GENERAL & ECONOMIC NEWS

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Salalah-based Dhofar Fisheries & Food Industries SAOG says it has obtained a fishing licence from the Ministry of Agriculture & Fisheries — a move that will help the company engage in ‘direct fishing’ operations to support its feedstock requirements rather than depend on less competitive imports and local procurements.
Direct fishing, according to the company chairman, is part of a raft of options being explored by the loss-making, yet operationally viable entity to achieve a turnaround in its financial performance over the coming years.
The company also plans to diversify its business activities beyond its current focus on fish processing and canning to include dairy products, fruit juices, and cold and dry storage. These plans were endorsed at an Extraordinary General Meeting (EGM) held on December 4, 2016.
The goal, according to Mahdi Mohammed Hassan Hassani, Chairman of the Board of Directors of Dhofar Fisheries & Food Industries, is to “maximise the utilisation of the existing production facilities” at its state-of-the-art plant at Raysut Industrial Estate in Salalah.
“This will result in efficiencies that will allow a more regular supply of the company’s products in the markets,” said Mahdi Mohammed. “Management is also focusing to diversify its production to other product lines like dairy and juice products, and will concentrate on direct fishing. Management has planned to expand the cold storage, can storage, and packing area facility. The company has started the necessary arrangements for these (initiatives),” he added in the Directors’ Report on the company’s financial performance for the year ended December 31, 2016.

Sohar Port and freezone is planning to establish an innovation zone inside the new free zone area, which will be built in close cooperation with Port of Rotterdam. “Together with private sector companies, international research institutes and some of the world’s top universities, we are seeking innovative solutions across a broad range of issues that affect our shipping, logistics and industrial sectors,” said Mark Geilenkirchen, chief executive officer of Sohar Port. “Ultimately this will all be in the best interests of consumers, both locally and internationally.”

Sohar Freezone will also witness a number of new developments in 2017, as plans for the second phase of the Freezone take shape. The first 500-hectares of phase one have almost all been leased out, explained Freezone CEO Jamal T Aziz: “We are currently improving the business environment based on the output received from Oman’s ‘Tanfeedh’ process. This includes further streamlining the Freezone’s One-Stop-Shop procedures for investors and ensuring that international best practices are applied. A new bonded road corridor, featuring the latest international customs procedures, will further improve connectivity between the port and adjacent free zone.”

A new customs duty of 0.5 per cent on bank notes imported by exchange houses and banks was withdrawn by the government within four days of introducing the same, after money exchanges submitted a memorandum to the Central Bank of Oman (CBO).

Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, told the Times of Oman that “everything is normal now.”

In fact, the customs department had decided to introduce customs duty on imported bank notes on February 13, which jacked up the value of foreign currencies (against Omani rial) sold by money exchanges for a few days as the exchange houses were passing on the additional burden to customers. After introducing the new levy, exchange houses were paying OMR5,000 for every OMR1 million worth of bank notes for three days (before the customs duty was withdrawn). As a result, exchange houses in Oman were selling $1,000 for OMR388, against OMR386 for every $1,000. Now, it is back to normal level.

Oman`s oil minister said on Wednesday there is room for non-Opec countries to cut output further as part of a supply deal agreement with Opec producers.

"Their numbers came as such because time was tight," Mohammad bin Hamad Al Rumhy told reporters in Kuwait.

The minister later said: "Russia told us since the beginning the cut will take some time."

He added he expects Russia’s compliance with the agreement to be better in February and March.

Rumhy described overall compliance with the agreement as okay in January and expects it to be better this month.

Meanwhile, Oil slipped further below $56 a barrel on Wednesday as an industry report showing a large rise in US crude inventories signalled ample supply, even as Opec achieves record compliance with its supply-cut accord.

US inventories rose by a larger-than-expected 9.9 million barrels last week, the American Petroleum Institute (API) trade group said on Tuesday, ahead of the Energy Information Administration`s (EIA) official supply report.

Oman’s budget deficit for 2016 stood at OMR5,010.5 million as falling crude oil export revenues started affecting fiscal balance, according to the latest monthly statistics released by the Central Bank of Oman (CBO).

This is slightly lower than an initial OMR5,300 million estimated by the government at the time of announcing this year’s state budget, but much higher than the budget proposal of OMR3,300 million for 2016.

