This year has marked a turning point for Oman’s planned investment in transport infrastructure, with the government reviving and retendering a number of road, rail and airport projects.

Speaking at MEED’s Oman Projects Forum in late October, Ahmed bin Hassan al-Dheeb, undersecretary of the sultanate’s Commerce & Industry Ministry, said about $20bn would be spent on transport schemes in the coming years. 

Oman’s transport infrastructure lags behind that of neighbouring GCC countries, a situation the government has become increasingly keen to rectify as it looks to boost economic development. Upgraded roads, coupled with larger airports and a new national railway network are also vital for the sultanate’s attempts to diversify its economy away from energy-related industries. 

With just 17 years of oil production left at current rates, Oman faces more extraction pressure than its neighbours to invest in non-oil and gas sectors.

Modern system

To support this diversification, the country needs a modern transport system to connect its mines, factories and refineries to logistics zones, ports and airports. Muscat is also eager to grow its tourism industry, another sector reliant on good transport links.

Back in 1970, when Sultan Qaboos bin Said al-Said came to power, Oman had just 10 kilometres of road. The sultanate now has a much more extensive road network, if limited compared with regional neighbours. This year has seen a substantial increase in road awards, with about $1.76bn-worth of contracts agreed to date. This is a 66 per cent increase on the $1.09bn-worth of deals signed for the whole of 2012.

Tenders for the construction of Oman’s $15bn [national railway] network will be launched next year

“Oman has potential and it has seen steady growth over the past few years,” says Adrian Manning, area manager, Dubai, Northern Emirates and Oman, at US consultancy CH2M Hill. The firm is looking to win work on two major road schemes: the Masirah Causeway, which links Masirah Island to the mainland; and the Khasab-Lima-Dibba road.

Central to Oman’s road improvement programme is the Batinah Expressway. It is the country’s biggest road project and its first dual four-lane road. It will extend the Muscat Expressway up to the Oman-UAE border at Khatmat Malaha. The Batinah scheme is expected to cost almost RO1bn ($2.59bn) and has been divided into six packages, with the majority of construction contracts already awarded. Only package 2 remains to be awarded, having been signed in 2012, then cancelled and retendered in early July.

In September, Oman’s Transport & Communications Ministry reissued a tender for the project management consultancy for the scheme, with consultants due to submit bids on 18 November.

The Batinah Expressway will be a particularly challenging road to build due to the need to traverse the mountains between Muscat and the UAE border, but once complete, it is expected to play a key role in supporting Oman’s economic development.

The expressway will help support Sohar Port and its surrounding economic zone’s expansion by providing a faster way to transport goods from Muscat to markets in the UAE. Sohar is expected to become a far busier port in the coming years as it begins to handle the commercial traffic transferred from Sultan Qaboos Port in Muscat. That port is being redeveloped as a cruise and leisure terminal, with commercial traffic to stop at the end of 2014.

Facilitating trade

Another road project to gain momentum this year is the planned Masirah Causeway that will link Masirah Island to the mainland at Shanna on the eastern coast of Oman.

The causeway plans were launched following Cyclone Phet in 2010, which damaged the island and the sultanate’s eastern coast. The road connection will help improve access and exit routes for those living on Masirah and will support the strengthening tourism and commercial ties between the island and the mainland. In June, eight companies submitted bids for a feasibility study for the 25km dual-carriageway causeway. A contract award is expected before the end of the year.

Plans to build a road connecting Khasab, Lima and Dibba within the enclave of Musandam have also progressed this year, with more than 30 contractors submitting prequalification documents in August.

This road will also be a challenging project as it involves the construction of seven tunnels and 18 bridges to traverse the difficult mountainous terrain. Once finished, it will support the tourism industry in the area, which is popular for day trippers from the UAE, and will provide a connection to Khasab’s port.

The Omani government has also revived plans to develop regional airports at Sohar, Ras al-Hadd, Duqm and Adam this year, having previously put the projects on hold in 2011.

Airport projects in Oman

In early September, the transport ministry tendered two contracts for package 3 for the Sohar and Ras al-Hadd airport schemes. This third and final package covers the construction of the passenger terminals. The other packages covering civil works and runway construction were awarded several years ago.

Contracts covering the construction of passenger terminals at Duqm and Adam have not yet been floated, although packages 1 and 2 have been awarded in the past three years.

Oman is also expanding airports at Muscat and Salalah. The new terminal at Salalah International is designed to handle 1 million passengers a year, while the new terminal at Muscat International will have the capacity to handle 12 million passengers a year. Both are set to be open by 2014.

A joint venture of Athens-based Consolidated Contractors Company and Turkey’s TAV is overseeing the civil works at Muscat airport, having won the deal in 2009. A consortium of the US’ Bechtel, Turkey’s Enka and the local Bahwan Engineering Company is overseeing the construction of the passenger terminal building, having won the contract in 2010.

Only two deals remain outstanding at Muscat airport: namely the detailed design and construction of cargo and maintenance facilities, as well as catering facilities.

The first phase of Salalah airport is also expected to be completed by 2014. A joint venture of the local Galfar Engineering & Contracting and India’s Larsen & Toubro was awarded the construction contracts for the new terminal building and runway in 2010.

At the same time as investing in road and airport projects, Oman has placed renewed focus on building a national railway this year, which will further boost its transport network.

There had been previous attempts to get a national rail project up and running, but plans stalled last September when the transport ministry decided to retender work on phase 1 of the scheme. At the beginning of this year, the authority revived the project and the government’s 2013 budget identified the construction of the railway as a priority.

In February, the transport ministry tendered for a design consultant for the railway, after altering the original plans and increasing the proposed length of the network by 1,180km, bringing the total length to 2,244km, including an additional connection to Salalah port.

Connecting the national railway to the Indian Ocean port will provide Salalah with a competitive edge over other regional ports by making it even easier to ship goods in and out of Oman and then transport them by land around the sultanate and on to other GCC states.

In August, Italian state-owned firm Italferr won the deal to carry out the preliminary design of the railway. In the same month, five consultants submitted bids for the project management consultancy, which are currently under evaluation.

Oman Railway Company

The formation of the new Oman Railway Company is also being finalised. The organisation will oversee the development of the national railway and is expected to commence operations by the end of the year, in time for the release of the design-and-build contract tenders.

UK-based Grant Thornton was awarded a contract to study the organisational structure of the new firm in October.

“We are taking an advising and consulting role, helping them design, define and implement an operational framework and organisational structure,” Raza Ashraf, partner advisory, Oman, Yemen and Ethiopia at Grant Thornton tells MEED. “This is so all are clear where everyone fits and what needs to be done.” 

Speaking at MEED’s Mena Rail and Metro Summit in Abu Dhabi at the end of October, Salim bin Said Salim Alami, assistant director-general at Oman’s Transport & Communications Ministry confirmed that tenders for the construction of the $15bn network will be launched next year.

The noticeable pick-up in transport project activity in Oman is paving the way for 2014 to be a strong year for contract awards.

Key fact

Oman plans to spend $20bn on transport schemes in the coming years

Source: Commerce & Industry Ministry