MUSCAT -- Activity in project spending in the Sultanate continues to be strong with the Tender Board allotting more than RO 1.2 billion till the beginning of the fourth quarter of 2012. The country currently has road and bridge projects worth RO 3.08 billion under way, planned rail project of over RO 2 billion and several ports and airports, in line with the government's efforts to improve its regional transportation infrastructure. As a result of the large-scale project spending, the infrastructure majors in Oman are expected to be the key beneficiaries.
"With the relative aggressiveness shown by the Tender Board to implement the projects, the coming quarters will see stronger flow of tenders for more projects coming up in Oman", Kanaka Sundar, Head of Research, Gulf Baader Capital Markets says. To aid to the spending is the Sultanate's rising revenues, which soared to RO 8.754 billion, an increase of 38.4 per cent at end of July this year compared to RO 6.326 billion during the same period last year.
With oil prices stabilising above $100 per barrel in the past months, oil and gas revenue rose by 34 per cent to reach RO 6.374 billion year-on-year after setting aside a portion of the revenues to the reserve funds. Revenues from gas sales recorded RO 985 million, up from the RO 597 million accrued in the same period a year earlier. Oman's Gross Domestic Product (GDP) at market prices grew rapidly during the last two years to reach RO 27.95 billion in 2011 after a global cyclical downturn in 2009. As of the end of the first quarter of this year, GDP at market prices stood at RO 7.37 billion compared to that of RO 6.2 billion for the same quarter last year. According to a statement published by the International Monetary Fund (IMF), that forecasted a real GDP growth of 5.5 per cent for 2011, economic activity is accelerating in Oman and the economy is set for continued expansion in 2012 driven by new oil extraction technologies and increasing government spending.
The IMF has projected a growth of 5 per cent for the current year and fiscal surplus is expected to stay high at around 8 per cent for the year. With the government entering into the penultimate plan of its Vision 2020 strategy, the overall allocation towards various development projects including roads, ports, housing, airports, health and service sectors has reached about RO 12 billion.
The government is expected to spend an average of RO 2 billion per year over the next five years on various infrastructure projects. The project investments during the Eighth Five-Year Plan stand at RO 30.487 billion, including an additional allocation of RO 1.6 billion towards infrastructure projects in the Budget 2012. Oman expects to boost spending in its 2011-2015 development plan by a whopping 113 per cent as it expects high oil prices and is pursuing plans to boost crude output.
Further, the government plans to ehnance its budget spending by 10 per cent for the year 2013, generating additional demand for infrastructure related industries and services. Around 40 per cent of the revenues of the most industries in Oman come from exports to the UAE which is expected to improve further amid signs of recovery in Dubai's property market.
© Oman Daily Observer 2012