The Sultanate’s government has enhanced its overseas borrowings to meet the deficit as the government does not want to disturb the liquidity situation and interest rates within the domestic market.

Country’s total revenue

Oman’s financial institutions, including Islamic banks, have achieved a 10.1 per cent growth at OMR22.1 billion by the end of December 2016, over the same period of last year.

Credit to the private sector increased by 10.1per cent to OMR19.7 billion by December, 2016. Of the total credit to the private sector, the household sector (mainly under personal loans) stood at 46.5 per cent closely followed by the non-financial corporate sector at 45.2 per cent, financial corporations at 5.1 percent and other sectors the remaining 3.2 per cent, according to the monthly statistics released by the Central Bank of Oman.

Total deposits registered a growth of 5.2 per cent to OMR20.4 billion as at the end of December 2016.

Private sector deposits of the banking system grew by 4.9 per cent to OMR13.3billionas at the end of December2016. Sector-wise, the share of households was 48.6percent of the total private sector deposit base, followed by non-financial corporations at 28.5percent, financial corporations at 19.8 percent and the other sectors at 3.1percent.

Out to put the Sultanate among the top in the transport and communications sector, the government is to open the Muscat International Airport by the end of 2017 and also kick off the first stage of the space programme soon.

Minister of Transport and Communications HE Dr Ahmed Bin Mohammed Futaisi, after reviewing strategic projects in the roads, ports, logistics and civil aviation sectors, said the ministry is seeking to put the Sultanate among the leading countries in the transport and communications sector by providing high quality, accessible, sustainable and safe services. This was after taking into account social responsibility and making the sector a second source of national income, as well as endeavouring to make the Sultanate among the top 10 countries in the logistics performance at the international level by 2040.

Al Futaisi affirmed the operational readiness stage of the passenger terminal at Muscat International Airport. The airport is scheduled to open by the end of 2017.

The Al Batinah Expressway will be opened for traffic, and a specialised unit will be established for the management of enterprises, one of Tanfeedh initiatives for the year.

Despite the economic slowdown due to weak oil prices, Oman is witnessing continuous growth in its industrial sector.

According to Hilal bin Hamad al Hasani, chief executive officer of the Public Establishment for Industrial Estate (PEIE), the first half of 2016 witnessed higher growth rates in various fields as total investment in the country’s industrial estates crossed RO6bn.

In a statement on the eve of the sultanate’s Industry Day, Hasani said the number of projects in the various industrial estates has reached 1,688, of which 277 projects are under construction and 349 projects have been allotted lands.

“It is expected that a large portion of these projects will initiate their operational processes in the coming period,” he said.

During the first half of 2016, PEIE was able to attract investments valued at RO228mn in the various industrial estates.



The Public Authority for Electricity and Water (PAEW) is implementing some projects on Thursday for achieving high operational efficiency, including laying a new 1,600mm water transmission line from the Ghubrah Desalination Plant. Work on the project, which will strengthen the water supply network in Muscat Governorate, will begin at 7 pm and is expected to be completed by 7 am on Friday.

Three major works will be carried out during the period, which includes the installation of a 600mm valve to regulate the entry of water from an 800mm capacity line to the Qurum reservoir and “performance testing” of 15 electronic valves installed at the new transmission line. The electronic valves will be monitored for their performance and managed from the national control and monitoring centre, SCADA.

Omani banks are expected to achieve a robust 8-10 per cent growth in credit this year, according to a top level official at the Central Bank of Oman.

“We expect the credit growth to be similar to 2016, say in the range of 8-10 per cent,” Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, told journalists on the side lines of a conference on cyber defence and network security, organised by Oman Banks Association at the Bank Muscat head office.

According to the Central Bank of Oman, total bank credit in Oman grew year-on-year by 9.6 per cent to OMR21.9 billion by the end of November 2016. Credit to the private sector alone increased by 11 per cent to OMR19.7 billion by end-November 2016.

“The development process will continue in Oman this year, although the government has reduced its involvement. There is more impetus on the private sector to take forward the development process. That will increase demand for credit,” added Al Zadjali.

CORPORATE NEWS

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An upward revision in customs charges and new levies for importing goods will raise the landed cost of various products in the country, according to sources in importing firms and shipping agencies.

