After many years of building up the transport system – and with over $11bn in the budget for hard infrastructure projects during the 2011-2015 period – the next few years promise significant transformation. New and expanded roads, a handful of new airports and airport extensions, and major port developments are under way, with opportunities for both local and international transport and logistics players also rapidly expanding. The development plan also underscores the increasing strategic importance of the sultanate. Oman’s location at the crossroads of Arabian, African, Asian and sub-continental trade is once more coming into its own. Once the seat of a major Indian Ocean-based trading empire, the sultanate’s transport infrastructure may well once again prove to be a major driver of growth. “Government needs to open trade and improve governance so that Oman can leverage its strategic geographical location as a transhipment and trading hub for the region,” Tarik Mohamed Al Junaidi, the deputy CEO of Oman Shipping, told OBG.

A Challenging Landscape

Oman’s transportation network has long faced a number of challenges posed by its geographical and demographic nature. With two discontinuous territories – the northern, Musandam Peninsula and the exclave of Wadi Madha, inside UAE territory – the main body of the country also divides into three main regions: the northern region, around the capital and centre of most industry, Muscat; a central, relatively underdeveloped territory; and the southern Dhofar region, next to the border with Yemen and centred around Salalah.

The first of these territories has a mountainous interior, along with a coastal strip where the majority of the population lives. The central region is mostly a plain of gravelly desert, while Dhofar is also mountainous, with a coastal strip. The latter territory experiences the end of the tropical Indian Ocean monsoon, known locally as khareef, in June-September, making it one of the greenest regions of Arabia.


This geography has long made transport problematic, however, with the central region and the interior largely underserved by roads and airports, while the network concentrated on a narrow coastal strip, serving a number of key ports. The development of oil exploration and mining did provide some transport infrastructure into the interior in previous decades, but this was largely un-metalled roads suitable only for heavy vehicles and four-wheel drives. Transportation corridors have also long existed into neighbouring Yemen and Saudi Arabia from Dhofar, and into the UAE from the northern region.

For many Omanis though, the real main highway for the sultanate has long been the sea.

With the exception of Musandam, the country lies on the Arabian Ocean side of the Strait of Hormuz, the 21-mile wide chokepoint at the entrance to the Gulf that is currently estimated to see the passage of approximately one-third of the globe’s entire seaboard oil trade and 20% of all the oil traded anywhere in the world.

Sea Traffic

The sultanate is also near the entrance to the Red Sea, at Bab el-Mandeb, another narrow channel and the route of vessels using the Suez Canal. These two are key transportation corridors for Europe and North America in particular, yet with the emergence of Asian markets as influential global players, the traffic at the current time is also eastbound. Indeed, with the development of markets in Eastern Africa, these days traffic across from Kenya and Tanzania to Pakistan, Sri Lanka and India is also emerging as a key transportation factor.

Oman sits in a remarkably central position for the majority of this traffic. It also possesses some of the best deepwater ports in the Indian Ocean, well capable of serving as a key hub for a butterfly service to the older and lesser-equipped ports of the East African and western Indian and Pakistani coasts.

“If you look at the optimal route from Europe to Asia,” Reggy Vermeulen, the commercial director of the Port of Duqm Company, told OBG. “That route is only a six-hour deviation from the Omani port of Duqm,” he added. The Omani government has therefore been looking very carefully at its seaports and using these to spur the development of the transportation grid as a whole.

Domestic Demand

The sultanate’s transportation policy is not only about developing its status as a global hub, though. It is also about developing the Omani economy as a whole. This has resulted in some impressive growth in recent years, with GDP expanding 5.5% in 2011 and an expected 5% in 2012, according to the IMF. The population too is expanding. Including expatriates, in 2001, the population stood at 2.28m, while in 2011 it had grown to 2.85m, according to the World Bank, with this increasing pressure for urban expansion. New roads and airports are therefore increasingly in demand.

