Web posted at: 2/20/2009 23:57:8Source ::: REUTERS
MUSCAT: Oman will build a OR692m ($1.8bn) port at Duqm as part of its economic development plan despite a global downturn and a projected drop in oil revenue, Minister of National Economy Ahmed Mekki said yesterday.
The government expects “reasonable growth” for 2009 despite the financial crunch in part because it aims to pursue all the major state-led development projects it has launched, using surplus oil revenue or state reserves, if needed, he said.
“The 2009 outlook is relatively good ... we expect a reasonable growth since we are going ahead with all major plans,” Mekki said.
Oman plans to diversify its economy away from oil income dependency, which makes up about 75 percent of national revenue, and is pursuing a number of large-scale infrastructure projects.
The government has already awarded 220 million rials worth of infrastructural projects since the beginning of the year, according to the state figures. Last week, Oman said it has shortlisted six companies for the construction of the $1.5bn Muscat airport terminal building.
The Duqm development in central-eastern Oman aims to create a new city to serve as a key administrative, industrial and commercial centre. The first phase of the Duqm project calls for the port and a dry dock expansion. Phase 2 includes an airport, an extensive road network and a free trade zone for industries.
“Phase 2 will be the development of various projects whose funds will come from huge foreign and local investments,” Mekki said.
Mekki said oil fetched 7.75 billion rials in revenue in the first eleven months of 2008, according to preliminary figures, compared to OR5.8bn in the same 11 month period in 2007. That helped drive a government budget surplus of OR1.98bn for the first 11 months of the year, he said.
“This indicates an overall healthy surplus for the overall year once the 2008 statistics have been finalised,” Mekki said.
The 2009 budget has been based on the average oil price of $45 per barrel. Any financial shortcoming would be financed by the national reserves, Mekki said in January.
Ratings agency Moody’s said non-OPEC oil exporter Oman has a “comfortable” cushion of financial assets to cover any budget deficits in 2009 and 2010 but that the state remains vulnerable to oil prices changes.
Economic growth in Oman is likely to fall by more than half to 3.3 percent in real terms this year from 7.1 percent in 2008, Moody’s said.
“The Muscat airport plan is now going satisfactorily. The objective is to increase efficiency to absorb fast growth of passengers and cargo to cater for the rise of tourism and business,” Mekki said.
About 1.5 million tourists visit Oman every year, 50 percent come from other Gulf Arab states, mainly from the UAE, Saudi Arabia and Kuwait.