GENERAL & ECONOMIC NEWS

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Oman’s banking regulator plans to raise OMR150 million through a government development bond isssue.

The Central Bank of Oman (CBO) said that the maturity period of bonds will be 10 years and will carry a coupon rate of 5.5 per cent per annum.

The issue will be open for subscription on December 11 until December 18, 2016. The auction will be held on December 21, 2016 with the settlement date on December 27, 2016.

Investors may apply for these bonds through the competitive bidding process only and can submit bids through commercial licenced banks operating in the Sultanate. Investors with applications of OMR1 million and above can submit their bids directly to CBO after getting them endorsed from their banks. Prospectus and application forms can be obtained from any commercial licenced bank operating in the Sultanate.

An ambitious initiative unveiled by the National Programme for Enhancing Economic Diversification ‘Tanfeedh’ envisages a significant upgrade of Salalah Port’s infrastructure aimed at boosting the hub’s container capacity and facilitating the flow of bulk commodities and liquids through the port. The proposal is part of a raft of initiatives presented by Tanfeedh to help leverage the Sultanate’s multimodal transportation infrastructure to fuel the growth of logistics-based economic activities in the Sultanate. The Logistics Strategy 2040 (SOLS) rolled out by the Omani government last year aims to position the Sultanate as a logistics hub with the potential to attract additional investment of around RO 4.2 billion by 2020, as well as enhance the contribution of logistics activities to the national Gross Domestic Product.
Tanfeedh’s proposal moots the expansion of Salalah Port’s Container Terminal through investments in new berths designed to ultimately lift the port’s container handling capacity from the present 5 million TEU (twenty-feet equivalent units) to 7.5 million TEU, entailing a 50 per cent increase. The goal is to “consolidate Salalah’s position as one of the most important transshipment ports in the region”, according to Tanfeedh.

Savannah Resources Plc has started three more electromagnetic surveys to identify drill targets at its copper projects in Oman. Lasail, Bayda and Mahab 4 will be surveyed with results from all three due in the first quarter of next year, the company said in a statement. David Archer, Savannah’s chief executive, said Lasail in particular was potentially a very large system in an area that historically was a significant copper producer. “VMS (volcanogenic massive sulphide) deposits tend to occur as clusters so we believe that there is a strong possibility there might be an extension or a repeat of the existing deposits in the highly prospective Lasail, Bayda and Mahab 4 project areas.” Recent drill results from Oman have been encouraging for Savannah. In October, six holes at the Mahab 4 area and four holes at Maqail South, in Block 5, showed “some of the broadest and highest-grade results at the project to date”, Savannah said. So far the high grades have indicated 1.7 million tonnes of resources with 2.2 per cent copper.

Oman witnessed a sharp decline in value of non-oil exports and imports during the first half of 2016 amid weak global commodity prices and slowdown across the GCC countries.

The decline in sultanate’s total non-oil commerce came following a sharp reduction in trade with regional countries, mainly the UAE and Saudi Arabia, which are experiencing an economic slowdown due to the persistent weakness in oil prices.

Total non-oil exports fell 23.7 per cent to RO1.25bn in the January-June period of 2016 against RO1.64bn in the same period a year earlier, trade statistics

released by the National Centre for Statistics and Information (NCSI) showed.

Non-oil exports to Saudi Arabia dropped 39.2 per cent to RO145mn in the first six months of this year from RO238.5mn in the same period of 2015. Exports to the UAE marginally increased 2.9 per cent to RO332.3mn from RO322.9mn, against double-digit growth recorded in the past few years.


The significant deficit-reduction efforts which began last year continue and fiscal consolidation is particularly sizable in Oman and Saudi Arabia, according to the International Monetary Fund (IMF).

In these two countries, non-oil deficits are projected to fall by more than 10 percentage points of non-oil GDP. In 2017, the pace of consolidation is expected to ease to about 1 per cent of non-oil GDP.

The increasing international sovereign debt issuance this year, together with the tapping of international markets by government-related entities and the private sector, will help fund the current account shortfalls, the report says. Privatisation and structural reforms to increase participation by foreign investors in the region will further support capital inflows. The international agency notes that Oman has drafted a foreign investment law to attract investors.

