, while China could easily capture important export markets in the region due to the strategic location of Duqm, which is close to international marine routes that connect East and West.