Oman and the private sector

When Oman unveiled a plan this year to build a large petrochemical complex alongside a $6 billion refinery in the southern coastal town of Duqm, officials hailed the project as a step towards diversifying income and creating jobs.

Promoting new industries and expanding downstream oil operations such as petrochemicals have been a cornerstone of the Gulf Arab state’s aim to cut its $73 billion economy’s reliance on crude oil exports and create jobs to combat unemployment, which the IMF puts at over 24 per cent.  [2]

The government of Sultan Qaboos bin Said, Oman’s ruler for 42 years, earmarked Duqm as the next industrial growth city with investments of up to $15 billion planned in new petrochemical and infrastructure projects at the port over the next 10 years.

Among other projects, Oman hopes to boost growth and employment with a 1,000 km, $13 billion railway. It is also investing heavily in airport and port operations in the southern city of Salalah near the border with Yemen. It is all part of a plan to give the private sector a bigger role in the economy as oil production, which accounts for 77 per cent of government revenues and half of economic output in non-Opec Oman, looks to be nearing a peak.

Oman has faced sporadic street protests over a lack of work and perceived corruption since early 2011 [2]and faces political uncertainty as Sultan Qaboos, 72, has not revealed his successor, a cause for concern when much of the Arab world is in turmoil.  Adding pressure on the economy, and employment, is a drop in natural gas production after a decade-long boom [3]. That has created a shortage of gas supply in the country that Oman quickly needs to correct, with much depending on whether British oil company BP will go ahead with a costly gas project in the country.

[4] Copyright 2012 Al Hilal Publishing & Marketing Group