One of the biggest cultural differences I’ve come across in the Middle East is the huge problem of getting across to locals what freedom of speech means in [most of] the West. In many ways the tradition is strongest in the USA and to a certain extent the UK, and their cultural derivatives NZ, Australia, Canada, etc. When combined with the principal of separation of Church and State, it leaves many Muslims baffled (as the Danes discovered recently).
Caution: If you’re reading this, please ensure you’ve first read the bit here on the right hand side of this blog about not being easily offended. You’ve been warned.
Free Speech means, of course, many things and has wonderful complications and subtleties, but to me it means that one is generally free to criticize public officials or Government policies, free to voice opinions about, say, human behaviour, science, religion or politics, and basically being free to offend people.
Now, that doesn’t mean I think you can or should get away with saying [or printing] whatever you want. Shouting ‘fire’ in a crowded cinema, urging a crowd to commit violent acts (who then go and commit such acts), or knowingly and purposely defaming someone (lying) to the extent that they suffer damage and can demonstrate that what was said or printed are untrue and damaged them, are some classic examples of common limitations. Pornography has always been a tough call, as have politically extreme views [we must kill all the XXXX for example].
But simply offending people, even knowingly, is not commonly illegal in the West. After all, it’s so butt-fuckingly god-damn easy to do. [see?] Comedians would be out of business for a start. And artists. And opposition politicians. And anyone whose religion is at odds with the majority, or the ruling class, or even the self appointed leaders of that religion. And usually the people concerned have to actually try to get offended anyway, by going to the comedy club, or watching the programme, or going to that website, etc. Essentially by choosing to seek to be offended.
And it seems someone is always being offended by something, somewhere.
Want to discuss the morals and legalities of homosexual men and gay marriage in a grown-up and dispassionate way? That gets you offending the Muslims, Christian fundamentalists, homophobes and various others right away by even suggesting that one should have such a debate in the first place.
Want to give good advice, especially to young people, on how to avoid getting HIV/AIDS that goes beyond ‘don’t exchange bodily fluids at all ever’ and might mention condoms, or oral sex – there you go, lots of people offended.
Want to name your cat after your best-friend who lives down the street? Probably OK, as long as he isn’t called Mohammed, (although he might be offended personally if it’s an ugly and or female cat).
Anyway, it seems many people just don’t get it – the protections we have as a society (in the West at least) against tyranny, oppression [both political and religious] and invasions of privacy are founded on the fundamental right to offend people. And that includes Muslims, Jews, Christians, Atheists, Evolutionists, Liberals, right wing nutters – everybody.
All these arseholes who I’ve seen recently trying to justify the lashing/deportation/guilt of this teacher in Sudan (who named a teddy bear Mohammed) are good examples. They offend the hell out of me with their stupid, parochial, bigoted, arrogant, dark-ages, nonsensical, finger-pointing, and supernatural attempted justifications. Saying things that will unfortunately have a real impact, not just for these children and their poor teacher, but for people in Sudan who need aid and help and possibly even for totally blameless moderate muslims elsewhere.
But I don’t see that my being offended is a good reason, or even a kinda-valid reason, to stop them saying it. Lots of things offend me. And in some ways I’d rather we all get to know what totally whacked-out fuck-up idiots are out there thaks to their transparent display of the crazy ideas they believe to be logical or justifiable.
Worst thing? They probably have driving licenses too. Evil Bastards. Just to be clear - those of you who think the teacher deserves any punishment for calling a teddy bear Mohammed are in my opinion totally insane.
To Quote Wikipedia:
The most important justification for free speech is a general liberal or libertarian presumption against coercing individuals from living how they please and doing what they want. However, a number of more specific justifications are commonly proposed. For example, Justice McLachlin of the Canadian Supreme Court identified the following in R. v. Keegstra, a 1990 case on hate speech:
Free speech promotes: "The free flow of ideas essential to political democracy and democratic institutions and limits the ability of the state to subvert other rights and freedoms.
It promotes a marketplace of ideas, which includes, but is not limited to, the search for truth.
It is intrinsically valuable as part of the self-actualisation of speakers and listeners.
It is justified by the dangers for good government of allowing its suppression.”
End quote
More research and debate on Free Speech and what it means can be found at the excellent website of the American Civil Liberties Union ACLU_Free Speech
Sunday, December 2, 2007
Saturday, December 1, 2007
Omani Ex-Minister Ahmed Suwaidan al Balushi Again
Just a quick one - I was thrilled over the holiday to buy a copy in my local supermarket of The International Herald Tribune [22nd November Edition] and find a story on the recent Ericsson alleged bribe that actually named the Ex-Minister of Telecommunication as Ahmed Suwaidan al Balushi.
