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 -------------- Summary -------------- ¶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. -------------- Satisfied with Private Power -------------- ¶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. -------------- Telecom and Post Next -------------- ¶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. -------------- Waste Management Proceeding -------------- ¶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