MAN­U­FAC­TUR­ING

pri­vate part­ner­ships are help­ing Oman’s in­dus­tri­al­i­sa­tion ef­forts

Oman - A Nation on the Move - - Contents -

The gov­ern­ment of Oman has em­ployed a strat­egy of en­cour­ag­ing in­dus­trial es­tates as en­ablers of man­u­fac­tur­ing in Oman. These in­dus­trial es­tates are led by The Pub­lic Es­tab­lish­ment of In­dus­trial Es­tates (PEIE). The new brand iden­tity of the PEIE - Ma­dayn was un­veiled at its silver ju­bilee celebration on Novem­ber 12, 2018. The launch of the new brand iden­tity co­in­cides with the 25th an­niver­sary since the es­tab­lish­ment of the PEIE. Ma­dayn op­er­ates nine in­dus­trial es­tates with a to­tal area ex­ceed­ing 100 mil­lion sqm. With the ex­is­tence of around 2000 projects, the vol­ume of in­vest­ments has touched nearly RO6.5 bil­lion. In ad­di­tion, the num­ber of work­force in all the in­dus­trial es­tates has reached around 55,000 by the end of 2017, of which around 20,000 are Oma­nis. Hi­lal bin Ha­mad Al Hasani, CEO, PEIE stated that the Pub­lic Es­tab­lish­ment for In­dus­trial Es­tates was es­tab­lished in 1993 to com­ple­ment the march of Rusayl In­dus­trial Es­tate Author­ity with the ob­jec­tive of plan­ning, es­tab­lish­ing, man­ag­ing and de­vel­op­ing the

in­dus­trial es­tates across Oman. “For the tenth year in a row, the in­di­ca­tors show growth at var­i­ous lev­els wit­nessed by the Pub­lic Es­tab­lish­ment for In­dus­trial Es­tates, which is seen in the num­ber of lo­calised projects, vol­ume of in­vest­ments, and direct and in­di­rect job op­por­tu­ni­ties,” Al Hasani stressed.

He added, “Over the last ten years, the Pub­lic Es­tab­lish­ment for In­dus­trial Es­tates has in­tro­duced sev­eral value adding ini­tia­tives to the lo­cal com­mu­ni­ties and the com­pa­nies. In 2010, the In­dus­trial In­no­va­tion Cen­tre (IIC) was ini­ti­ated to sup­port the man­u­fac­tur­ing sec­tor and serve the in­dus­tri­al­ists tak­ing into ac­count the sig­nif­i­cance of in­no­va­tion and sci­en­tific re­search in de­vel­op­ing and ad­vanc­ing Omani in­dus­tries. Re­cently, the IIC has been trans­formed into a com­mer­cial unit with the sup­port of Tan­feedh.”

“PEIE has also given at­ten­tion to sup­port Omani Small and Medium En­ter­prises as it has es­tab­lished the Na­tional Busi­ness Cen­tre (NBC) to act as an in­cu­ba­tor for the Sul­tanate’s SMES by of­fer­ing them a plat­form to fur­ther their busi­ness ideas and de­velop them into grow­ing ven­tures.” he said, adding: “In line with its ef­forts to mar­ket and pro­mote lo­cally man­u­fac­tured prod­ucts in the coun­try and abroad, the Pub­lic Es­tab­lish­ment for In­dus­trial Es­tates is man­ag­ing ‘Made in Oman’ cam­paign, which is a na­tional ini­tia­tive to ex­pand mar­kets of the lo­cally man­u­fac­tured prod­ucts and con­trib­ute to the ad­vance­ment of the na­tional econ­omy.”

In line with the na­tional pro­gramme to pro­mote eco­nomic di­ver­si­fi­ca­tion ‘Tan­feedh’, which is part of the 9th FiveYear De­vel­op­ment Plan, the PEIE has adopted a pro­gramme to strengthen Pub­lic-pri­vate Part­ner­ship (PPP) to sup­port the pri­vate sec­tor to be­come the lead­ing sec­tor and the main fo­cus of the fu­ture plans of Ma­dayn. “The PPP pro­gramme aims at in­creas­ing Ma­dayn’s con­tri­bu­tion to the sustainable eco­nomic and so­cial de­vel­op­ment in the Sul­tanate and achiev­ing the as­pi­ra­tions of the man­u­fac­tur­ing sec­tor be­ing one of the ma­jor promis­ing sec­tors for the eco­nomic di­ver­si­fi­ca­tion. Based on this, the pri­vate sec­tor in the com­ing years will have the role of con­struct­ing, man­ag­ing and op­er­at­ing the in­dus­trial es­tates and eco­nomic zones per­tain­ing to Ma­dayn,” says Al Hasani.

