Oman pushes for privatisation of state-owned companies

Oman's government has launched a programme to privatise government enterprises, which is controlled by the sovereign wealth fund. 

Muscat is following in the footsteps of its neighbouring countries, such as Saudi Arabia and the Emirates of Abu Dhabi and Dubai, by selling off various assets, such as energy, mining and others, to achieve the greater benefit of attracting foreign investment, knowing that they are mineral-rich countries. 

Vale, the Brazilian mining company, made an announcement about the purchase of global integrated energy group OQ's stake in its joint venture. 

OQ, now owned by the Investment Authority and formerly known as Oman Oil Company, had bought a stake in Vale Oman in 2010. 

The main idea behind OQ's deal is to attract foreign investment and partnerships in order to utilise the country's natural resources. 

Guillermie Reinisch, president of Vale Oman, said: "We provide guidance to the company on how to make business decisions in order to make successful investments in the region". OQ plays an important role in supporting all partners in the Sultanate of Oman. 

In addition, it was explained that Vale Oman continues to make positive improvements in expanding in the Sultanate and in the Middle East region, in order to achieve global carbon neutrality. 

Vale Oman manufactures nine million tonnes of iron ore per year and has a distribution centre with a capacity of 40 million tonnes. The company supports local supply chain development and CSR projects with high investments of $1.4 billion.

To improve the business environment, OQ plans to raise $224 million by acquiring Abraaj, a unit focused on drilling in the oil and gas industry. Among the investors attracted to Abraaj were Saudi Omani Investment Company, wholly owned by the Saudi Wealth Fund, the Omani Royal Court Affairs Office and Schlumberger Oman, all of which want a 40 per cent stake in the offering.

The government outlined plans to sell the assets as it deals with a budget deficit after oil prices hit revenues. The aim is to transfer these shares to new owners who are suitable for them.

Notably, among the energy companies is Salalah Methanol Company, which was founded in 2006 and is 90 per cent owned by Oman Oil Company, while Takamul Investment Company owns the rest, signalling that it is very important to the government and that it takes privatisation and investment in a company very seriously. 

In 2020, the government set out a plan to end dependence on energy revenues by diversifying revenue sources and because of the crisis caused by the Ukraine-Russia war, which gave officials a chance, as there were global consequences such as rising oil prices in the general markets. With this, the country is expected to achieve a financial surplus not seen since 2013. 

Confidence in international debt markets amid rising oil revenues has helped boost the government's reform agenda, which secured a loan a few months ago to help continue its plan to exit the financial crisis. 

Last month, Muscat completed the process of a refinancing loan, increasing financing to $4bn.