The customs department has started charging an additional 2 per cent on the CIF (cost, insurance and freight) value of imported products for non-submission of original legalised documents. The 2 per cent additional charge is reimbursable once the importer produces the original legalised documents of certificates of origin and commercial invoice within 90 days. These documents have to be attested by the embassy of Oman in the exporting country.

United Power, the first independent power company in Oman set up under the build, own, operate and transfer (BOOT) scheme, is awaiting the outcome of a study undertaken by the regulatory authorities, which will determine whether it can continue operations beyond 2020.

The company will continue to run both, phase one and two units, till 2020 at which time the plant assets will be handed over to the government, according to the management discussions and analysis report of the United Power Company. The company has a power generation capacity of 260-270 megawatt at Manah.

“As per the power purchase agreement’s conditions, the company has to hand over the plant to the government in April 2020 for a value of OMR1,”ZoherKarachiwala, chief executive officer of the United Power Company, told the Times of Oman. Now, the Oman Power and Water Procurement Company has to take a decision about the future of the Manah power plant. The authorities may float a tender for building another plant there. However, considering the international practice, a plant like the one in Manahcan run for many more years.

Meanwhile, the company’s transmission and distribution network was transferred to the Oman Electricity Transmission Company (OETC) and the Mazoon Electricity Company (MEC)on December 1, 2016. While transmission assets were transferred to the OETC,the MEC received distribution assets.

Low level of oil prices during the past couple of years brought to the fore several challenges to the Omani economy, impacting overall economic activity.

According to the bulletin published by the Central Bank of Oman (CBO), preliminary national accounts data for Oman indicated that the nominal GDP declined by 9 per cent during the first nine months of 2016, compared to the same period last year.

The decline was reflected primarily in the petroleum sector with a fall of 29.4 per cent and a marginal drop of 0.2 per cent in the non-petroleum sector.

While manufacturing and wholesale and retail trade were adversely affected, value addition showed positive growth, mainly in construction, agriculture and fishing, as well as in real estate services. Average annual inflation for the year remained moderate at 1.1 per cent. The fiscal gap widened during the year and the government took several measures to augment non-oil revenues and rationalised government spending, apart from stepping up external borrowings, given that the current level of debt to GDP ratio remains relatively low.

The rial remains strong and there is no change in its value, according to Central Bank of Oman Executive President HE Hamoud Bin Sangour Al Zadjali.

Denying any decline in its exchange rate, he told Al Watan, the sister publication of Oman Tribune, that the existing cash reserves with the CBO was sufficient to cover the rial. Moreover, the monetary and economic conditions of the Sultanate were stable and positive, contributing to enhancing the status of the rial in terms of exchange or purchasing power, he added.

Zadjali said the fixed exchange rate for the rial provided monetary stability in terms of low inflation rates, and also contributed to enhancing the degree of certainty and stability of the economic environment, This helped in boosting investment.

The bank maintained sufficient foreign reserves and adopted a monetary and banking policy contributing to enhancing stability and maintaining attractiveness of the rial.

Since 1973, the Sultanate has adopted a fixed exchange rate of the rial against the dollar; the most important currency in the world.

The third phase of Duqm Airport Project in the Governorate of Al Wusta has been completed 50 per cent, according to Dr Mohammed Bin Nasser Al Za’abi, CEO of the Public Authority of Civil Aviation (Paca).

All construction work is expected to be completed by the end of this year, which includes passenger terminals, navigation and meteorology complex.

The meteorology complex includes a control tower building, cargo building and other facilities for companies operating the airport.

Al Za’abi said: “The operation of Al Duqm Airport and the move to passengers’ terminal will be in 2018, after completing two years of work. Before moving to the airport total readiness is to be ensured by all operators, including Omani Airports Management Company, Oman Air, the Royal Oman Police and other agencies in coordination with the Special Economic Zone Authority of Duqm.”

Oman produced 29.93 million barrels of crude oil in January, equivalent to 965,617 barrels per day, according to a monthly report released by the Ministry of Oil and Gas.

This shows a drop of 2.97 percent in crude oil production, compared to December 2016.

As many as 26.65 million barrels of crude oil was exported in January 2017, equivalent to 859,682 barrels per day, an increase of 4.54 percent compared to the previous month.