LE­GAL CHANGES

PEIE has made ef­forts to re­struc­ture its le­gal sys­tem and re-en­gi­neer all its op­er­a­tions with the as­pi­ra­tion of en­hanc­ing com­pet­i­tive­ness and at­tract­ing for­eign and na­tional in­vest­ments. The is­suance of the Royal De­cree no. 32/2015 came to re­flect the new role at­tached to the PEIE as it would be linked to reg­u­lat­ing and mon­i­tor­ing, and the role of de­vel­op­ing will be through an ac­tive part­ner­ship with the pri­vate sec­tor. Recog­nised as the first body to of­fer such long-time no­tion, de­vel­op­ers

are now granted with usufruct con­tract for up to 99 years. Be­sides, un­der the new in­vest­ment reg­u­la­tions, the man­age­ments of the in­dus­trial es­tates in the var­i­ous gov­er­norates have been granted with the author­ity to ap­prove in­vest­ment ap­pli­ca­tions of up to 100,000 square me­ters of in­dus­trial lands. New reg­u­la­tions of in­vest­ment have also been is­sued, in which en­vi­ron­men­tal re­lated as­pects have been taken into con­sid­er­a­tion.

PEIE has re­cently es­tab­lished Oman In­vest­ment and De­vel­op­ment Hold­ing Com­pany, which aims at de­vel­op­ing and im­prov­ing the op­er­a­tional pro­cesses, com­pet­i­tive­ness, in­fra­struc­ture and fa­cil­i­ties of the var­i­ous in­dus­trial es­tates. The com­pany shall take over the as­sets man­age­ment of the ex­ist­ing in­dus­trial es­tates and work in part­ner­ship with lo­cal and in­ter­na­tional de­vel­op­ers to de­velop and man­age the in­dus­trial es­tates, raise pro­duc­tiv­ity, en­hance in­come, of­fer com­pre­hen­sive ser­vices for the in­vestors op­er­at­ing in these es­tates, and pro­vide job op­por­tu­ni­ties for the na­tion­als. It is hoped that in 2019 Rusayl In­dus­trial Es­tate and Knowl­edge Oa­sis Mus­cat will be the first two es­tates to be man­aged and op­er­ated by Oman In­vest­ment and De­vel­op­ment Hold­ing Com­pany as their main de­vel­oper.

Oman’s gov­ern­ment has taken sev­eral bold steps to strengthen pri­vati­sa­tion pro­grammes within in­dus­trial es­tates across the coun­try. As part of the strat­egy, PEIE has formed a new hold­ing com­pany to man­age the es­tab­lish­ment’s as­sets in dif­fer­ent in­dus­trial es­tates across the Sul­tanate. The move is ex­pected to strengthen the role of the pri­vate sec­tor in at­tract­ing in­vest­ment in the man­u­fac­tur­ing sec­tor in a more flex­i­ble and easy man­ner.

PEIE will own 51 per cent stake in the newly-formed Oman In­vest­ment and De­vel­op­ment Hold­ing Com­pany, while 49 per cent will be of­fered to the pri­vate sec­tor. The new com­pany will man­age PEIE’S 100 mil­lion square me­tre in­dus­trial land and other as­sets in dif­fer­ent in­dus­trial es­tates, which will help bring in flex­i­bil­ity and easy im­ple­men­ta­tion of the pri­vati­sa­tion strat­egy.

The hold­ing com­pany, which is ex­pected to start oper­a­tion in the sec­ond half of this year, will pro­mote com­pa­nies for de­vel­op­ment, man­age­ment and oper­a­tion of the ex­ist­ing in­dus­trial es­tates through part­ner­ship.

IN­DUS­TRIAL ES­TATES

The coun­try’s in­dus­tri­al­i­sa­tion drive was mostly fa­cil­i­tated by the PEIE, which man­ages more than six in­dus­trial es­tates spread across the coun­try. PEIE, which acts as a one-stop-shop for new en­trepreneurs, man­ages Rusayl, Ray­sut, Sohar, Sur, Nizwa and Bu­raimi. The PEIE is plan­ning to build new in­dus­trial es­tates in sev­eral lo­ca­tions, be­sides ex­pand­ing ex­ist­ing ones to meet the grow­ing de­mand for in­dus­trial plots. The PEIE plans to build three in­dus­trial es­tates – one each in Thum­rait, Shi­nas and Al Mud­haibi.