Domestic transportation is also about the sultanate’s sociology, with roads and airports – and eventually, railways (see analysis) – important means of uniting the country and creating a sense of shared identity between different groups. For this reason, considerable weight hangs on the transport grid.

Budget Boost

While Oman’s transport network expansion is being undertaken as a direct result of government policy, that policy also stresses the need to encourage public private partnerships (PPPs) and other forms of private sector involvement.

In January 2011 the Minister for National Economy announced the eighth five-year plan (8FYP), with some OR30bn ($75.88bn) in total investment earmarked for the period 2011-15. While this figure covers a whole range of projects and programmes, as well as overall operational costs, a major slice goes directly to transport infrastructure programmes.

Indeed, some OR1.65bn ($4.18bn) goes to airports, OR1.23bn ($3.12bn) to roads, and OR502m ($1.27bn) to seaports. Expenditure on this has already begun too, with civil ministries – those responsible for the transport infrastructure programme – taking 37.7% of the 2011 budget, up from 28% in 2010. The 2012 budget earmarked OR3.5bn ($9.06bn) for civil ministries from a total expenditure of OR6.4bn ($16.56bn), while investment expenditure on development projects was set at OR1.4bn ($3.62bn) out of a total OR2.7bn ($6.99bn). As such, the current period is one of the front-loading of large-scale government investment in infrastructure projects, with these then rolling out over the next few years.

The government is in a strong position to do this, given recent high oil prices – it has consistently underestimated barrel prices in its budget assumptions for several years, including 2012-13. The 2012 budget assumed a price of $75 a barrel, while for much of the year the price had been over $100.

The Ministry of Transport and Communications (MOTC) is the chief government agency for carrying out much of the work involved in these plans, with the Ministry of Regional Municipalities and Water Resources also involved at times, depending on the nature and location of the project. At the same time, a number of municipalities are also important participants, as they have powers over road construction and repair within their boundaries, while private sector contractors and sub-contractors are usually the key implementers.


The road network in the sultanate has seen some impressive growth in recent years. According to MOTC figures, back in 1970 the entire network consisted of just 1710 km of roads, with only 10 km of this under asphalt. By 2011, however, the figures had dramatically changed to some 29,411 km of roads, with 12,402 km of this metalled.

This network is now set for a quantum shift upwards yet again, as the MOTC’s Directorate General of Roads and Land Transport currently has some challenging highway projects either under way or reported as being in the pipeline.

As an overall philosophy, the ministry aims to create a national network of grade separated highways – dual carriageways in most cases – connecting all the major towns and cities of the sultanate. In terms of length, the most ambitious of these schemes is a new Muscat-Salalah road.

Linking north and south, the current highway is a dual carriageway from Muscat to the historical inland capital of Nizwa, but after that is single carriageway. The plan at present, which is still in the design phase, is to introduce grade separation the whole way, with a 71-km stretch needing such work to connect the end of the northern dual carriageway (currently located at Adam) to the southern port’s existing dualised road network at Thumrait.

Most of the terrain beyond Nizwa is relatively flat, consisting of the gravelly central desert of the sultanate, yet some 40 bridges are required, according to MOTC officials who spoke to OBG. This is because there are a large number of wadi (the Arabic term for valley) to cross. The MOTC has estimated that three to four years are needed to complete this challenging area of the project.

In July 2012, the MOTC announced that the US company Parsons had been awarded a contract for design and construction supervision services for the Nizwa-Thumrait stretch of the highway. The MOTC also announced in September 2012 that may offer the first tenders for a three-part project in January 2013.

Muscat To Sur

A second key roadway initiative is to further boost connectivity between Muscat and the coastal city of Sur, which lies 337 km southeast of the capital. Sur is an important Liquefied Natural Gas (LNG) terminal, with an important port and growing population, yet its road connection to the capital has long been a zig-zag one, unsuited to modern traffic. This project commenced some years ago, with a section from Muscat to Bidbid completed, a stretch that also forms part of the route to Nizwa. The intention now is to link Bidbid to Sur, a distance of approximately 200 km, by dual carriageway.

