Gateway Role Driving Port Expansion


Oman's Port of Salalah is set to receive even more investment in an attempt to position the facility as an Eastern gateway to the GCC (Gulf Cooperation Council) and boost its transhipment appeal. With a US$143mn expansion of its general cargo terminal (GCT) and building of a liquid jetty already being undertaken, and both due to be completed by mid-2014, there are now plans for a major new breakwater, more liquid jetties, container berths, a cruise terminal, and tank farm - to be built over the next seven years. Additionally, a new power plant and service corridor, to connect to the Salalah Free Trade Zone (FTZ) to the port, are also planned.

The current expansion of the Port of Salalah, which is being undertaken by Archirodon Construction (Overseas), aims to increase the port's cargo handling capability by around 14 million tonnes per annum (tpa) of dry bulk commodities, in addition to 6-7 million tpa of liquid cargoes. While the substructure and marine works package of the expansion is being funded by the Ministry of Transport and Communications, the superstructures will be financed by Salalah Port, which is 30% owned by APM Terminals. We expect future planned projects - aimed at boosting the port's capacity and attractiveness to shipping lines - to be funded in a similar manner, with the government providing the bulk of funding, but also looking for private investment to supplement it. We currently forecast that Oman's construction sector will grow by 4.8% year-on-year (y-o-y) from 2014 to 2019 - the timeframe outlined for investment in the planned port expansion projects.

Indeed, the government is set to launch the tender for the next phase of the port's development - a service corridor between the port and the Salalah FTZ - within the next six months. Significantly, Salalah Port has already signed up a couple of customers within the FTZ that will utilize the port's new liquid berth; Salalah Methanol and Octal Petrochemicals. Good connectivity between the FTZ and the port will enhance the appeal of Salalah to investors, providing upside to future projects in the pipeline. Furthermore, plans for Oman's rail network, which will take a significant proportion of the US$20bn the government expects to invest in the transport sector up to 2015, should see the port connected to the GCC rail network. If this is realised, then Salalah will be a key access point to lucrative Middle Eastern markets and become extremely attractive to shipping lines. As such, we expect that funding should continue to flow into developing the port and therefore the plans to add further facilities provide upside to our long-term forecasts.

Salalah Developments To Provide Support
Construction Industry Value (US$bn) and Real Growth (% Change y-o-y)

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This article is tagged to:
Sector: Infrastructure
Geography: Oman