There are also ongoing ex­pan­sion projects for fur­ther de­vel­op­ing ex­ist­ing

in­dus­trial es­tates, which will help di­ver­sify the coun­try’s econ­omy and cre­ate em­ploy­ment op­por­tu­ni­ties for Omani youths. Apart from projects within the in­dus­trial es­tates, sev­eral mega ven­tures are in dif­fer­ent stages of plan­ning and im­ple­men­ta­tion. Sev­eral in­dus­tries, in­clud­ing the Salalah Am­mo­nia Plant, Salalah Liq­ue­fied Pe­tro­leum Gas, an acetic acid project, an au­to­mo­bile body­build­ing unit and sev­eral petro­chem­i­cal ven­tures are in dif­fer­ent stages of plan­ning and im­ple­men­ta­tion.

For in­stance, the state-owned Oman Oil Com­pany (OOC) started work on two ma­jor projects - Salalah Am­mo­nia Plant and Salalah Liq­ue­fied Pe­tro­leum Gas (SLPG) - in Dho­far. These projects are strate­gi­cally im­por­tant for strength­en­ing the in­dus­trial sec­tor and en­hanc­ing eco­nomic di­ver­si­fi­ca­tion plans in the Sul­tanate. SLPG will have a cap­i­tal ex­pen­di­ture of $826 mil­lion, and will be de­vel­oped on a 20 hectare-plot within Salalah Free Zone. LPG and Con­den­sate Stor­age Fa­cil­i­ties will be built at Salalah port on an area of around eight hectares.

The project, which has LPG ex­trac­tion fa­cil­i­ties at Salalah Free Zone, is de­vel­oped by Oman Gas Com­pany – a sub­sidiary of Oman Oil Com­pany. Petro­fac of UK own the en­gi­neer­ing, pro­cure­ment and con­struc­tion (EPC) con­tract to build the project. The main LPG Ex­trac­tion Plant will have a pro­cess­ing ca­pac­ity of around 8.8 mil­lion stan­dard cu­bic me­tres per day. The plant will have lo­cal LPG truck load­ing fa­cil­i­ties cater­ing to do­mes­tic de­mand in Dho­far re­gion. To­gether with a ded­i­cated ex­port jetty, Salalah Port will be­come an in­ter­na­tional LPG and con­den­sate ex­port hub be­gin­ning in 2020 when the project is fully op­er­a­tional.

The es­ti­mated cost for the am­mo­nia Project, de­vel­oped by Salalah Methanol Com­pany, a sub­sidiary of Oman Oil Com­pany, is $463 mil­lion. The project will span over 12 hectares at Salalah Free Zone and will in­clude fa­cil­i­ties for man­u­fac­tur­ing, stor­ing and ex­port­ing am­mo­nia. The con­struc­tion work of the plant, which will pro­duce 1,000 tonnes of am­mo­nia per day, is ex­pected to be com­pleted by 2020. The plant will en­hance the sus­tain­abil­ity, in­crease the prof­itabil­ity and di­ver­sify the com­pany’s prod­uct port­fo­lio, through tar­get­ing its main mar­ket in In­dia, Viet­nam, Thai­land, South Korea and Ja­pan. The two projects are part of Oman Oil Com­pany’s growth strat­egy aimed at strength­en­ing value ad­di­tion in oil and gas sec­tor.

In yet an­other de­vel­op­ment, en­ergy ma­jor BP is in discussion with the Oman gov­ern­ment, its en­ergy in­vest­ment arm Oman Oil Com­pany (OOC) as well as a po­ten­tial part­ner, to press ahead with the im­ple­men­ta­tion of its world-scale acetic acid plant in Duqm — a project in­volv­ing an in­vest­ment of around $1 bil­lion.

The pro­posed Duqm Acetic Acid project, first un­veiled few years ago, en­vi­sions a large-scale petro­chem­i­cal project based on BP’S pro­pri­etary Saabre tech­nol­ogy.

Oman Oil Com­pany, which is a 50 per cent eq­uity part­ner in the $7 bil­lion Duqm Re­fin­ery project, is also ex­pected to play a key role in the ven­ture.

Acetic acid is used as a raw ma­te­rial in the pro­duc­tion of a wide range of petro­chem­i­cals that serve as in­ter­me­di­aries in the man­u­fac­ture of ad­he­sives, paints and sol­vents, as well as the pro­duc­tion of pu­ri­fied tereph­thalic acid (PTA), one of the most com­mon poly­mers at the source of the mul­ti­ple forms of polyesters.