The project has been divided into two phases, each for two different contractors and with one phase already awarded. As of October 2012 Italy’s Astaldi and Turkey’s Ozkar Insaat were working on a 40-km stage through the Al Uq Mountains, while Turkey’s Sanayi ve Ticaret and Al Habtoor Leighton were working on a second, a 64-km stage between Al Jaarda and Masroon. The total value of these contracts was estimated to be OR125m ($323.75m) according to local press reports.

Regional Integration

A third major project under way is the construction of a parallel highway to the one currently linking Muscat to Dubai in the UAE. This is an extremely busy link route, both for business and tourism purposes, a factor that can lead to some congestion. So, construction of a new, 265-km road, also referred to as the Al Batinah Expressway project after the Omani region through which much of it passes, is now under way.

The MOTC announced in September 2012 that the project has been divided into 11 different packages, with the total worth around OR1bn ($2.59bn). Package 1 was under construction at that time, while Package 2 had just been awarded and Package 3 was in the final stages of award. Packages 4, 5 and 6 were in tendering, with award expected in 2013.

Package 1 was awarded in early 2012 to the Galfar Engineering and Contracting Company – Oman’s largest construction outfit – with the deal worth some OR138.9m ($359.67m). Package 2 was awarded to a joint venture between Malaysia’s WCT Berhad and the Oman Roads Engineering Company, for a 44.75 km section of expressway worth approximately OR123.2m ($319.01m).

At the same time, the existing Muscat-Dubai road is also being upgraded. Originally designed for a much lower capacity, it had included a large number of roundabouts. These are in fact now being replaced by dual carriageway, with flyovers at interchanges, a move that is predicted to boost overall capacity of the existing road.

These developments will help with congestion at the port of Sohar, as the Al Batinah Expressway will link to this fast-expanding industrial development. With the future relocation of industrial and commercial traffic away from the Port of Sultan Qaboos in Muscat toward the port of Sohar, this road network improvement will be vital in the medium to long term. Indeed, there is also some discussion of a third road, following the coast, which would not be entirely freeway, but would nonetheless alleviate a considerable amount of the traffic between coastal communities off the main highways.

Big Spending

Under the 8FYP, the Nizwa-Thumrait road has been allocated some OR250m ($632.33m), or 20% of government spending on roads over the five-year period (and some 4% of all government spending under the five-year plan). The Bidbid-Sur road, meanwhile, will receive OR240m ($607.03m), or 19% of road spending and 3.8% of total spending, while the Al Batinah Expressway is to get another OR250m ($632.33m) and the Al Batinah coastal road some OR200m ($505.86m) – 16% of the total road spend and 3.2% of the total overall spend, respectively. These four projects alone represent approximately 75% of all road spend by the government for the 2011-15 period.

The 8FYP does list some other projects, too, the most valuable of which is the Ibri-Jibrin road, a OR73m ($184.64m) project to convert to dual carriageway. Also listed are the OR80m ($202.34m) project to increase the efficiency of the Sinaw-Mahout-Ad Duqum road, the OR32.4m ($81.95m) construction of a third lane at the intersection of Al Mualih-Bait Al Barkah; and OR25.5m ($64.5m) to address traffic congestion along Al Burj Road in Ruwi, the business and administrative district of Muscat.

A further OR13.6m ($34.4m) is to be allocated to the Wadi Hyat (Al Hamra)-Wadi Bani Auwf road project and some OR44.8m ($113.31m) to paving various internal roads in several different wilayat (the Arabic term for district).

Municipal Transport Projects

Meanwhile, municipal transport construction is also being rapidly developed. Muscat municipality in particular has a challenging work schedule trying to keep pace with the expansion of the capital.

In recent years, this has featured a shift west along the coast from the old centre of Ruwi to neighbourhoods out towards the airport and the road to Sohar. Congestion is a growing problem, however, with municipal transport officials telling OBG that in 2011, the number of cars had increased by roughly 15%. There is little public transport – a handful of bus routes – adding to the traffic.

