Boston, MA -- (ReleaseWire) -- 04/10/2014 -- With official data reporting stronger than expected construction industry real growth for 2012 at 3.7%, we now estimate that the sector saw 3.3% growth in 2013. Although weaker than the double-digit growth seen in the last decade, we expect growth to pick up again over the next five years at an average of 4.8%. Our expectation for short-to-medium term growth is supported by a strong project pipeline, particularly in Oman's transport infrastructure sector. The government's US$78bn five-year (2011-2015) spending plan is a major part of this view, along with investment associated with a burgeoning tourism industry. However, a potential downside to our forecast over the longer term is slower economic growth derived from declining oil revenues, which could undermine the government's ambitious infrastructure spending plans.
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Key Trends And Developments
- The government's five-year spending plan (2011-2015) includes OMR30bn (US$78bn) of expenditure, the majority of which will be allocated to social and transport infrastructure. In addition, the government announced in October 2013 that the country will spend over US$50bn in infrastructure projects in the next 15 years. From this budget, US$20bn is earmarked for the transport sector - including Oman National Railway - which is where we see the strongest pipeline of projects.
- The second package for the Al-Batinah Expressway attracted 11 bidders after the Tender Board released technical bids in November 2013. This package includes the construction of a 45km-long four-lane dualcarriageway from Suwaiq to Shinas.
- An extension to the planned Omani segment of the GCC rail network has been confirmed by the government. The aim is to offer another option for transporting some of the oil coming from the Persian Gulf, viand act as a back-up, or even relief-valve, to the Strait of Hormuz. The extended line will now run along the coast passing through the port of Salalah, to the Yemeni border.
- In November 2013, Austrian construction company Strabag secured a the US$120mn contract from Oman's Ministry of Transport and Communications to construct a 100km section of the 400km-long road between Sinaw and Duqm. The new highway will run parallel to the existing Sinaw-Duqm highway. Construction on the project is scheduled to be completed by early 2016.
- Government-owned OPWP has officially started the process related to the construction of an independent power project (IPP) in the sultanate. The tender to develop the new gas-fired water and power plant will be floated by OPWP in Q314. The US$1.5bn development will be the biggest independent power project (IPP) in the country.
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