$170m agro-terminal taking shape at Sohar Port in Oman

A major agricultural handling terminal currently under construction at Sohar Port and Freezone (SOHAR).

02 September 2015
MUSCAT: A major agricultural handling terminal currently under construction at Sohar Port and Freezone (SOHAR), with an investment of around $170 million, will underpin the development of a strategic food hub designed to serve not only Oman, but the wider GCC and Middle East region, according to top port executive.

Andre Toet (pictured), CEO -- Sohar Port and Freezone, said the project has immensely beneficial implications not only for the Sultanate's food security objectives, but also in positioning SOHAR as a 'food storage and distribution hub' for regional markets.

"SOHAR's new agricultural handling terminal will play a major part in Oman's plans to expand its food-processing sector. Work on our new $170m agro-terminal has already begun and, once completed, we will be able to handle 700,000 tonnes of grain and 1.5 million tonnes of raw sugar imports every year," said Toet.

"We will soon be able to offer practically unlimited reserves of grain and sugar to potential food sector investors; abundant and cheap energy; a well-educated and ample supply of labour; world-class connectivity to other ports globally, for imports and exports; as well as fast and direct connections right across the Arabian Peninsula. That leaves so many possibilities open to food industry investors of every size in SOHAR, from global giants to regional SMEs, that it's hard to know where to start. I am sure that there are success stories just waiting to be written for cold storage, logistics, food processing and manufacturing companies. And thanks to our One-Stop-System in SOHAR, establishing a food business in the Middle East has never been more straightforward," the CEO added in comments to the Observer.

Food security

A core objective behind the Agro-Terminal Project, says Toet, is food security. "The Oman government is working to enhance food security by increasing cultivation and by buffering grain stocks, with extensive grain storage facilities now being developed at SOHAR and elsewhere in the Sultanate."

According to the official, the aftermath of recent cyclones combined with the 2008 food crisis led to the establishment of a national committee for food security: the Public Authority for Stores and Food Reserves (PASFR). The committee identified a number of food items deemed strategic to Oman's food security interests including rice, flour, vegetable oil, sugar, meat, fish, milk powder, tea and coffee.

"PASFR is responsible for maintaining and managing strategic stockpiles of these items in key locations around the country -- one of those locations now being Sohar Port, in large part due to our prime location and excellent multi-modal connectivity with the rest of the country. Our new agro bulk terminal is a key component of the Oman government's long-term food security strategy," he said.

A key component of the agro-industrial hub at SOHAR Port is Oman's first sugar refinery -- a 1 million tonnes per annum capacity project that will help largely eliminate the Sultanate's current need to import over 120,000 tons of refined sugar a year.

Logistical advantage

Equally significant is the investment planned by the Sohar Food Cluster Company (SFCC), which has signed a lease agreement for a ten-hectare plot located between the sugar refinery and a new 500 tonnes per day capacity flour mill envisioned at the port. Through SFCC, the UAE's Essa Al Ghurair Investment will create the basic infrastructure to attract international investors as partners in joint ventures to launch various food-related industries at SOHAR, said Toet.

"The availability of flour, sugar, molasses and a host of other products and byproducts that will come from the flourmill and sugar refinery is the underlying value proposition for investments in this cluster. For example, with flour from Sohar Flour Mills, the possibility of investing in bakeries offers a major logistical advantage. Other investments could look at processing the molasses that will be produced by the sugar refinery as well as opportunities in associated areas such as cold storage, warehousing and many other investments along the supply chain," he explained.

According to Toet, SOHAR Port enjoys locational advantages to serve as a food processing, storage and distribution hub in a region that inherently suffers from food cultivation and production constraints.
"Arab countries are the largest net importers of cereals in the world. Large expanses of desert and arid land bring enormous challenges for farming in this region and many countries are looking for better solutions to their problems before they can escalate, as the region's youthful populations continue to grow. Oman, Saudi Arabia and the UAE, for instance, are all heavily dependent on food imports."

Regional investments

He further added: "Our growing population combined with the lack of naturally occurring freshwater for irrigation in the Middle East has pushed food security into the region's spotlight. This puts SOHAR in a strong position for significant regional investments."

Not only is SOHAR Port ideally positioned outside the Strait of Hormuz, offering many direct liner connections to major ports in Asia, Africa, Europe, the US and Latin America, but it can also offer excellent landside connections across the Arabian peninsula, he noted.

"That is where SOHAR really scores high, with new and uncongested freeways offering direct road access to the UAE, KSA and beyond; a brand new cargo airport; and we'll soon be a critical modal point in Oman's new rail network," said Toet.

The planned construction of this national cargo rail network, scheduled to be ready before the end of the decade, will alleviate any potential pressure on our already fast improving road transport facilities, he stated.

Work is set to begin later this year to build the first stage of this multi-billion dollar investment, a 207 km line between SOHAR and Buraimi, on the border with the UAE.

The line will link to the wider regional network, facilitating imports of materials and exports of processed foodstuffs and other goods between GCC member states.

Likewise, a major road from Oman to Saudi Arabia currently nearing completion will provide a new and uncongested link for road cargo directly from SOHAR, according to Toet.

"Once complete, the new freeway will stretch from the gates of our Port right to the Saudi border, via Ibri, and will greatly increase ease of business between the new SOHAR food hub and Saudi Arabia.

Similarly new highways are being constructed towards the UAE borders, and the GCC rail network will be up and running before the end of the decade. So it is very likely that in the near future we will start to see SOHAR serving regional markets as a major food storage and distribution hub," he noted.

© Oman Daily Observer 2015