The municipality used to carry out all of its road construction in-house, but more recently it has started privatising certain services, such as surfacing and general maintenance. At the same time, some OR250m ($647.47m) will be spent by Muscat Municipality on roads before 2015, with most of this funded by central government grants. Tendering for these projects is open to private sector outfits.

Ports & Provisions

The sultanate’s road development plans – and its future railway link up, as does its airports programme (see analysis) – are also heavily integrated with its maritime development strategy. This revolves around a number of important seaports, from Sohar in the north to Salalah in the south. Each has been given a key niche to develop, from oil and gas at Duqm (see analysis), to regional distribution at Salalah (see analysis).

According to Peter Broers, the CEO of the Port of Duqm, Oman is well located to compete with regional peers: “If you look at world shipping traffic passing through the Arabian Sea, there is room for more competition and Oman is ideally situated. Having ports spread 500 km apart and serving different roles, as in Oman, makes more sense than what is happening in the Gulf, where there is overcapacity.”

Moving Out

The port of Muscat, Sultan Qaboos, meanwhile, is set to be transformed into a mainly tourism-oriented venue, while Sohar will expand its commercial and industrial strengths and Sur its LNG. Connecting these ports up and thus transforming them into more effective, multimodal hubs, is thus a key part of the road, rail and air building plan.

In a decision aimed at accelerating Muscat’s transformation into a prime destination for tourism, Sultan Qaboos bin Said Al Said directed ministers in July 2011, to transfer Port Sultan Qaboos’s (PSQ’s) cargo and container operations in Muscat’s scenic harbour 220 km north-west to Sohar Industrial Port (SIP) in the Al Batinah Region. This will allow PSQ to function as a dedicated tourism port for cruise and tourist ships, welcoming even more ocean liners, yachts and pleasure boats than it already does.


The change in the two ports’ functions could provide some solutions to several ongoing issues. It will relieve congestion at PSQ, move heavy industry out of the city and make Muscat a more appealing destination for tourists. The development of the ports sector for tourism is also in line with Oman Vision 2020, which aims to diversify the sultanate’s economy away from its current dependence on hydrocarbons.

Details of what PSQ will look like after the transfer are still to be fully completed. The MOTC and the Ministry of Tourism have been tasked with developing a master plan to include designs for the port, preparation for construction works and implementation documents. The MOTC is also in the process of identifying a consultant to create a plan for a well-organised transition.

There has so far been no time frame announced for the planned relocation of cargo operations from PSQ to SIP. However, in a financial performance report for the first half of 2012 released in July, Mohammed Jawad bin Hassan bin Suleiman, the chairman of the board of directors of Port Services Corporation (PSC) – which administers PSQ – said the time frame and mechanisms required for the transfer of commercial activities from PSQ to SIP are under study by the relevant government authorities.

In the meantime, the future PSQ’s design and technical aspects are to be laid out in a master plan, from which plans for the rehabilitation of the port’s marine utilities and site, including its terminals, will emerge. The plan will encompass the requirements of cruise ships, infrastructure, utilities and other services. In addition, tenders related to tourism assets, such as shopping outlets, recreational centres and marinas, will be floated by the appropriate ministries, with any new buildings maintaining the area’s traditional Omani architectural style.

According to PSC’s Mohammed Jawad, a consultant will be appointed to explore and study the present status of PSC, the port, the shareholders and the alternatives for allowing PSC to continue managing PSQ after its conversion into a tourist port. This could be achieved either solely by PSC, with other collaborative partners, or through the acquisition of the private shareholders’ shares by the government.


No matter how it is handled or who does the handling, though, the move will be difficult on many fronts, as PSQ is one of the sultanate’s largest ports. PSQ is currently equipped with 10 commercial berths, the two largest of which are multi-purpose and can accommodate various containers and other types of cargo. The berths are served by 40-tonne quayside gantry cranes, supported by a bulk conveyor facility that is able to move 500 tonnes an hour. The port currently handles more than 55,000 vehicular units each year.

