MUSCAT -- Major projects and investments in the Sultanate will continue to benefit from the strong lending appetite of international and regional banks, senior banking executives and experts said here yesterday. Addressing the conference titled 'Port of Sohar --Anchoring Success', the speakers stressed the robust appeal of investments, both at Sohar and elsewhere around in Oman, for project finance.
Abdul Kader Askalan, CEO of Oman Arab Bank, listed a number of factors for the vigorous lending support by international, regional and local banks for projects at Sohar: strong Government commitment to the projects, the role of Oman Oil Company as a government vehicle for investment; world-class infrastructure; availability of power and natural gas at competitive prices, and effective regulatory oversight. "All these factors encourage investors and lenders to finance projects in Oman," he said.
Another key driver for attracting lenders to projects is the presence of heavyweight promoters, such as Oman Oil Company, Dow Chemical, LG International, Alcan, Ferrostaal, and Abu Dhabi Water and Electricity Authority (ADWEA), among others. Further, the sound economics of individual projects, underpinned by product offtake agreements, add to this appeal, he stated.
"All the projects at Sohar have been oversubscribed by banks, except for a few which have been financed by export credit agencies. This underlines the strong appetite for international participation in the financing of Sohar projects," Askalan stated. International banks account for the lion's share of lending commitments to projects in the Sultanate, followed by regional banks, the CEO said, stressing that the trend will continue in light of Oman's impressive track record in raising project finance.
According to Rajshekhar Singh, Head of Project Finance, BankMuscat, project finance commitments have aggregated about $10 billion during the period 1994-2005 largely through commercial loan finance, with export credit agencies having a smaller role. Commercial loans have constituted around 70 per cent of total commitments.
"The pricing has become extremely competitive, while the number of banks participating in each project has increased," Singh said, adding that BankMuscat has been involved in the project finance of the vast majority of major projects in the Sultanate. There were also presentations and remarks by Rajeev Singh, Consulting Partner, Ernst & Young; and Patrick Townsend, Director -- Project and Export Finance, HSBC Bank Middle East.
© Oman Daily Observer 2005
