Prosperity in Oman: Duqm Port

May 10, 2018 in Transport

Duqm Port is quickly becoming the commercial gateway of Oman. With enhanced transportation infrastructure, a Special Economic Zone, and links to the mineral market, the port is striving for maximum commercial success. 

Situated on the southeastern seaboard of the Sultanate of Oman, Duqm Port overlooks the Arabian Sea. This prime location in the vicinity of major shipping lanes has main line connectivity to key export destinations. There is ample access to markets across the Middle East, the Indian subcontinent and East Africa. In addition, the port benefits from favourable geopolitics; it is far removed from Strait of Hormuz and the Arabian Gulf, which means it is a safe, stable and business-friendly destination for industrial and economic investment.

Many development plans are taking place at the port. Not only are these attractive and viable: they are inevitable and ongoing. The developments are guided by the Port of Duqm Company (S.A.O.C). SAOC’s current development project involves turning Duqm Port into a multimodal logistics hub. This is being achieved through the implementation of efficient, modern transportation. Strong transportation infrastructure will ease logistics and will encourage more business to the port and the port’s neighbouring Economic Zone. This is part of a management strategy by the PDC, a 50:50 joint venture between the Omani government and the Consortium Antwerp Port (CAP). Plans include the building of maritime, road, air and rail transportation infrastructure. There will be an airport at Duqm to encourage visitation and movement. Additionally, the proposed rail-based freight and passenger transportation network will link the industrial port city with the national rail system.  This will connect Duqm to Muscat and onwards to the UAE and other Gulf Cooperation Council (GCC) countries, thereby creating an integrated multimodal transport system in and around the port town.

Roads are also important for Duqm Port. There are two main roads in Duqm; the first road is a 17 km-long primary dual-carriageway with three lanes in each direction. This road connects the port, airport, and tourist areas with local residential and social amenities. The second road is a 22.5 km, 4-lane road beltway around the city that connects the residential areas within the city with the beach.

Another 37km of roads are under construction in and around the port, dry dock, and government quay; these will connect the port to the airport, the city, and the main roads linking Duqm to other cities in Oman. This means that Duqm will be served by a comprehensive road/air system along with a planned traffic management system to ensure efficient traffic flow.

Reliable transport is not just beneficial for the port: it is beneficial the Special Economic Zone (SEZ) as well. The SEZ is a key component of the port’s success, and vica versa. SEZ targets economic sectors such as the industrial sector, manufacturing, warehousing, tourist villages/resorts, commercial, office and residential. The Sultanate has expanded the total area of the Special Economic Zone at Duqm to 2,000 square kilometers from 1,745 square kilometers to accommodate oil storage activities at the Ras Markaz area. This was included in the Special Economic Zone at Duqm as per the Royal Decree No 5/2016 issued on January 28. The Economic Zone Authority at Duqm (SEZAD) will continue to support the growth of the mammoth industrial/economic zone.

SEZAD now offers an attractive package of investment incentives and tax cuts to enhance the business environment for the private sector. These investment incentives improve the zone’s competitive standing with:

  • Easy and facilitated access to land based on long term leases and reduced rates.
  • Removal of any restrictions on foreign ownership and minimum investment capital; waiver/reduction of corporate tax and customs duties.
  • Tax exemption for 30 years from the date of starting business and for 30 years renewable. This exemption does not apply on banks, financial institutions; insurance and reinsurance companies, telecommunication services providers and land transport companies – unless they are registered with SEZAD and do their business continuously within the boundaries of the area.
  • Up to 100% foreign ownership.
  • Exemption from minimum capital requirement stipulated in the commercial company’s law and other laws.
  • No currency restrictions.
  • Exemption of Commercial Agency Law provisions.
  • Free repatriation of profits & capital.
  • Usufruct agreements up to 50 years renewable for similar periods.
  • Freedom to import all kinds of goods (except the legally banned imports) without prior approval or permit unless classified as explosives or chemical products. To import such products, investors should abide by the laws and regulations in force.

This is in addition to nationally applicable incentives such as the waiver of personal income tax, convertibility of currency, and the full repatriation of investment capital and profits.

The SEZ and the port work together to stimulate the local economy and generate revenue. For example, the zone provides mining, blending, ore concentration, and other basic processing activities and the port exports the final products. Mineral exportation is now a top priority for Duqm Port. Minerals have become one of Oman’s biggest and most lucrative markets, and minerals such as dolomite, gypsum, silica sand and limestone go through the port regularly. Duqm mainly exports minerals to India, Qatar, and the United Arab Emirates. Reggy Vermeulen, CEO of Port of Duqm, said:

“One of the three major markets that port of Duqm is aiming for is the support of the mineral industry of Oman.”

“Mineral is the new oil of Oman. It is a big resource for the country and is barely tapped. To start with, the country needs to strengthen mineral exports and make a name. Then, we have to attract mineral processing industries for value addition.”

There is much hope that the Port of Duqm will become a major international export hub for industrial minerals.  The port is banking on the commercialization of the substantial mineral resources of Wusta Governorate to generate a sizeable chunk of the industrial hub’s cargo volumes over the long term. Additionally, mineral mining activities will increase in the area, once the natural gas pipeline from central Oman is operational. This will be in 2018, according to SEZAD. The gas will be used for mineral processing in the SEZ; it will be used as a fuel and will encourage further investments in mineral processing units, cement and clinker plants, glass manufacturing and other value enhancement activities.

There are other economic advantages of mineral exports, aside from investment and trade. The entire industry can offer great employment prospects for local people. Reggy Vermeulen spoke on this. He said:

“Having flows of minerals going through the port of Duqm is an enabler for the setting up in the mid-term of a proper mineral related industry cluster offering potentially numerous jobs for Omani’s”.

Given the enormous potential for mineral-based industrial activities at Duqm, the port is developing a Dry Bulk Terminal with an indicative capacity of up to 5 million tons per annum. Its 300-metre-long berth will allow for the simultaneously docking of at least two ships alongside. The new container terminal will have an annual capacity to handle two million twenty-foot equivalent units (TUEs), will be ready by the end of 2019, according to a senior port official. Turkey’s Serka Taahhut Insaat is building the container terminal. According to the CEO “the master plan for the Port of Duqm has been slightly changed. We have added capacity in mineral and roll on/roll off terminals. So, the container terminal will be 1.6 km long, extendable to 2.2 km”.

Construction on the terminal is underway. According to Mr Vermeulen, the port authority are “now building the platform, rail, and warehouses. By the end of 2018, [they] will order the big equipment, including cranes, for the port.”

With these developments in place, Duqm Port is expected to achieve a steady growth in 2018 followed by a much steeper growth from 2019, once the major works in the ports are commissioned and the infrastructure is fully handed over.