Monday, November 30, 2009

Oman to set up new unit to develop water and energy strategy

Ahhh, don't you love Eid + National Day? A whole week off work and the weather's perfect. One of the reasons Oman is a nice place to live.

The Ministry of National Economy is forming a new high powered analysis unit to study the economics of the nation's water and energy provision, and to develop a national strategy for energy [aka subsidised and increasingly unreliable electricity], fuel [ever increasing cost of subsidising petrol and diesel] and desalination/dams.

Perhaps a highly experienced expat leading such a team can stop this madness of building a $1bln coal fired power station in the middle of nowhere running on imported coal...

Oman continues to plan a coal fired power station in Duqm even though Oman has no useful coal deposits to run it

Oman needs to do a lot more to:
- stop subsidising electricity
- encourage electricity efficiency (double glazing and insulation?)
- stop subsidising petrol
- stop wasting water
- develop solar electricity
- reduce requirements for more and more desalination

The current incentives and subsidies present a huge distortion in pricing compared to true costs and therefore not only allow too much waste of natural gas. The subsidising of power and gas acts to discourage any real private investment in power generation and infrastructure, or in additional gas production and alternative energy.

In other news,

Oman cracks down on hard working poor foreigners
Oman's fabulous Ministry of Manpower is cracking down on... poor subcontinent workers who have a visa with one employer but actually work on building sites for others. Oman changed the law to supposedly allow the employers to be fined, but naturally its the poor workers who are paying the price. The reported increases in the suicides of such unfortunates will only increase as a result. Once again a cheap and ill-thought out law is being used to try and fix a deep-seated problem by diktat. The claim by Salim Bin Saeed Al Badi, a DG with the Ministry, that as a result more Omani will be employed working on building sites is pure delusional fantasy that might sound good in the comfort of an air-conditioned Ministry tea-room but has precious little to do with the reality of the labour market.

Meanwhile, speaking of delusional fantasies, Dubai has still to resolve the Dubai World debt problem and the world wide panic it started last Wednesday. Markets have woken up to the fear of a second global meltdown as the debts in Dubai Inc, and the related CDS derivatives, are suspected of having the potential to become the new sub-prime crisis triggering more liquidy freeze. Royal Bank of Scotland, for example, appear to have more than $2bln in exposure to financial genius Sh. Maktoum's various money pits, and HSBC are reported to have loaned him almost $16bln. LMAOFOFL.


  1. I think they should stop subsiding electricity and water on stages, or only subsidize a certain quota per household only, exceed that and pay full price.

  2. Dragon- I enjoy your posts very much. They are a unique combination of humor, candidness, and a few good pointed 'zingers', and make us look critically at Local Issues. However, this post seems to me to be especially acerbic. You loaded your post with emotionally charged words. Please be careful not to turn people off with your harshness.

  3. I agree with Abdullah about your emotionally charged remarks.
    You state 'the weather's perfect', when a glance out of the window will show you it's about to pour down. And as for the temperature - sunbathing requires a wooly jumper.

    As for Duqm, it's a good location for a coal fired power station for access to coal shipments from India, and much cheaper than burning diesel or gas. (I don't think the PDO coal team has found any significant resource yet, and are not likely to)

  4. I'm concerned about your call for the end of electricity subsidies for a selfish reason: I live in an employer-provided flat (I can't move) on the top floor of a completely isolated building without double-glazing or insulation. I work most of the summer and can't run away to a cool English cottage or a breezy south of France retreat. My electric bills for summer air conditioning are now very high - I can't imagine what they would be if there were no subsidy!

    The government needs to set strict building codes for both public and private buildings that require double-glazed windows and full insulation (and solar panels??). They also need to empower building inspectors to refuse building permits unless the building will meet energy efficiency guidelines, or to refuse to "pass" a completed building if doesn't meet the standards. (Are there building inspectors now in Oman?) After that, I think it would be okay to reduce or eliminate subsidies, or allow a monthly quota, after which the user would pay the full rate, as ColOman suggests. Until then, though, I think people living in older buildings that can't be retrofitted should still receive the subsidy - at least in the hottest months.

