MUSCAT, AUG 12 – Salalah Free Zone is being weighed as a possible location for the establishment of a sugar mill project — a move that will bode well for a strong uptick in general cargo volumes handled at the adjoining Port of Salalah.
The proposed venture, which is understood to be still under study, will be the second plant of its kind in the Sultanate. The nation’s maiden sugar refinery is currently being developed at Sohar Port and Freezone in North Al Batinah Governorate with an investment of around $200 million.
Revelations about the latest project came in the Directors’ report of Salalah Port’s financial and operational performance for the first half of the year ended on June 30, 2017. Together with initiatives, notably a tank farm development at the port, the planned sugar plant scheme will add to the maritime hub’s commodity mix, as well as ramp up throughput at the general cargo terminal, the Chairman said in the report.
“The initiatives to diversify the cargo mix at the general cargo terminal from its present overreliance on aggregates is starting to achieve results with agreements being signed with Salalah LPG for handling LPG at the port, agreements being pursued for the tank farm and the setting up of a sugar plant,” said Ahmed bin Nasser al Mahrizi, Chairman of the Board of Directors — Salalah Port Services Co SAOG.
“While the volumes from these projects may start flowing through the port only after a few years, the port should see the cargo associated with these projects’ construction flowing through the port from the end of this year,” he added.
According to officials, talks are under way with an unspecified investor for the development of a sugar plant in Salalah, the scope and scale of which is still the subject of discussion. While the main plant is expected to come up within the free zone, the associated infrastructure for the unloading of feedstock will likely be developed on the waterfront at the adjoining port. Also envisioned are unloaders and storage silos built along the quay and linked to the plant via a system of conveyor belts.
Once firmed up and implemented, the sugar plant will also spur the growth of Omani origin export cargo shipped out by container — thereby meeting Salalah Port’s longstanding ambition to boost ‘gate cargo’ at the maritime hub.
In recent years, general cargo volumes at Salalah Port have grown exponentially on the back of an upsurge primarily in mineral exports, chiefly gypsum and limestone. Other commodities handled at the general cargo terminal include cement and methanol.
General cargo throughput however declined five per cent to 6.785 million tonnes during the first half of this year, down from 7.148 million for the corresponding period of last year. The downtick was attributed primarily to a spike in customs duty and export taxes.
Ahmed al Mahrizi, Chairman, explained: “The general cargo terminal volumes have been seeing a turnaround from May’17 after a disastrous two months of March’17 and April’17 which was a direct consequence of the Government deciding on levying additional customs duty and export surcharges without any prior notification/discussion.”
In contrast, the port registered a marginal uptick in volumes handled at the Container Terminal during the first half of this year. As many as 1.603 million TEUs of containers were handled this year, up from 1.585 million TEUs for the corresponding period of last year, an increase of 1 per cent. Turn to page 15
Buoying the outlook for enhanced volumes at the general cargo terminal is a deal for the establishment of a LPG extraction plant by Oman Gas Company (OGC) – a wholly owned subsidiary of Oman Oil Company – at Salalah Free Zone. The project also calls for the construction of a tank farm and export pipelines at the port for the export of LPG produced by the extraction plant.
As for the overall overlook for business growth at the maritime hub, the Chairman added: “The outlook for Salalah for FY 2017 continues to remain stable although rates continue to be under pressure due to growing competition and continued development of capacity both within and outside the country without any volumes available to justify the same. The recently concluded agreements with our major customers were crucial to stop the decline volumes and have resulted in recovery of container volumes. However rates are expected to continue to be under pressure in the long term and therefore requiring significant focus on cost to maintain margins.”