Energy price reforms are also being implemented. The 2016 January–July average prices for diesel in Oman and the UAE and for natural gas in Oman and Bahrain are very close to or above US price levels.

To reduce the dampening effect on growth, countries need to phase in the additional deficit-reduction measures gradually, while strengthening the medium-term fiscal framework. To ensure steady gradual implementation, deficit-reduction measures should be embedded in a well-defined, medium-term fiscal framework that incorporates the overarching fiscal objectives and consideration could also be given to the potential role of fiscal rules, according to IMF.

Oman Investment Fund organised the second annual Oman Institutional Investor Summit at Al Bustan Palace Hotel under the patronage of Sultan bin Salim al-Habsi, Secretary General of the Supreme Council for Planning. During the event, Hamood bin Sanjour al Zadjali, Executive President of the Central Bank of Oman (CBO), said: “Our banks are adequately capitalised with the Basel capital adequacy ratio averaging around 16 per cent in June 2016 as against the 12 per cent plus the 0.625 per cent conservation buffer mandated. The non-performing loans (NPLs) edged up modestly to 1.9 per cent in June from 1.8 per cent in March. Going forward, it is expected that restructured loans may increase slightly. The share of restructured loans to total loans increased to 1.8 per cent in June from 1.5 per cent in March. However, there is no discernable deterioration in credit quality on account of economic slowdown due to low oil price. With a view to ease the challenges faced by borrowers due to weakened economic activity and to ensure flow of credit to productive sectors, the specific provisions on restructured loans have been moderated from 15 per cent to 5 per cent for the year, 10 per cent for 2017 and 15 per cent for the 2018, with effect from October 20, 2016,” he added.

Oman Logistics Company (OLCo), the master developer of the nation’s flagship integrated logistics city branded ‘Khazaen’, says it has made further headway in the development of the hub in South Al Batinah Governorate. Contracts have been signed with a number of investors for the establishment of, among other things, temperature-controlled warehouses, conventional covered structures and open-yard areas for the storage of goods. While some of the new tenants are direct investors, others are Third Party Logistics (3PL) service providers, according to officials of OLCo.
An overview of the progress achieved by the state-owned company in developing the infrastructure, as well as attracting investors to Khazaen, was presented to dignitaries visiting the project site last week. Led by the Governor of South Al Batinah Governorate, the delegation included local walis, high-level government officials, and members of the Majlis Addawla and Majlis Ash’shura. In opening remarks, Ahmed bin Said al Azkawi, Acting CEO — OLCo, described the Khazaen initiative as an integral part of the Omani government’s efforts to create a logistics-centric economy in the Sultanate
The project, he said, seeks to leverage the Sultanate’s modern transportation infrastructure, as well as its ports and free zones, in driving logistics related investments and activities within Khazaen, thereby supporting the government’s vision of creating jobs for Omanis and diversifying the economy in general.

Oman’s market watchdog Capital Market Authority (CMA), which is planning to announce a separate set of regulation for listing Real Estate Investment Trustas (REITs), said that it is willing to allow such investment trusts, even before announcing the legislation.

The Real Estate Investment Trusts are securities that sell like a stock on the bourse and invest in real estate directly, either through properties or mortgages. It provides investors an opportunity to participate in real estate projects even with a small fund size and offers regular income and capital appreciation.

Several investors have approached the Capital Market Authority for launching REITs in Oman. “We are willing to look at their application even before announcing the regulation. The draft regulation is already there. We have the legal framework structure (for allowing REITs) and we need to have bylaws. It has to go through a process (before announcing the same),” Abdullah bin Salim al Salmi, executive president of the Capital Market Authority, told the Times of Oman.

