09 March 2017 By Megha Merani
State-owned Oman Rail said it is considering using a public private partnership (PPP) model for a rail project to connect mining towns to one of the country’s main ports which could possibly give miners a stake in the project.
The 625-km Mineral Line, part of the wider Oman Rail Network, aims to connect mineral-rich areas in the sultanate to Duqm Port.
“The reason we're looking at that [PPP] as opposed to us financing the project and then carrying the volume risk… in the event the miners don't produce the volume and therefore, we don't export the right amount of material, we're left carrying the liability,” Nathan Wiles, general manager for projects at Oman Rail, told a roundtable at the Middle East Rail conference in Dubai on Tuesday.
He said the PPP solution is still in its infancy and that the option of using the original plan of turnkey engineering, procurement and construction (EPC) remained on the table, adding that Oman Rail has already pre-qualified 17 international EPC contractors.
Wiles said Oman Rail is working with Minerals Development Oman (MDO), the investment and licensing arm of Public Authority for Mining, to develop the PPP model.
"What we want to do is come up with a PPP model where the miners have a stake in the financing of this [project], we have a stake from an infrastructure perspective, and other players play a part, whether that's through contractor finance, export credits, government-backed debt or multilateral banks,” he said.
Wiles said MDO would need to determine the size and quality of mineral reserves to build the business plan.
“They need 9-12 months of exploration before they can actually put something on the table marketable globally. We will attract good interest by putting this in a PPP model,” Wiles said.
“They (Oman’s mining industry) are looking at a big opportunity to get themselves out as a global player rather than a relatively minor player in the regional market.”
In December last year, Beijing-based Asian Infrastructure Investment Bank announced a loan of $36 million to Oman to part finance its $60 million railway system preparation project. The bank said in a statement that the project’s objective is to achieve full readiness for the construction of the new railway system that aims to support Oman’s economic diversification and develop its position as a transport hub and exporter of minerals.
© Zawya Projects News 2017