OMAN MOVING FORWARD ON PRIVATIZATION EFFORTS

UNCLAS MUSCAT 000355

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP
COMMERCE FOR COBERG

E.O. 12958: N/A
TAGS: EINV PREL MU
SUBJECT: OMAN MOVING FORWARD ON PRIVATIZATION EFFORTS

REF: MUSCAT 190

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Summary
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1. (U) The Ministry of National Economy's Director of
Privatization provided Econoff a status report on the
government's various privatization initiatives in the power,
water, waste, telecommunications, and postal sectors. The
government will continue to proceed with its efforts at a
measured pace, and that all opportunities will be tendered to
promote transparency and competition. End Summary.

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Satisfied with Private Power
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2. (SBU) On April 2, Econoff received an update on government
efforts to privatize state-run institutions from Dr. Ahmad
bin Ali al-Mawali, Director of Privatization at the Ministry
of National Economy. Mawali stated that, in general, the
Ministry was satisfied with the current pace of
privatization. In the power sector, Mawali remarked that the
government was pleased with the interest shown by the private
sector in assuming control over the al-Rusail power plant, in
conjunction with the right to construct a new power plant in
Barka (reftel). The government will proceed by privatizing
existing state-owned operations at Mazoon, Majan, and Ghubra.


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Telecom and Post Next
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3. (SBU) Mawali commented that the privatization of power and
water production was part of the government's five-year plan
to divest itself from a number of other utility services. On
telecommunications, Mawali said that the privatization
committee was considering how to further divest itself from
majority state-owned Omantel, 30% of which was spun off to
the private sector in July 2005. He noted that the Ministry,
"has a good plan for it, but that we have to be careful" in
moving forward. On the postal sector, Mawali said that the
Ministry is working with the Ministry of Legal Affairs on
finalizing the sector law. Once finished, the government
would then move to privatize it over three to four years.
During the course of the transfer period, staffing would
slowly be transferred from the government to the new entity,
which Mawali stated would serve to instill a "private-sector
culture." On transportation, Mawali commented that the
government had formed a "steering committee" to create a
business plan for the sector that would foster more
competition.

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Waste Management Proceeding
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4. (SBU) In response to an earlier inquiry raised by
U.S.-based Integration Capital and Trade, Inc. and Innviron,
Econoff asked for an update on the government's plans for the
privatization of the solid waste sector. Mawali said that
the proposal remained pending before a steering committee
headed by Muscat Municipality Chairman Abdullah Abbas. He
stated that the sector law governing the privatization effort
was under review by the Ministry of Legal Affairs. Mawali
further remarked that advisors from the United Kingdom,
Finland, and Canada were in place to oversee the creation of
the regulator, holding company (to be called the Oman
Environmental Protection Services Company),and the
regional/hazardous waste entities. Each entity would oversee
operations in Muscat, Salalah, Batinah, and Rustaq,
respectively, with the hazardous waste facility most likely
located in Adam. Mawali added that once these entities were
established, the government would provide a three-year
transfer period for public sector employees to transition
over to the newly formed private sector entities. He noted
that under Oman's Tender Law, the government would be
tendering for each entity in order to promote competition and
transparency, and that decisions would be based on the tariff
rate presented by qualified competitors.
GRAPPO