Energy
EXPLAINED: How Is EDO Expected To Reduce Oman’s Budget Deficit?

Muscat: The Sultanate has devoted a total investment of RO1.3bn to Energy Development Oman (EDO) and will remove the Petroleum Development Oman (PDO) from the expenses of the General State Budget.
A 100 per cent government-owned establishment, Energy Development Oman has been established with a clear vision to reduce the financial dependence of the oil and gas sectors on the General State Budget.
Oil and gas expenditures were estimated to hover around the RO2.3bn mark in the 2021 General State Budget. But the outlay has since been transferred to EDO’s portfolio.
Issued by Royal Decree No. 128/2020, it was stated that the company will be formed with the purpose of transferring government stake in Concession Area 6 to EDO.
Also read: Oman General Fiscal Budget 2021: The Big ‘First Step’ Towards Achieving Vision 2040
The new company will be tasked with the collection of oil and gas revenues, payment of capital expenditures and operational expenditures of annual production, and development of the oil and gas sector.
It will also develop and expand the sector and pump more investments to bolster financial and economic returns of the state, thereby keeping PDO oil and gas expenses out of the general budget, which will enable the company to enjoy financial independence.
In this way, EDO can fund its own economically feasible development projects and reflect the actual value of this sector, which will have a positive effect on indicators of financial performance.
It is also expected to reflect positively on PDO, allowing it to carry out investment projects without dependence on the State Budget.
EDO is expected to upgrade the performance of management of the oil and gas sector, support government plans on cost-cutting and increasing economic activity, as well as the in-country added value of petroleum activities.
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