Oman Rail, the state-owned organisation overseeing the rollout of a rail-based passenger and freight transportation system across the Sultanate, is hosting a key meeting today of top Gulf rail executives aimed at formulating operational policies and procedures critical to the delivery of a safe, efficient and interoperable rail network spanning all six Gulf Cooperation Council (GCC) states.
The meeting of the Operations Expert Working Group (EWG), one of a trio of expert working groups set up by GCC rail authorities, underscores a commitment by Oman Rail and its counterparts across the GCC to press ahead with the policy planning and operational aspects of an integrated GCC rail system notwithstanding the current pause or slowdown in the actual implementation of national rail networks.
The hiatus is primarily attributable to the ongoing fiscal crunch and economic downturn triggered by the oil price slump.
Officials representing regulators as well as railway operating authorities from Bahrain, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates, in addition to Oman, are expected to attend the two-day meeting, which opens today. Deliberations will focus on the development of a common set of rules to underpin the interoperability of train movements across national borders and all along the GCC Rail Network. “This complex process is extremely challenging as (these common rules), when completed, will be the main basis for safe and efficient operations for all of the railways throughout the GCC,” said Oman Global Logistics Group (OGL), the state-owned holding company under whose umbrella Oman Rail, among other government-owned transport and logistics related entities, function.

Moody`s revises outlook on Oman`s banking system to stable from negative

* Moody`s - outlook expresses Moody`s expectation of how bank creditworthiness will evolve in Oman over the next 12 to 18 months

* Moody`s on Oman- forecasts problem loans to increase to around 3.0% of gross loans by end 2017, from a low 2.1% at june 2016

* Moody`s on Oman- expects real GDP growth to slow gradually to 1.7% in 2016 and 2.0% in 2017, from 3.3% in 2015

* Moody`s on Oman`s banking system - credit growth will decelerate to an average of 7%-9% over 2016-2017, from 12% in 2015

CORPORATE NEWS

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Commercial operations of Sohar Refinery Improvement Project are expected by the early part of the second quarter of 2017.

The expanded capacity will be stabilised for sustained operations by the end of the same quarter, according to a senior official of Oman Oil Refineries and Petroleum Industries Company (Orpic), which owns the Sultanate’s two refineries.

“Construction activities are in the advanced stage of completion for major units and likely to be completed by end of 2016. Commissioning activities have already been started for utilities facilities,” said Christiaan van der Wouden, chief operating officer of Orpic.

Sohar Refinery Improvement Project (SRIP) is one of the three strategic growth projects undertaken by Orpic and is being delivered in response to the need to upgrade Orpic’s refining capability to further maximise the value of Omani crude oil.

The Sultanate needs to have a reputable and credible credit bureau to expand the lending businesses to ease loan approval procedures. The proposal made by Tanfeedh Labs suggests that the bureau be run by the private sector should be under the supervision of government entities to enhance trust. “A credit bureau is an essential element to a country’s financial infrastructure”, says the proposal. The key stake holders, according to the proposal, should include the Central Bank of Oman (CBO), Ministries of Finance, Manpower and Housing, Capital Market Authority (CMA), Royal Oman Police and financial institutions.

According to Tanfeedh, the Government of Oman should partner with international credit bureaus to speed up its implementation. Although domestic credit penetration to private sector has increased, it is relatively lower in the Sultanate in comparison to other GCC countries. To be established in three phases, the bureau will help expand lending business, increase access to credit, support responsible lending and reduce credit losses. While the CBO should take the lead in proposing law for a Royal Decree to establish

State-owned Oman Oil Refineries and Petroleum Industries Company (Orpic) is offering business opportunities worth of $400 million for small and medium enterprises (SMEs) for developing its $6.5 billion-Liwa Plastics Industries Complex.

These business opportunities, including sub-contracting works, will be awarded by four main contractors who have won these packages as part of in-country value (ICV) obligation.

Orpic has already awarded four major packages to multinational contracting firms for building Liwa Plastics Industries Complex with a total cost of $4.5 billion.

“There is an in-country value obligation in the contract with EPC contractors. These are in four categories, including purchase of local materials and service, which has to be a minimum of 25 per cent,” said Ibrahim Al Maamari, ICV manager at Orpic. “We are expecting to reach around 30-35 per cent ICV.” He was talking to the media on the sidelines of a three-day SME exhibition, which opened on Monday at the new Oman International Exhibition Centre.

The volume of trade between Oman and Iran has surged since international sanctions were lifted against Iran earlier this year.

