SPS close to signing free zone concession

05 April 2002

Salalah Port Services Company (SPS)and its partners have reached agreement with the government on the revised masterplan for the proposed 6,000-acre Salalah free zone project. The next milestone in the scheme is expected to be the signing by the end of April of a formal concession agreement. The initialling of the contract will be followed immediately by the signing of a shareholders' agreement to form a new company to manage and operate the venture for a period of 30 years.

Phase 1A of the development, covering the construction of road infrastructure, architectural work and construction of a 'speculative building' - intended to gauge the commercial viability of the scheme - is expected to start this year. This will be followed by the implementation of phase 1, which involves the development of an initial 250-acre site. Negotiations with potential tenants are already under way. Companies are being offered units on 99-year leases, with tax exemption for 30 years.

SPS has also reached a critical stage with its plans to expand facilities at Salalah port. The company is awaiting final approval from the government for the addition of two berths at the port and the extension of the existing breakwater to create a deep-water harbour with a 900-metre turning basin capable of handling the next generation of 400-metre-long freight vessels. The government is close to completing the design studies for the breakwater.

The scheme, which is valued at about $150 million, may be expanded to incorporate the addition of more berthing facilities at the port at a later date. The company is in talks with lenders over a debt package, which will be used to refinance its existing facility and provide part-finance for the expansion.

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