Abstract
Oman’s infrastructure sector has seen a high level of activity in 2008.
Transport links are being
diversified and moves to meet probable future
power and water shortages have been forthcoming. The
construction sector
has seen activity across the subsectors, as Oman attempts to diversify its
economy,
with a drive toward tourism and industrial production. However,
the GCC countries will not be immune
to the global downturn, especially as
oil revenues will decline following the drop in the price of oil. In
BMI’s Q109 Oman Infrastructure Report we are forecasting the
construction will grow by 4.58%
reaching a value of OMR1bn
(US$2.61bn).
The transport sector, traditionally reliant on roads, will
benefit from a regional rail link which is currently
under construction
linking Oman to other GCC states. Oman’s airports have also been a key
focus of the
transport sector, with plans to construct six new airports
and expand existing airports at Muscat and
Salalah. The contracts for the
first phase of construction of Duqm International Airport and Ras Al Hadd
Airport were awarded to Desert Line Projects. Oman’s Gulf Engineering
Consultants and Canada’s
Pryde Schropp McComb have also benefitted
from contracts in the aviation sector, winning design and
management
contracts for three new domestic airports: Haima, Adam and Shaleem.
The
utilities sector has been equally active. With looming power and water
shortages forecast, Oman has
turned to independent water and power
producers (IWPPs) to plug the gap. Four IWPPs are planned, with
a total
output of 3,200MW.
Construction activity in all sectors has been strong in
2008. A drive on tourism has seen major tourism
construction contracts and
the development of hotels by several companies including Canada’s
Fairmont.
Residential construction has been led by The Blue City, a
US$15-20bn residential complex. Industrial
construction has benefitted
from Oman’s attempts to diversify the economy through industrial
complexes
at Sohar and Duqm. Brazil’s Vale has plans to construct a
US$1bn iron ore pellet factory and Deawoo
has won a contract for a ship
repair yard. Both sites have prompted the construction of surrounding
infrastructure to support the transportation of goods produced.
However,
BMI is forecasting a drop off in the rate of construction in 2009 as a result
of the global
economic downturn. A fall in demand for residential and
commercial construction is expected to hit the
GCC in 2009 and the decline
in the price of oil will reduce oil revenues and therefore government
expenditure abilities.
As a result there is are downside risks to our
forecasts, which see growth in the construction industry
declining from
6.83% y-o-y estimated for 2008 to 4.58% y-o-y forecast for 2009. This mirrors
a decline
in real GDP growth, from 6.37% y-o-y estimated for 2008 to 3.69%
forecast for 2009. However, we do
foresee growth in the construction
industry to pick up again from 2010, with an average real GDP growth
rate
of between 5.5% and 6.5% a year between 2010 and 2013. However, real GDP is
forecast to remain
under 5% y-o-y to the end of our forecast period, with
an average rate per year of 4% between 2009
and 2013.
In BMI’s
Q109 Oman Infrastructure Report we are introducing our new Project Finance
Ratings. The
ratings provide a globally-comparative, numerically-based
assessment of the risks facing major
infrastructure projects. Within the
Middle East, Oman places 2nd out of 11 countries rated. Countries
within
the GCC have been rated in the top tiers, as a result of stability afforded
through the GCC
common market.
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