  5. ColOman
    I totally agree that a small quantity limited subsidy would be fine, as there's no need for little old ladies to pay full price, and there is no mechanism to assist the poor without also assisting the rich (as there's no income tax and very limited social security).

    Thx, but WTF? Can you be more specific? The Ministry of Manpower are idiots if they think this law and cracking down on those unfortunates who build Oman will do anything to aid Omani employment. Its just another easy, lazy way of trying to be seen to be trying to do something.

    But thanks for the continued support and intelligent comments, BTW.

    I find this cool weather perfect. A spot of cool rain is always a cause for celebration. And Duqm is a terrible place for a CFPS. There is nothing there, it's 600km from any industry or population centres, and the port will be unavailable due to bad weather 30%+ of the time. (Thats why the country had to build a huge expensive pipeline across the Oman mountains to export oil from Mina Al Fahal.) PDO is not empowered to look for coal and its area of operations anyhow doesn't include the mountains, but the Ministry of Minerals has looked and there isn't any**. Importing coal instead of using solar or the natural gas already has (the expensive stuff) is bad business as its more expensive than the alternatives, bad for the environment, and bad for our image.

    Biting the bullet by encouraging greater efficiency and developing home made solar technology could actually generate new international businesses doing the same for other countries.

    As above, I agree with limited subsidy, . And people should retrofit.

    ** OK, there is a very limited amount of poor low grade lignite in the Hajar mountains, but it is useless for a power station or much else.

  6. Dragon- My post was not a comment on your weather reporting- your accuracy is only rivaled by the Met Bureau at the airport.

    Please let me give you a few examples of what I did mean:

    "The Ministry of National Economy is forming a new high powered analysis unit to study"- on second thought that may be a pun for 'electrical study'.

    "Perhaps a highly experienced expat leading such a team can stop this madness"- Are there no qualified Omani Madness Stoppers?

    "The current incentives and subsidies present a huge distortion in pricing compared to true costs"- As contrasted to 'Western Economies', Oman's money is pumped into the economy from the top. Maybe this is the govt's way of giving some financial relief to the people.

    "Oman's fabulous Ministry of Manpower is cracking down on..."- fabulous??????

    "that as a result more Omani will be employed working on building sites is pure delusional fantasy that might sound good in the comfort of an air-conditioned Ministry tea-room but has precious little to do with the reality of the labour market." rather harsh, probably true, but rather harsh wording.

    Enough from me, keep up the good work.

  7. This comment has been removed by a blog administrator.

  8. Abd.,

    Sorry, but I classify that under "fair comment".

    One must use ... English-style humour & sarcasm to stay within the law...

    On the Expat thing: no there are not. That's why we're advertising for a 10yr++ Government Economics professional, an experienced expert who will hopefully:
    - be able to do his job quickly and correctly
    - lead a team
    - be able to calculate/quantify and explain the truth without fear of politics/wasta/fantasy/

    And yes, right now. at this level, it needs an expat.

  9. UD
    Have you got a 'joke mode on' icon that we can use?.
    There realy are/were PDO staff investigating Oman's coal potential (possibly for Minerals Ministry), but I assume most would agree with your synopsis of extremely limited resources. There's certainly none in the mountains, but there is a small exposure inland from Sur. At least one oil exploration well has recorded drilling through coal, but at significant depth.

  10. UD,
    May be it is a good idea to put the coal plant just to drive a good bargain and get better price for gas from Iran or Qatar.

    Incidentally more skeltons coming out from dubai cupboard.
    Sheikh's high life sowed the seeds of crisis

    Dubai ruler’s racehorse buying spree falters

  11. Significantly reducing the tremendous waste of energy and water in Oman should be an easy win. With relatively little effort an awful lot could be done and achieved in this field. Development of alternative, sustainable sources of energy (like indeed solar) would be another relatively easy step for Oman. But yes, it would unfortunately again need one or more expats and lots of imported expertise and know-how to get this off the ground in Oman.


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