In ad­di­tion, in 2015, BP and Oman In­ter­na­tional Petro­chem­i­cal In­dus­tries Com­pany (Om­pet) — part of Oman Oil Com­pany — had signed a li­cence agree­ment for sup­ply of BP pro­pri­etary tech­nol­ogy for a pro­posed 1.1 mil­lion tonnes per an­num (tpa) ca­pac­ity PTA project in Sohar. PTA is a key in­gre­di­ent in the man­u­fac­ture of polyesters for tex­tiles and pack­ag­ing ma­te­ri­als. As part of its com­mit­ment to the project, BP has agreed to pro­vide a wide range of tech­ni­cal and knowl­edge trans­fer ser­vices as well as as­sist Omani staff within the Om­pet joint ven­ture. The fron­tend en­gi­neer­ing de­sign (FEED) pack­age for the li­cence had been com­pleted and de­liv­ered to Om­pet on sched­ule, com­pany of­fi­cials said at the time.

FO­CUS ON DUQM

In an­other ma­jor ini­tia­tive, foun­da­tion stone for a bus man­u­fac­tur­ing and as­sem­bling unit de­vel­oped by Karwa Mo­tors project was laid in the Spe­cial Eco­nomic Zone in Duqm (SEZD) re­cently. Karwa Mo­tors is a joint ven­ture part­ner­ship be­tween Mowasalat Qatar – the na­tional trans­port com­pany of Qatar (with a 70 per cent eq­uity stake) and OIF, a sov­er­eign wealth fund of the Sul­tanate (with the re­main­ing 30 per cent stake). To­gether, the part­ners will in­vest around $90 mil­lion in the ini­tial phase of the project – a ven­ture with the po­ten­tial to un­der­pin the growth of a bus hub at Duqm over the long-term.

Karwa Mo­tors will lever­age Oman’s ex­ist­ing au­to­mo­tive sup­ply chain net­work to gain a foothold in the Oman and Qatar mar­kets, which is tipped to be­come the re­gion’s largest by 2022. This plant will en­able Karwa Mo­tors to sell buses in the largest mar­ket of the Mena re­gion while pro­vid­ing greater flex­i­bil­ity for Oman and Qatar. De­mand for buses across the world is grow­ing and this is the first step to­wards be­com­ing a lead­ing re­gional bus man­u­fac­turer.

The first stage of the project will be on a 220,000 square me­tre site lo­cated not far from a world-scale mul­tipur­pose port cur­rently be­ing de­vel­oped at Duqm. The plant is ini­tially planned for a pro­duc­tion ca­pac­ity of 1,000 buses a year, which can in­crease up to 3,000 buses per an­num in a phased ex­pan­sion based on mar­ket de­mand.

The first Se­bacic acid plant, which has a ca­pac­ity to man­u­afac­tur 30,000 tonnes of se­bacic acid per an­num, also started pro­duc­tion at Duqm. The 100 per cent ex­port-ori­ented unit of Se­bacic Oman was es­tab­lished with a cap­i­tal ex­pen­di­ture of $62.7 mil­lion. This is the first se­bacic acid man­u­fac­tur­ing project

in the en­tire Mid­dle East and North Africa (Mena) re­gion. In­dian and Omani in­vestors have pro­moted the state-ofthe-art ex­port-ori­ented se­bacic acid project with a cap­i­tal ex­pen­di­ture of $62.7 mil­lion.

Se­bacic acid, which is used to make high per­for­mance en­gine oil and lu­bri­cants, ad­he­sives, en­gine coolants, biodegrad­able pack­ag­ing, sub-sea pipe/ ca­ble coat­ings, aerospace poly­mers, anti-cor­ro­sion ap­pli­ca­tions, and bio­plas­tics, is man­u­fac­tured from cas­tor oil. The en­tire pro­duc­tion from the Duqm plant would be ex­ported to the United States, Europe, Ja­pan and China. De­mand for se­bacic acid has been grow­ing due to a ban on plas­tics for pack­ag­ing food prod­ucts for chil­dren in sev­eral de­vel­oped coun­tries and due to in­creas­ing aerospace ap­pli­ca­tions. The cas­tor oil de­riv­a­tives mar­ket is worth $15 bil­lion per an­num and a ma­jor de­mand is com­ing from the United States, Europe and Ja­pan.

In ad­di­tion, Se­bacic Oman plans to set up a 10,000 tonne per an­num-ca­pac­ity project to pro­duce bio-ny­lon (ny­lon 6-10 and ny­lon 10-10) as a for­ward in­te­gra­tion of the se­bacic acid project with a cap­i­tal ex­pen­di­ture of $250 mil­lion. This is go­ing to be the first project to pro­duce bio-based ny­lon in the en­tire Mid­dle East re­gion.