China was the major importer of the Sultanate’s oil as 60 percent of the total oil exports were bought by the country. Thisreflected a 27.89 per cent drop from 64.16 per cent of import by the country in December.

South Korea imported 16.68 per cent of Oman’s crude oil exports in January, followed by 7.85 per cent imported by Malaysia which was an increase when compared to the previous month.

Oman Power and Water Procurement Company (OPWP) is to appoint consultants for supervising the Salalah and Sharqiyah Independent Water Projects

It has invited tenders from specialised companies qualified and experienced in providing project management and technical consultancy services during the construction, commissioning and testing of the Salalah and Sharqiyah projects that are to come up in Dhofar and South Sharqiyah at a cost of 105 million rials.

The projects are being implemented by the developers on a build-own-operate (BOO) basis under the terms of water purchase agreements with OPWP.

The tender documents are available from Sunday till March 5. The last date for submission of tenders is March 26, according to the company statement.

The two seawater desalination projects will have a total potable water output of 180,000 cubic metres per day. While the Salalah project will be commercially operational in the third quarter of 2019, the other will be ready in the second quarter of 2020.

US-based international oil and gas producer Occidental Petroleum Corporation (Oxy) says it is optimistic about growth prospects across its substantial operations in the Sultanate, most notably in Block 9 where state-owned Oman Oil Company Exploration & Production (OOCEP) recently acquired a 45 per cent participating interest. Block 9, also known as the Suneinah block in north Oman, is a key source of hydrocarbons where output from the Safah and Wadi Latham fields averaged around 100,000 barrels of oil equivalent per day (boepd) in 2015.
Under a revised Exploration & Production Sharing Agreement (EPSA) signed in Muscat last month, OOCEP — the upstream energy arm of wholly government owned investment vehicle Oman Oil Company — acquired a 45 per cent participating interest in the Oxy-operated block. Oman’s Oil & Gas Minister Dr Mohammed bin Hamad al Rumhy, inked the agreement on behalf of the government, while OOCEP was represented by Eng Isam al Zadjaly, CEO of Oman Oil Company. Mitsui E&P is also a partner in the block.
In remarks to analysts over the weekend, Ken Dillon, President of International Operations at Occidental Petroleum Corporation, described the new Block 9 contract as promising. “That’s a 15-year contract where we see substantial growth opportunities, both in oil and gas and in exploration. We think there are other opportunities in Oman that are a good fit long-term for us. So overall very positive,” he said.

Oman’s industrial estates had attracted investment to the tune of OMR6 billion till the first half of 2016, according to Hilal bin Hamad Al Hasani, chief executive officer of Public Establishment for Industrial Estates (PEIE). The PEIE is witnessing continuous growth in the industrial sector.

“The number of projects in various industrial estates has touched 1,688, of which 277 projects are under construction, and 349 projects have been allotted land,” Al Hasani added, while issuing a statement to mark the industry day. “It is expected that a large portion of these projects will initiate their operational processes in the near future.”

Al Hasani added that during the first half of 2016, the PEIE was able to attract investments of OMR228 million in various industrial estates. By the end of the first half of 2016, the PEIE had provided more than 46,000 job opportunities in the existing and new projects, of which 17,000 were for locals.

Iran and Oman signed a renewed document of ‘general framework of agreement to build gas export pipeline’ in the presence of oil ministers of the two countries on Tuesday in Tehran, according to Iranian media reports.

According to Iran’s IRNA news agency, Ali Asghar Hendi, advisor to Iran’s Petroleum Minister and in-charge of following up the claims of the Iran’s Petroleum Ministry signed the new document with Saif bin Hamad al Salmani, an official in the sultanate’s Ministry of Oil and Gas.

The meeting between Iranian and Omani delegations to renew the agreement and use the latest situation to prepare preliminary works to build the gas pipeline was held on Tuesday in the presence of Iran’s Petroleum Minister Bijan Zangeneh and Oman’s Minister of Oil and Gas H E Dr Mohammed bin Hamad al Rumhi. Zangeneh said that the discussions over how the project will be implemented will be finalised by the end of this month.

Representatives from Total, Shell, Korea Gas Corp, Uniper and Mitsui also attended the meeting between Omani and Iranian officials and offered their proposals for possible participation in the project, according to the IRNA report.