Oman telecom, transport merger to speed sell-offs
Oman's merger of its transport and telecoms portfolios in a minor cabinet reshuffle is a well-aimed push towards privatization in the Gulf state, diplomats and analysts said on Tuesday, May 15.
Oman's Sultan Qaboos on Monday issued decrees setting up a Transport and Telecommunications Ministry as well as other new ministries to streamline the bureaucracy. Previously, the transport portfolio was handled by the Transport and Housing Ministry. Telecommunications was part of the Communications Ministry, which included the postal services.
"The reshuffle is a carefully designed move not only to scale down the government but to speed up the country's reforms towards the privatization of its state-run establishments," a Western diplomat told Reuters.
Analysts said that the creation of the ministry was a clear sign that Oman would soon privatize a host of state-owned assets such as airports and telecom provider Omantel.
"The idea is to reduce bureaucracy that existed when these (transport and telecoms) sectors were in different ministries. This really held up the privatization process," said an analyst familiar with the privatization program.
"This new ministry has been set up to accelerate the privatization of Omantel, the airports, the postal service, Sohar Port and the Salalah free zone," he added. "The changes are aimed at approaching privatization from a different angle to lure foreign investment and diversify the economy from oil and gas," an economist said.
Independent oil producer Oman was the first Gulf state to open its power sector to private investors, and has secured investment of more than one billion dollars for four projects since 1992.
It has since offered six industrial areas, the Sohar port which is under construction and airports in the capital Muscat and Salalah that are mainly used for domestic flights, but has often put off the actual sale.
The government has twice delayed the privatization of the airports and has just recently started reviewing bids. Earlier this year, Oman announced that it would sell off Omantel by March, but the firm has yet to go on the block. Industry experts have described telecoms as the fastest growing industry in Oman, saying that Muscat should not have any trouble attracting foreign investment.
The International Monetary Fund has urged Oman to develop other sectors as crude oil prices are forecast to decline in the coming years. Up to 80 percent of Oman's income in 2000 came from oil and gas sales, a rise from 70 percent in 1999. Oman produces 900,000 barrels of crude a day. ― (Reuters, Muscat)
By Saleh al-Shaibany
© Reuters 2001
© 2001 Mena Report (www.menareport.com)