CONNECTING OPPORTUNITIES

Oman 2018 | TRANSPORT | FOCUS: OMAN RAIL NETWORK

The establishment of a national rail network will help Oman capitalize on its geographically advantageous location and boost international trade, increasing the Sultanate's competitive advantage.

An upcoming national rail network promises to be a transformative force for Oman's logistics industry. Once operational, the railway is expected to provide the most cost-effective and reliable international logistics corridor in and out of the GCC. The 2,135km network will be divided into nine segments and is expected to run between Buraimi and Khatmat Malaha in the north to Duqm in the south, and Salalah and Mazyounah in the southwest. The project will have strategic links to industrial estates across the country, as well as to special economic zones, mining and logistics clusters, and major urban centers, which would help boost growth throughout the country.
The railway itself would consist of a non-electrified double track system, designed to meet demand for both mixed freight and passenger traffic. The railway's Section 1 is expected to connect the Sohar Port with the proposed GCC rail network at Oman's border with the UAE at Buraimi and Khatmat Malaha. According to Ithraa's 2016 Logistics Report, “it will also serve as a logistics corridor for rail-based freight to and from the Sohar Port to markets deep in the Arabian Peninsula." Additionally, four intercity passenger stations are planned for the 207km Sohar-Buraimi corridor in Hafeet, Sohar City, Zurub, and Buraimi.
It is expected that the railway will spark a significant increase in international container traffic to Oman's ports within the first years of beginning operations, to be later distributed into and out of the wider GCC by rail. The rail is also expected to attract numerous industrial goods, bulk commodity, and consumer product shippers to import and/or export their goods through Omani ports and avoid the politically sensitive Strait of Hormuz. Currently, new vehicles are being distributed by manufacturers directly to each GCC country, and by 2020, sale projections of cars in the GCC reach over 3 million new cars, according to Ithraa. This clearly shows the existing potential to consolidate distribution in a single country, with Oman being able to offer a highly attractive value proposition once the rail is developed.
Furthermore, Oman's rail network is expected to drive growth in attracting inward investment. As more customers distribute their GCC-bound cargo through the Sultanate, opportunities will increase for Oman's free zones and logistics centers to offer value-added services such as warehousing, packaging, and assembly. In addition, the rail would enable a more efficient and reliable value chain, making the Sultanate more attractive to international companies looking for a secure GCC business hub. The rail is also expected to increase both domestic and international cost-competitive ratios for Omani companies.
Also, it would enable Oman to exploit its significant natural resources, such as gypsum, limestone, dolomite, chromite, gabbro, and marble due to improved capacity and logistics solutions. Moreover, Oman's mineral base can be predominantly found in the mountains, which span 700km by 150km and contain zinc, silica, copper, gold, cobalt, and iron. The Sultanate has vast non-metallic mineral wealth that is proving to be highly popular in international markets; approximately 70% of the marble mined in Oman is exported, all of which can be found in its finished form.

Exports of Omani gypsum and limestone, among other minerals, are projected to grow exponentially with the launch of the national rail network, connecting mining areas to the ports in Sohar, Duqm, and Salalah. This will allow Oman to meet the growing demand for minerals in countries such as India, Japan, Taiwan, Indonesia, Vietnam, Bangladesh, and East Africa, just to mention a few. According to estimates, the railway can transport tens of millions of tons of inland-found commodities each year to Omani ports, greatly enhancing rail-to-port connectivity and transporting Oman to new industry heights.