LIKE TO MOVE IT

Oman 2015 | TRANSPORT | REVIEW: TRANSPORT

Benefiting from shrewd investments by the government, the Omani transport sector is thriving in anticipation of wider regional integration.

Spurred on by the prospect of the viable infrastructural integration of the GCC, Oman is working hard to ensure its own road, rail, maritime, and air assets will be ready to take full advantage of the situation. The principal seaports of Sohar, Salalah, and now Duqm, have the potential to attract shipping giants from around the world, which will have the option to then move cargo over Omani territory and re-export merchandise to Gulf neighbors over land. This is reliant on the completion of the Gulf Rail system, which is receiving heavy investment from the state, along with its airport and road base.

DAYS ON THE ROAD

Despite having virtually no road network prior to the accession of His Majesty Sultan Qaboos bin Said in 1970, Oman overcame the challenge posed by a completely underdeveloped road network and today boasts an impressive system that serves the country's 3.9 million residents. Globally, Oman ranks 64th in terms of per capita car ownership, according to World Bank data, and each year this figure is rising. Figures obtained from the Royal Oman Police show that 62,465 new private vehicles were registered over the preceding year by end-July 2014, a 14% increase on mid-2013. Over 12,000 vehicles intended for commercial usage were counted, in addition to thousands more for government and rental use.

Outlined in the seminal Oman Transport Infrastructure Summit in Muscat in late 2013, the government has extensive plans for the country's road network, many of which have already begun to be implemented. Among the projects that will have the most profound effect on the country is the construction of seven tunnels as part of the Daba-Lima-Khasab roadway, and a combined total of almost 13,000 kilometers of new routes will be created. These will augment the existing system of almost 50,000 kilometers of roads, approximately 30,000 of which have been paved. The Omani Ministry of Transport and Communications will spend $8 billion on roads over the coming years, as part of the 2011-2015 Five-Year Development Plan.

SILVER WINGS

A key strategic element of the government's broader transport infrastructure plan is the development of its airports. With airfields in the capital Muscat, the southern city of Salalah, the key ports of Duqm and Sohar, and Ras Al Had on the eastern tip of the Omani coast, the government is pursuing a decentralized policy designed to shift the focus of economic growth away from the main cities and foster the development of the rest of the country. Crucially, the integration of inland Oman is considered necessary for a sustainable future for the nation. Oman Air is the Sultanate's official carrier, and celebrated the 20-year anniversary of its foundation in 2013. It operates routes to Gulf neighbors the UAE and Qatar, as well as South Asian countries traditionally connected with the region through maritime trade, such as India and Pakistan. Additionally, services to Tanzania and the Maldives have improved connections with Africa's Indian Ocean nations, while new routes to Manila and Jakarta began in late 2014.

The success of Oman Air has been recognized internationally, with the carrier being awarded Best Business Class Airline Middle East and Best Economy Class Airline in the Middle East at the World Travel Awards in May 2014, reinforcing its reputation across the world. It has also been celebrated for its contribution to sport in Oman through the sponsorship of athletes and the national soccer team. However, these achievements come at a cost, with the company sustaining losses of almost $300 million in 2013, a 16% rise on 2012. Concern over this fact is allayed by the government's pragmatic view that the regular international connections provided by the airline play a crucial role in the country's broader economic growth.

In addition to Oman Air, the preeminent airlines of the Middle East, and many from beyond the region serve Muscat. Qatar Airways, Turkish Airlines, Saudia, Egypt Air, Etihad, Emirates, KLM, Lufthansa, and British Airways all run regular services to the capital, ensuring that Oman remains connected with its hinterland and key destinations around the world. Overall 41,296 take offs and landings occurred at Muscat International Airport in the first half of 2014, transporting 2,299,549 arriving and 2,332,284 departing passengers. Domestic flights moved 454,079 passengers within the country, bringing the grand total of passengers passing through its terminals to 5,105,199.

MANAGEMENT ISSUES

The expansion of the Muscat and Salalah airports is ongoing, and represents a significant investment on the part of the Omani state. The new Muscat International Airport will have an initial capacity of 12 million passengers per annum at the first stage of its operations. Subsequent development of the 334,995-sqm terminal building will cater to 24, 36, and then 48 million passengers annually. Between the Muscat and Salalah projects, 10 main contracts and three standard nationwide contracts were tendered. The principal consultancy contract was awarded to Hill International for design and supervision of the project, while ADPI took responsibility for project management consultancy. However, the authorities are keen to involve local firms as much as possible. In conversation with TBY, Vic Allen, Acting CEO of Oman Airports Management Company (OAMC), noted that “as part of our support for local industries we recently gave a workshop to outline the available opportunities, and are seeking ways to accommodate the SME sector, which the government of Oman is keen to promote." The OAMC is responsible for the development of land around the new facility, and is considering the construction of an “Airport City" that would tie in to the logistics infrastructure of the country as a whole.

TAKE ME HOME

The growth of Oman's Indian Ocean port infrastructure, the development of its rail network, and the construction of airport logistics facilities is combining to transform the country into one of the Gulf's leading logistics providers. Sustained government investment in the sector has contributed considerably to the growth of GDP, predicted to reach almost 5% in 2014, and rise by over $18 billion in 2015. Driven by a recognition of the central role of logistics in a diversified Omani economy, logistics centers based around the ports of Sohar, Duqm, and Salalah are being created or expanded to cater to the long-established trade routes which connect Africa, the subcontinent, the Gulf, and Europe. When rail systems are running efficiently, these prominent ports will connect directly with the GCC rail network at the UAE border in Al Ain, offering transport companies the chance to avoid shipping cargo into the Arabian Gulf, docking instead on Oman's Indian Ocean coast. In addition, efforts to reduce obstacles created by bureaucracy and streamline the import and re-export of foreign goods will further entice interest from global logistics service providers. The total value of re-exports by mid-2014 stood at over OMR1 billion, but this figure is expected to rise once the nation's logistics infrastructure projects reach completion.