Wednesday, November 28, 2007

Oman Waste Water Company capitulates to the Chinese

I meant to blog about this a couple of weeks ago, but got distracted.
Oman Waste Water Services Company had a press conference where they announced that they had re-engaged the Chinese company SinoHydro to continue the massive waste water project. The details are here Times of Oman Article

Work on Muscat Wastewater project to resume next month
Tuesday, November 13, 2007 12:14:23 AM Oman Time
MUSCAT — Work on the Muscat Wastewater Project, which was stopped temporarily after the June cyclone, will resume next month, the Oman Wastewater Services Company announced yesterday. According to Omar, like all large-scale projects, technical problems are almost inevitable. Work had come to a halt in some parts of the Bausher area. The current difficulties are relatively minor and temporary, particularly in the total context of the project.

“Sino Hydro Corporation which had been contracted to lay the pipeline network remains committed to the long term interests of the project and I am happy to announce that we have reached a solution and agreement with them. I can confidently tell you that work will be restarting by the end of the year,” Omar disclosed to the press.

Great. I was a bit disappointed however than none of the crack reporters present seemed to think of asking some real questions. Like, ‘Can you tell us what happened to all the Indian and Nepalese workers SinoHydro abandoned when their management fled the country in June?’
As reported here News Post India Article
and here in the excellent (and Dragon recommended)News Brief Oman

Or questions like: ‘How much extra did Oman Waste Water Co have to pay to get the Chinese back, seeing as no-one else would touch the contract with a 10 foot pole? Or, Why are you now paying extra money to a contractor that has a recent history of both completing work at poor standards, abusing their workers, bringing in illegal Nepalese workers, and of fleeing the country and their responsibilities when things got difficult? Or, What is OWSC doing to make sure the previous mistakes are not repeated?

No, instead all we got was the usual moronic re-printing of the press release that flatters OWSC with no mention of any of the real story. Well done Times of Oman.

SinoHydro did its runner after cyclone Gonu trashed a lot of their original work and OWSC decided not to entertain any compensation. Perhaps OWSC should have made sure that SinoHydro had insurance against such events. Or awarded the contract to a decent company in the first place. But when it was clear to SinoHydro that the contract was flawed, they literally left. All SinoHydro Senior management got on a plane and flew back to China. Leaving everyone in limbo. Anyone who has experience in contracting knows that you never want to take on someone elses work once they’ve started. The liabilities are too great.

So it seems SinoHydro had OWSC by the balls. Now, as a result of the flawed contract, and OWSC incompetence, SinoHydro are back, on improved terms, and with no apparent penalities for their previous behaviour. OWSC management are still in their jobs, and probably planning holidays to Switzerland to see the gnomes.

Actually, I made that last bit up – I have no evidence whatsoever that the fantastic team at OWSC have done anything improper at all. Because that just wouldn’t make any sense at all, would it?

We all know who will have to pay for this – the Oman Government, and the people who will again have to deal with dug up roads all over the Capital not finished properly. Good work OWSC!

Monday, November 26, 2007

Omani Employment

In a press release a couple of days ago I saw this gem:

MUSCAT — The number of national manpower employed in the private sector establishments until November 18 stood at 55,694.
[Times of Oman Article]

I still find that incredible. Incredibly low that is.

If the population of Omani's is around 2.5 million, and around half are of working age, that means only 54,000 out of more than a million people are working in paid employment in private companies? 5%??? Maybe someone left a zero off the end?

I have to presume this does not include owners of their own businesses, taxi drivers, etc etc. But when you remember that approx 80,000 Omani youngsters graduate high school every year, you can see the present and looming problem.

Massive under- and un-employment.

It is and will continue to be an issue for the entire Gulf region. People are still having way too many children, and it is still much much more attractive for employers to employ expat workers to actually get work done cheaply and effectively. Omani staff are - and I realise this is a generalisation - often just uncompetitive.

If this does not change, and soon, it will all end in tears.

Saturday, November 24, 2007

Ericsson accused of bribing ex-Omani Minister

Omantel really in the news this week!

That Ericsson was accused by a Swedish Journalist of paying about 2mln into the Swiss bank account of an agent for the ex-minister of Telecommunications in the late 90s hit the wire last week, but the ex-Minister was never named. That changed today.

It seems Swedish Radio has published documents listing the account's beneficiary as Ahmed Suwaidan Al Balushi, ex Minister rsponsible for telecom at the time and until 2000. Presumeably the same person who was also chairman of Oman's Alliance Housing Bank, until he was replaced at EGM July 2007.

While the investigator on whose work the story is based has said he has no evidence that the claim is true, readers should note that because he wouldn't have such evidence as he was looking at the system, not specific payments, and he hasn't said its not true.

A google search will get all the messy details.

STOCKHOLM, Nov 21, 2007 (AFP) - Ericsson AB, the world's leading mobile networks maker, allegedly paid more than a million dollars (euros) to a former Oman government minister in what appears to have been a bribe for a large contract, Swedish public radio reported Wednesday.

Ericsson paid 12 million kronor (1.3 million euros, 1.9 million dollars) into the Swiss bank account of Oman's former telecommunications minister, Ahmed Suwaidan Al Balushi, in the late 1990s, apparently as compensation for winning a 300-million-kronor contract in the country, Swedish Radio said.

"This seems very strange ... That the company paid some government minister through an agent probably means in this case that it was a bribe," Oerjan Berner at anti-corruption group Transparency International told the radio station.

Swedish Radio posted bank documents and memos detailing the transaction, made public during a tax probe of the company, on its website.

