Oman is embarking on a major privatisation and public-private partnership (PPP) drive to maintain economic growth while oil prices are low, according to the Minister of Commerce & Industry Ali al-Sunaidy, speaking at MEED’s Outlook Oman conference on 24 October in Muscat.

“These are challenging times for hydrocarbons exporting economies,” said Al-Sunaidy. “That’s why it is vital for Oman, like other oil and gas exporting countries, to speed up the implementation of programmes promoting non-oil diversification activities.”

The sultanate has already cut government spending as far as it can without strangling economic growth.

“The government tried to drop spending without pushing the economy too much,” said Al-Sunaidy. “If you end up with with a lower rate of return then you can’t come back. We have dropped costs so Oman’s breakeven oil price has fallen to $90 a barrel. We cannot do more – if we keep cutting then the economy won’t be able to breathe. Growth has already slowed to a rate of 3.5 or 4 per cent, and people are talking about 2 per cent.”

To maintain capital spending, Muscat will promote PPP projects. Until 2015, Oman’s capital expenditure was above RO1.6bn ($4.2bn) a year. The 2016 budget envisages RO1.2bn of capital spending, with a further RO300m invested by the private sector.

“The question here is, at times, will a tight budget like this provide the opportunity for PPP?” said Al-Sunaidy. “Will private sector ownership and financing help? Internationally, many projects like these are privately financed. This could pave the way for a true shift, an adequate transfer of assets to the private sector.”

Muscat is considering higher levels of private sector involvement in electricity transmission and distribution, building on the work in power generation and telecoms, and transport.