Se­bacic Oman plans to build a biobased ny­lon project as for­ward in­te­gra­tion of its soon-to-becom­mis­sioned se­bacic acid project in the Duqm free zone. Bio-based ny­lon, which will have ap­pli­ca­tions in aerospace and in en­gi­neer­ing poly­mers, will use se­bacic acid from the com­pany and ben­zene and sul­phur from Sohar-based Oman Oil Re­finer­ies and Pe­tro­leum In­dus­try (Or­pic) as raw ma­te­ri­als. The project is cur­rently in the de­sign stage, which is be­ing car­ried out by the com­pany’s tech­nol­ogy sup­plier, Cong As­so­ciates. Also, once the Duqm Re­fin­ery starts op­er­a­tions, the com­pany will be able to get ben­zene and sul­phur from a nearby re­fin­ery. The con­struc­tion work is likely to start some­time in 2020, while the project is ex­pected to be com­pleted af­ter two years, in 2022. The en­tire pro­duc­tion from the project will be for ex­port to the United States, Ja­pan and Europe. At present, only few a coun­tries in the world, such as China, the United States and Europe, pro­duce bio-ny­lon.

In an­other de­vel­op­ment, sev­eral large gas-based in­dus­tries, in­clud­ing a steel pro­ducer and a fer­tiliser firm, have an­nounced their plans for en­hanc­ing ca­pac­ity few years ago. Now Oman gov­ern­ment is in a bet­ter po­si­tion to com­mit nat­u­ral gas as feed stock for gas-based in­dus­tries with BP start­ing pro­duc­tion from its tight gas field in Khaz­zan in Septem­ber 2017.

BP started sup­ply­ing al­most 1 bil­lion cu­bic feet of nat­u­ral gas per day, which is a 30 per cent growth in pro­duc­tion, from the fourth quar­ter of last year.

Also, the ex­pan­sion pro­grammes of state-owned Oman Oil Re­finer­ies and Pe­tro­leum In­dus­tries Com­pany (Or­pic), the Sul­tanate’s ma­jor petro­chem­i­cal firm, are ex­pected to fur­ther strengthen nonoil sec­tor in the com­ing years. For in­stance, Or­pic’s $6.4 bil­lion- petro­chem­i­cal com­plex called Liwa Plas­tics In­dus­tries Com­plex (LPIC) will help strengthen the non-oil ex­port rev­enue of the Sul­tanate.

With the com­ple­tion of LPIC, Or­pic will be pro­duc­ing a to­tal of 1.4 mil­lion tonnes of poly­eth­yl­ene and polypropy­lene per an­num by 2020 – all for ex­port mar­kets. LPIC is the largest petro­chem­i­cal project un­der­taken in Oman, which will con­trib­ute 2 per cent to the gross do­mes­tic prod­uct (GDP) of the Sul­tanate and sup­port cre­at­ing a wide-rang­ing down­stream in­dus­try in the Sul­tanate. Upon com­mis­sion­ing in 2020, Liwa Plas­tics In­dus­tries Com­plex will trans­form Or­pic’s prod­uct mix and busi­ness model, dou­ble com­pany prof­its, cre­ate new busi­ness op­por­tu­ni­ties and gen­er­ate sig­nif­i­cant em­ploy­ment op­por­tu­ni­ties. The LPIC project is ex­pected to cre­ate about 900 direct, and some 1,200 in­di­rect jobs, dur­ing the project life­time.

The gov­ern­ment has also suc­ceeded in mar­ket­ing Duqm as an at­trac­tive in­vest­ment des­ti­na­tion for Chi­nese in­vestors, who were look­ing for a man­u­fac­tur­ing and tran­ship­ment base for ex­ports to South East Asia, West Asia and the en­tire Mid­dle East and North Africa (Mena) re­gions. It is a win-win sit­u­a­tion for both China and the Sul­tanate as Oman could strengthen its man­u­fac­tur­ing base and thereby cre­ate em­ploy­ment op­por­tu­ni­ties for its young pop­u­la­tion, while China could eas­ily cap­ture im­por­tant ex­port mar­kets in the re­gion due to the strate­gic lo­ca­tion of Duqm, which is close to in­ter­na­tional marine routes that con­nect East and West.

With the sign­ing of in­vest­ment deals worth $3.1 bil­lion for build­ing a host of ma­jor in­dus­tries in April 2017, China re­it­er­ated its com­mit­ment in Duqm where the coun­try is build­ing a large in­dus­trial park – the sin­gle big­gest in­vest­ment of any coun­try in Oman.

Oman’s gov­ern­ment has taken sev­eral bold steps to strengthen pri­vati­sa­tion pro­grammes within in­dus­trial es­tates across the coun­try.

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