The situation looks promising, thanks to a rebound in crude oil prices. For the first four months (by forward contracts) of this year, the average price realisation for Oman crude stood at close to US$63 per barrel. This is quite encouraging compared to US$50 assumed in the 2018 budget.
This is not true. In the second half of last year three contracts were awarded for the multi-billion dollar Duqm petrochemical project. Recently there was an announcement that a 385km mineral rail line will be constructed in the south, which is rich in mineral connecting to the Port of Duqm. The mineral rail line is part of the Tanfeedh initiative of developing the mining sector within the economic diversification strategy. The government is rationalising spending and focusing on priority areas. In addition, we expect many projects to be executed via the public-private-partnerships (PPPs). We expect the PPP law to be issued this year, which will pave the way for execution of a number of projects.
The PPPs should help reduce significantly the financial burden on the government with a positive impact on the overall budget. This will allow the government to focus more on other important areas such as defence and security. The PPP model should therefore play a very important role in the diversification strategy. Oman has made its intentions clear that it would be looking at implementing VAT in 2019. The decision has been taken in order to allow comprehensive preparation by all the stakeholders. The VAT law is expected to be issued in the second half of 2018. It is the intention of the government to provide businesses adequate time to prepare for VAT implementation.