Ericsson in one memo listed go-between agent Peter Sullivan and his company Middle East Services as the beneficiaries of the commission payment for the contract it had received from Oman's telecommunications authorities to expand the mobile network in the capital Muscat, according to the radio.

The bank documents however reveal that Al Balushi, who was Oman's telecommunications minister until 2000, was the owner of the account into which the money was paid, the radio alleged. - 27k -

Omantel spends large on strange Pakistani Company

What's going on with Omantel? Their 'great deal' seems to be a huge payment to a local businessman for a not very impressive minor Pakistani Telecom compnay.

Many of you will have read that Worldcall Telecom says it has accepted the offer of Oman Telecommunications (Omantel) to buy 60% of its shares, in a deal worth 11.3 billion Pakistani rupees ($185.6 million). Omantel will acquire 60% of Worldcall at 25 rupees per share, the company said in a notice to the Karachi Stock Exchange seen by Reuters on Wednesday.

As part of the deal, Omantel also has to acquire an additional 5% from those shares publicly traded.

What’s the real story? It seems more than a bit fishy.
Is this a good deal for Omantel Shareholders? The shares traded recently at about 18 rupee/s, so Omantel is paying a 40% premium to acquire the company vs traded prices. They are paying a 17% premium vs it’s peak price over the past 12 months of 21.30, which only occurred as the share price spiked following the rumours of Omantel’s interest that emerged in May this year. Until early this year when the Omantel deal leaked the share price was just 10Rupee. So Omantel in its wisdom is paying 250% more than the company was valued at early this year! And since then the company has actually performed much worse than in 2006.

The company has never paid a dividend, so its hard to get a P/E ratio. However, the latest 2007 results aren’t pretty – Earnings before tax from on-going business fell from 898mlnRupees to 358mlnRupees and revenue was flat. By my calculations, this means Omantel has paid an effective P/E of more than 50 times core earnings for a company in a highly competitive market with much bigger and better funded competitors. The company also has significant debt, with interest payments this year of 306mlnR [$5mln]. Total ‘real’ assets (ignoring goodwill and intangibles) are worth about US$200 mln, so again, Omantel seems to be paying 50% more than effective book value, for a company that of late has demonstrated no growth in revenue and actually lost money in 2005. For all the details, see

Its hard to reconcile these numbers with the statement from Omantel quoted in that bastion of high quality investigative reporting the Oman Daily Observer - “Unlike other regional firms, we are very conservative and prudent in investing our funds,” said a senior official of the company.

The not-so secret majority Omani shareholder in the Pakistani WorldCall company that Omantel decided to buy so expensively is Sheikh Sulieman Ahmad Said Al-Hoqani. Sheikh Hoqani is also Chairman of the publicly traded Oman Hotels and Tourism Company, who run the Al Falaj Hotel, Ruwi Hotel, Al Wadi Hotel and Sur Plaza Hotel, essentially a set of second tier hotels.

Even more interestingly, a Mr. Salmaan Taseer serves as Chief Executive Officer and Director of Worldcall Telecom Ltd and the company reports that his total Annual Compensation is $1.6M. Hmmm. Nice work if you can get it. That’s about 25% of the company’s real profits this year. Maybe Omantel will be looking into the compensation packages…

WorldCall is strongly linked to First Capital Securities Corp. Ltd. (1CSC:Karachi Stock Exchange), currently trading at around 90Rupee up from a yearly low of just 22Rupee. Sheikh Hoqani is on the board of directors of 1CSC, and its board shares most of the board with World Call. Mr. Taseer also serves as Chairman of the Board of Directors and Chief Executive Officer of First Capital Securities Corp. Ltd. His compensation package from 1CSC is not stated.

Sheikh Hoqani is listed as a major shareholder in Khadim Ali Shah Bukhari & Co. Ltd.[KASB] a Pakistani Financial Services Company, Brokerage, Bank and IT conglomerate. Interestingly, KASB also owns World Tel Oasis, an IT company also specialising in Internet provision in Central Asia in partnership with World Tel Canada. It also is in the internet supply business in Pakistan, and would seem to be a competitor to WorldCall.

It might be very interesting to know the details of any financial commitments WorldCall has made to 1CSC. It seems strange that 1CSC’s share price has shyrocketed at the same time as the Omantel deal with WorldCall was made clear.

Sunday, November 18, 2007

Proxy Servers and Oman

Sorry team, I was off on business for a while, and then had to be a bit careful postwise. The Ministry IT team were snooping... Hmmmm. As they say, sometimes the paranoid are right.

Anyhow, for those who want to avoid the Omantel filters, there is a programme that - well, at least as of today - will work in Oman to automatically find proxy servers. And the site is available [unlike most of them], so if you are interested in surfing without Omantel looking over your shoulder, act fast kids, before it joins the list of blocked sites.

Its called Invisible Browsing v6.5:

or try:

Good luck surfers!

Please note: this will get you around Omantel filters, and hide your TCP IP address, but if Omani Internal Security really, really want to find you, they probably still can, as anyone who's seen the series 24 can explain...

More Omantel wierdness

It was bad enough that the Government had to cut the 'Royalty' [ie special tax] Omantel pays to help boost its sagging shareprice and ease its cashflow problems. The company also is the monopoly supplier of Internet connections to the outside world in Oman - Nawras could get 10x the bandwidth at 10% of the price they pay OmanHel via the UAE, but that would be against their licence with the TRA.

But the recent announcement of Omantel buying a stake of $204mln in a pretty obscure Pakistani Telecom company for a pretty hefty stake is very interesting, as highlighted by the (always well connected) Muscati here at the Oman Community blog:

Oman Community Blog: Omantel - Smoke and Mirrors

The questions: who owns the shares? How does the price compare to projected cashflow? Anyone out there who knows?