Oman: $1bn infra fund boosts transport and energy sectors

Move signals Govt willingness to embrace alternative financing, analysts say

The decision to establish a sovereign wealth-backed fund targeting infrastructure projects signals the Omani government's continued willingness to harness non-traditional sources of funding to facilitate the process of economic diversification, according to a new report.

Oman's sovereign wealth fund will establish a $1bn fund dedicated to financing infrastructure projects throughout the Sultanate, it was announced on January 17.

Government officials indicate that the fund will target the energy and transport sectors, complementing existing government-backed investment plans to construct a national rail network and adding additional upside to the growth outlooks of these segments.

“Oman's intention to deploy $1bn into its infrastructure sector adds further upside to our already positive construction sector growth forecast, which places the country among the fastest growing markets on both a regional and global basis,” BMI Research said in a report.

“As such, we see scope for the transport and energy sectors to increase their total share of Oman's project pipeline in the years ahead.”

In the wake of lower oil prices and the corresponding drop in government revenue, Omani authorities have demonstrated a flexible approach in bridging the resultant infrastructure funding gap.

The government has actively solicited bilateral funding (particularly from China and its Gulf Cooperation Council neighbours) and ramped up use of the country's already robust Public Private Partnership framework.