PSQ takes up a considerable area as well. Its combined container yard storage area offers 2028 ground slots, and the port has a total of 312 reefer points. It has more than 20,000 sq metres of covered sheds, providing 418 sq metres for a marine workshop and two 1906 sq metre sheds, one for the purpose of military defence and another reserved for the Royal Yacht Squadron. In addition, PSQ offers almost 218,000 sq metres of open storage area. All of this area will eventually have to be repurposed.

In addition to the cruise liner companies such as Costa, Cunard, Royal Caribbean International and Khimji Ramdas Shipping LLC – which already call regularly at PSQ and will presumably continue to do so once the port is designated for tourism only – there are numerous freight and container liners that call at the port and which will have to move all their operations to SIP. These include Maersk Line, Mediterranean Shipping Company, GAC Oman, APL, Evergreen Marine Corp., Libra, NSCSA, United Arab Shipping Company and Oman Container Lines.

Together, these companies and others move a great deal of goods in and out of Muscat that will in the future go through Sohar. In the first half of 2012, PSC reported an 11.9% rise in cargo volumes handled at PSQ. Cargo throughput rose to 5.91m freight registered tonnes (FRT), compared with 5.28m FRT during the same period in 2011.

Of these volumes, imports accounted for the majority, increasing to 4.92m FRT in the first half of 2012, up from 4.38m FRT during the same period in 2011, an increase of 12.5%. Exports rose 9.3% to approximately 991,000 FRT, from 0.91m FRT in the first half of 2011. If the move goes smoothly, however, once the shipping agents adjust to the change in ports they should be in very capable and well-equipped hands at Sohar.

A Modern Facility

Located just south of the Strait of Hormuz, SIP is an integrated, fully operational, 6300-ha deep-sea industrial port with a draught of 18 metres. The port hosts petrochemicals, logistics and metals clusters. It is also undergoing one of the largest port development projects in the world, with investments of over $14bn. With this strong backing, SIP has evolved into an industrial port equipped with modern facilities. A 50-50 joint venture (JV) between the government of Oman and the Port of Rotterdam, SIP is operated by Sohar Industrial Port Company (SIPC) and is International Ship and Port Facility Security (ISPS) certified.

In 2010 SIP handled more than 2200 ship movements. Later in 2011, a temporary bulk terminal facility was built to accommodate vessels with up to a 16-metre draught until a more permanent facility can be built for large vessels. The new facility will be appointed with a 3.5-km conveyor belt system connecting the storage yard and the terminal. It will have a capacity of 10m tonnes per year.

Agents already operating out of SIP include Maersk Shipping Services (Maersk line), Sharaf Shipping Services (MSC line), Mutrah Shipping & Trading Agency (APL line), Khimji Ramdas (Global Container Lines), Universal Freight Services (Forbes line), Blue Eagle Shipping & Insurance Agencies (Ceekay line), Bhacker Haji Abdullatiff Fazul (UASC line), Clarion Shipping Services (HLL, ICL, LMT, BSH lines), and Transworld Shipping, Trading & Logistics Services (OEL line). This list is most likely to grow as the agents now operating out of Muscat make the move to relocate their operations to Sohar.

Sohar itself is also home to a free zone, an industrial zone and an airport project which add up to Gateway Sohar, an extremely large development that to date has attracted billions in foreign investment in its own right (see regions chapter).


These are highly exciting times for the sector in Oman, with major developments in road, rail, air and sea traffic infrastructure creating opportunities not just for construction contractors, but also for logistics companies of all kinds. Within a few years, many of the current bottlenecks will have been removed, while the journey time between destinations within the sultanate and beyond will be significantly cut, assisting economic development.

The sultanate’s role in international maritime traffic will likely increase in the medium to long term, with its position only likely to help it reap rewards from changes in regional and global trade patterns.