Time of Expansion
The defining development in GCC transportation infrastructure at present is the Gulf Rail network. The line will ultimately run from the Kuwaiti border with Iraq as far south as Oman’s busy Salalah, with the possibility of an extension into Yemen depending on political agreements. Oman is eagerly undertaking its responsibilities with regard to the rail network, while simultaneously pouring funding into its aviation and road networks.
The synergies that will emerge from this combined improvement will place Oman in a strategically important position. The anticipated subsequent influx of FDI, coupled with an infrastructure that is capable of supporting an ever-growing amount of passengers and freight, will transform the Sultanate into an efficient, connected whole. Considering the fact that the country virtually had few paved roads before the reign of HM Sultan Qaboos, this is a more than impressive achievement.
Though Oman currently lacks an active rail network, the prospect of the inter-GCC Gulf Railway has inspired the country to set some major projects in motion. The UAE’s impressive Etihad Rail is forging ahead and meeting its stated objectives, with its initial phase due to be completed by 4Q2013. The network will feed into the planned regional network, which it is hoped will be ready by 2017. Oman Rail is currently in the initial stages of evaluating contractors with a view to finalizing preliminary agreements by the end of 2013. The project, worth approximately $15.5 billion, is expected to start in 4Q2014 and be operational by 2018. The initial phase will link the coastal ports of Sohar and Muscat, then from Muscat to Duqm, and finally from Sohar to Al Buraimi on the Emirati frontier. In total, the network will comprise 2,244 kilometers of track, and will have a considerable effect on the economy, specifically in the logistics sector. “Rather than trucking, we are hoping to use trains to send cargo from here to Dubai,” explained DHL Country Manager Turgay Sarıkaya, speaking with TBY. “If this train connects to Istanbul someday, our customers will be able to buy Omani products and choose to send them via train; rail will be a game changer for Oman.”
HIT THE ROAD
Oman comes in at 67th in the world for car ownership, not far behind its GCC neighbors Saudi Arabia and the UAE at 51st and 55th respectively. The country is, however, on the brink of an unprecedented expansion of its highway, bridge, tunnel, and general road infrastructure. In September 2013, Muscat played host to the Oman Land Transport Infrastructure Summit. It was announced that 12,704 kilometers of roadways will be added to the roughly 45,000 kilometers that currently exist, 29,000 kilometers of which are paved. In addition, seven tunnels will be created for the Daba-Lima-Khasab carriageway in Musandam. The continued development of the massive ports of Duqm and Sohar will involve sustained construction of related infrastructure, and the sector looks set to keep growing. In conjunction with the rapid development of other transport networks, the government’s heavy investment in roads ($8 billion over the coming years) is expected to facilitate the diversification of the economy in keeping with the Oman Vision 2020.
WHEN SHIPS COME IN
Overall, 2012 was an outstanding year for the shipping sector in Oman. The government’s ambitious port construction policy, intended to make the most of the country’s advantageous position at the entrance to the Gulf and facing the Arabian Sea, has been developing as expected. A combination of enviable location, expert management by Dutch port authorities, and strategic investment on the part of the Sultanate and private shipping firms have led to this promising situation. Established in 1998, the Port of Salalah is Oman’s largest. It grew by over 10% to reach 3.62 million TEUs in 2012, an impressive figure for the increasingly popular Arabian harbor. Planned expansion of facilities to boost both the port’s dry and liquid bulk capacity will be finished by 1Q2014, confirming the crucial role it is playing in the Dhofar region and the country at large. Sohar, much closer to the capital and neighboring UAE, saw a staggering 51% growth in 2012. Viable progress is forecast for Sohar as it reaches its 10th birthday and capitalizes on its upstream hydrocarbons, metal and steel, and logistics shipping potential. The soon-to-be immense port of Duqm, being operated by the Port of Antwerp, has been expanding continually. Duqm refinery is planned to be completed by 2017, and will drastically transform shipping in the Sultanate.
BREATH OF FRESH AIR
Majority-owned by the Omani government, Oman Air is the national carrier of the Sultanate. It was founded in 1993, and enjoyed rapid success, expanding international flights to some of Oman’s closest neighbors including the UAE, Qatar, Pakistan, Bangladesh, and India. In 2007, the government presided over a considerable recapitalization of the airline. Oman Air has since gone from strength-to-strength, culminating in its May 2013 World Travel Awards win in the “Middle East’s Leading Airline Economy Class” category. It has firmly established itself as a serious competitor in the GCC, and has been expanding its fleet (30 aircraft as of 1Q2013). Increased demand from the Indian Subcontinent was formalized by the signing of memorandum of understandings (MOUs) with both India and Pakistan, and long-haul flights to France, England, and Thailand are now counted among their routes. The airline plays a crucial role in promoting tourism in the country, specifically to the budding holiday destination that is Salalah. Approximately 10 daily flights were operated on the Muscat-Salalah-Muscat line during the holiday season from June to September 2013, reinforcing the importance of the destination and the assistance the aviation sector can offer. The value of the aviation sector in Oman is evident: 52% of visitors to the Sultanate arrive by air, according to the UN World Tourism Organization (UNWTO).
The Omani authorities have been making all the right moves to transform the country into a regional logistics hub. According to Warith Al-Kharusi, Chairman of the Oman Logistics and Supply Chain Association, “The economy of the country is reliant on the effectiveness and efficiency of its logistics.” The growth of GDP (estimated to reach $18.5 billion in 2015) is related to the government’s heavy investments in infrastructure, and in the development of logistics centers centered on the country’s major ports, most notably in Sohar and Salalah. The Salalah Free Zone Company, which already houses $3.6 billion of industrial, petrochemical, manufacturing, and logistics investments, is currently carrying out extensive expansion of its site. Within the coming five years, up to 229 hectares of land are designated for development. The government has a clear focus on facilitating business and investments throughout the country, evident not only in these free zones, but also in progressively unrestrictive customs procedures. Efficiency and speed are becoming watchwords as the authorities completely overhaul the customs process. The provision of infrastructure and easing of bureaucracy, together with the country’s privileged location between the prosperous Gulf, resource-rich Africa, and industrial India, could finally help the Sultanate achieve its dream of a diversified economy based in part on logistics.
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