The Asian Infrastructure Investment Bank (AIIB) has committed $239.2 million in funding for the development of Oman’s national fibre optical broadband network — an ambitious initiative that has important implications for the growth of the Information and Communications Technology sector, while also enhancing the nation’s appeal as a destination for manufacturing, business and strategic logistics services.
The amount, which will be made available in the form of senior debt, has been pledged to the Oman Broadband Company (OBC), which is rolling out a national broadband network in support of the country’s National Broadband Strategy.
The pledge, approved recently by the Beijing-based multilateral development bank’s Board of Directors, is the third such funding commitment made by AIIB in support of Oman’s strategic economic diversification goals.
Last December, the lender approved a pair of loans totalling $301 million, which included $265 million towards maritime infrastructure development at Duqm Port, and a $36 million commitment towards the development of a Mineral Line Railway Project being overseen by the ASYAD’s Group Oman Rail subsidiary. All three funding commitments, the lender said, are in support of Oman’s strategic goal to progressively diversify the economy away from its current dependence on export of hydrocarbon products.
Significantly, the latest loan commitment is AIIB’s first stand-alone non-sovereign-backed limited recourse financing that involves mobilisation of private capital through syndication, according to a high-level executive.
“This non-sovereign debt investment is a great example of AIIB’s increasing capacity to independently structure financing in innovative ways,” said AIIB Vice President and Chief Investment Officer D J Pandian.
“In addition, the loan will be partially syndicated and will demonstrate AIIB’s ability to introduce private investors to new markets and new project types to support the development of vital national infrastructure. Not only will the new broadband infrastructure support local families and businesses, we’re confident it will increase Oman’s attractiveness as a designation for manufacturing businesses and strategic logistics services,” he added in a statement.
Importantly, the loan will finance the construction and operation of the first phase of Oman Broadband’s nationwide fibre broadband infrastructure project, which aims to build the nation’s communications infrastructure, thereby providing equal and open access to telecommunication service providers, on a wholesale basis, and owners and operators of private networks, on a retail basis.
The funds will be utilised to finance Phase 1 of the project envisioning the rollout of fibre optical broadband cable to approximately 406,000 homes and businesses by the end of 2021. Upon completion of phase one, 80 per cent of Muscat will be fibre-ready for connection with gigabit-capable optical networks, according to AIIB.
As part of project scope under Phase 1, Oman Broadband will oversee the laying of more than 4,000 kilometres of cabling, in addition of drop cables of around 9,500 km, besides installing fibre distribution hubs and other support infrastructure. Phase 1 of the groundbreaking project began in 2014, kicking off a roughly 8-year implementation programme estimated to cost $467 million. This investment is proposed to be funded by equity, debt and operating cash flow from Oman Broadband’s ongoing operations.