Oman’s imports from Iran shot up by 396.2 per cent to OMR183.1 million in the first half of this year, from OMR36.9 million in the same period last year, according to the latest data released by the National Centre for Statistics and Information (NCSI). Also, re-exports from Oman soared by 23 per cent to OMR63.2 million in the first half of 2016, against OMR51.4 million in the corresponding period last year.

Oman’s exports for the first half of 2016 plunged 27.2 per cent to OMR4.96 billion from OMR6.82 billion in the same period last year.

The decline in export revenue was mainly attributed to the fall in oil and gas prices in international markets and a dip in non-oil exports. The average price of Oman Crude declined 33.7 per cent to $38.9 per barrel for the first nine months of this year, from $58.6 per barrel for the same period in 2015, according to the latest monthly data released by the National Centre for Statistics and Information (NCSI). “The fall in exports is mainly due to a plunge in energy prices and not due to output. The export revenues will show improvement only when energy prices improve. The energy prices will be better next year,” said Kannan Rajagopal, general manager of the Global Omani Investment Company.

Oman’s banking regulator has relaxed specific provisions for restructured loans, in a move to ease the flow of credit to productive sectors.

The specific provision for restructured loans, which was earlier set at 15 per cent for 2016, has been spread over a three-year period – at 5 per cent for 2016, 10 per cent for 2017 and 15 per cent for 2018, Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, told Times of Oman, on the sidelines of the second annual Oman Institutional Investor Summit here on Monday.

“In view of the challenges faced by the borrowers due to recent economic activity,and the issue of credit to productive sectors, the specific provisions of restructured loans have been relaxed from 15 per centto 5 per cent for 2016, 10 per cent in 2017 and 15 per cent to 2018,” said Al Zadjali.

The central bank chief notedthat there has been no growth in the restructuring of loans by borrowers. “However, we expect that there could be some delays in payment due to the economic situation. So, perhaps some of the big customers will seek the restructuring of their loans. Going forward, we expect that restructured loans might increase slightly.”

S&P Global Ratings revised its outlook on the long-term counterparty credit ratings on Bank Muscat to negative from stable. At the same time, it affirmed the BBB-/A-3 long- and short-term foreign and local currency counterparty credit ratings on the bank.

According to the ratings agency, the outlook revision on the bank follows a similar action on Oman earlier in the month. "The negative outlook reflects our view that Oman’s fiscal consolidation could take longer than we expect. The widening of Oman’s current account deficit and deterioration in its external position have moved in tandem with the worsening of the government’s fiscal position," S&P said on Wednesday.



The construction of the $390-million Mina Sultan Qaboos Waterfront project first phase was inaugurated on Wednesday.

The ceremony was held under the patronage of Minister of Tourism HE Ahmed Bin Nasser Mehrzi in the presence of Minister of Commerce and Industry and Omran Chairman HE Dr Ali Bin Masoud Al Sunaidy.

Minister of Transport and Communications HE Dr Ahmed Bin Mohammed Al Futaisi said the first phase will transform the port into the Sultanate’s tourist gate.

Hotels in Oman recorded a 41.7 per cent year-on-year rise in the number of guests in September this year, according to National Centre for Statistics and Information (NCSI).

The data shows that there were 142,333 hotel guests in September compared with 100,412 visitors during the same month last year.

However, according to industry insiders, a preference for no-frills hotels has been, which is reflected in NCSI data as well.

The revenue of 3- to 5-star hotels in the Sultanate during the month reached OMR13,021,000, declining 4.1 per cent from OMR13,574,000 recroded in September 2015.

The total occupancy rate in hotels was 54.5 per cent in September, compared with 52.7 per cent in September last year, the NCSI said.

Guidelines on installation of internal telecommunications networks in buildings have been issued by the Telecommunications Regulatory Authority (TRA).

The guidelines are about the installation criteria which represent a technical reference to construction engineers, consultants and landlords of residential and commercial buildings.

The guidelines aimed to ensure presence of a fast internal communications network for all facilities of the building and the possibility of connection of e-services in the future such as the security system in the building and the smart home technology.

The guidelines also include the necessity for presence of one communication channel or more between the boundary wall of the land plot and the built up area of the house or establishment in order to facilitate supplying the building with communication cables, mainly the fibre optic cables.