28 July 2016
July 27: Port Services Corporation SAOG (PSC), which operates and manages Muscat's Port Sultan Qaboos (PSQ), says it expects compensation for any revenue loss stemming from the government's decision to transfer the port's assets before the expiry of its current concession agreement.

At the same time, citing the continued "uncertainty of the Corporation's future and its role", the Board has also urged the government to consider acquiring all of the private shares in the corporation, or alternatively liquidating it altogether.

Both concerns were articulated by Mohammed Jawad bin Hassan bin Suleiman, Chairman of the Board of Directors, in a report of PSC's financial and operational performance for the first six months of 2016.

Following the government's decision to relocate Muscat Port's commercial cargo operations to Sohar Port two years ago and to convert the facility into a maritime-based tourism and leisure destination, PSC has seen its operations and revenue earnings dramatically plummet in the ensuing period. However, the port continues to receive a modest number of cruise vessels, bulk grain carriers, bitumen tankers, vegetable oil carriers, cement carriers, livestock carriers and visiting naval and passenger ships.

Earlier this year, the government mandated its tourism investment arm Omran to drive the transformation of Port Sultan Qaboos into a major maritime-based tourism and leisure hub. The so-called Mina Sultan Qaboos Waterfront Development envisages a mix of maritime, residential, hotel, resort, leisure and retail components.

PSC says it has since been instructed to prepare for the relocation of all remaining commercial operations out of Muscat Port. A committee has since been constituted to chalk out a detailed strategy for achieving this goal and to submit a report to this effect to the Minister of Transport and Communications.

"The committee held its first meeting on May 26, 2016 wherein the management of the Corporation has reflected clearly, in detail, its opinion with regard to all the procedures and steps proposed, stressing that the Corporation will have to be compensated for any loss of income resulting from the shifting if it carried out prior to the expiry of the concession agreement period," Mohammed Jawad bin Hassan said.

According to the Chairman, PSC has also conveyed the Board's request that the government buys the shares of the private shareholders or alternatively move to liquidate the corporation. A decision from the government is still awaited on this request, he noted.

Notwithstanding these issues, PSC's net profit for the six months ended June 30, 2016 soared an astronomical 2,439 per cent to RO 1.857 million, up from RO 73,140 for the corresponding six months of 2015. Aiding this growth was a 61.6 per cent increase in operating revenue fuelled by the increase in port tariffs and an uptick in cruise vessel calls.

Operating expenditure also dropped 46.9 per cent to RO 1,509K this year on account of "austerity and cost control measures". A significant reduction in the size of the Corporation's workforce, from 373 as of June 30, 2015 to 120 by mid-year 2016, helped achieve this hefty cost reduction, it said.

PSC's concession agreement with the Ministry of Transport and Communications, covering the operation and management of Port Sultan Qaboos, has been extended to December 31, 2016, according to the Corporation. It also operates and manages Khasab Port in Musandam Governorate on a temporarily basis in line with an agreement concluded with the Ministry in 2012.

© Oman Daily Observer 2016