I wonder if it got through:
A)Because it was buried in the middle of the paper
B)Because it wasn't printed across a picture of a bare-chested or bikini-clad woman
C)Because the Omani Gov. doesn't care about such reports being available
Obviously I've yet to read anything about it in an Omani paper. But, no surprise there.
Perhaps the plan is to simply ignore it, knowing most Omanis don't know about it, or don't care about it, and let it fade away. (I'm pretty sure they don't sell a lot of International Herald Tribunes in Nizwa.)
Unfortunately its a plan that will probably work.
I wonder if it got through:
A)Because it was buried in the middle of the paper
B)Because it wasn't printed across a picture of a bare-chested or bikini-clad woman
C)Because the Omani Gov. doesn't care about such reports being available
Obviously I've yet to read anything about it in an Omani paper. But, no surprise there.
Perhaps the plan is to simply ignore it, knowing most Omanis don't know about it, or don't care about it, and let it fade away. (I'm pretty sure they don't sell a lot of International Herald Tribunes in Nizwa.)
Unfortunately its a plan that will probably work.
Act Now - Momentum builds to Rial and GCC revaluation
Recent media and press reports are building rapidly to prepare the ground for a revaluation of the GCC currencies, including the Omani Rial. A great example is Wednesday's story in Arabian Business and here.
The latest issue of international magazine The Economist also called for a GCC revaluation at minimum, and expressed a preference for a basket that included the oil price explicitly. The brother of Oman's powerful Minister of National Economy was also quoted last week musing in the press that a 5% revaluation would be appropriate, importantly making the link to Oman's previous devaluation when oil prices were low and advocating a simple revaluation while remaining on a dollar peg. The well-connected and perceptive Muscati also reported last week that those in the know in the Omani Government are moving money into AED.
I suspect the 'compromise' agreement will be a general GCC revaluation of 5-10% announced very very soon - maybe before Wednesday as the GCC meets Monday - while retaining a dollar peg. I think a basket a-la Kuwait will prove too difficult in the short term to agree on. Once the decision has been made, and all indications are that it has already been made except perhaps the exact % amount, the change will need to come very quickly to avoid massive speculation.
So, dragon's advice - get as many Dhirams as you can today or tomorrow, or at least don't sell rials for USD or other currency for a week or so. The rial may not revalue as far as the UED. Once the market decides a revaluation [or devaluation] is on the cards it quickly becomes a self-fulfilling prophesy as the flow of funds can overwhelm even the largest Central Bank resources. So, fill your boots kids, and make a cool short-term return. You can be sure the GCC won't be devaluing, so there's not a lot of downside here...
The latest issue of international magazine The Economist also called for a GCC revaluation at minimum, and expressed a preference for a basket that included the oil price explicitly. The brother of Oman's powerful Minister of National Economy was also quoted last week musing in the press that a 5% revaluation would be appropriate, importantly making the link to Oman's previous devaluation when oil prices were low and advocating a simple revaluation while remaining on a dollar peg. The well-connected and perceptive Muscati also reported last week that those in the know in the Omani Government are moving money into AED.
I suspect the 'compromise' agreement will be a general GCC revaluation of 5-10% announced very very soon - maybe before Wednesday as the GCC meets Monday - while retaining a dollar peg. I think a basket a-la Kuwait will prove too difficult in the short term to agree on. Once the decision has been made, and all indications are that it has already been made except perhaps the exact % amount, the change will need to come very quickly to avoid massive speculation.
So, dragon's advice - get as many Dhirams as you can today or tomorrow, or at least don't sell rials for USD or other currency for a week or so. The rial may not revalue as far as the UED. Once the market decides a revaluation [or devaluation] is on the cards it quickly becomes a self-fulfilling prophesy as the flow of funds can overwhelm even the largest Central Bank resources. So, fill your boots kids, and make a cool short-term return. You can be sure the GCC won't be devaluing, so there's not a lot of downside here...
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.
Anyway.
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 TimeMUSCAT — 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!
Anyway.
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 TimeMUSCAT — 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.
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.
http://www.zawya.com/Story.cfm/sidANA256325105406
www.gulf-daily-news.com/Story.asp?Article=200701&Sn=WORL&IssueID=30247 - 27k -
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.
http://www.zawya.com/Story.cfm/sidANA256325105406
www.gulf-daily-news.com/Story.asp?Article=200701&Sn=WORL&IssueID=30247 - 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.
http://www.arabianbusiness.com/503692-worldcall-gives-nod-to-omantel-deal
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
http://investing.businessweek.com/research/stocks/financials/financials.asp?symbol=WCTL.KA
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.
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.
http://www.arabianbusiness.com/503692-worldcall-gives-nod-to-omantel-deal
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
http://investing.businessweek.com/research/stocks/financials/financials.asp?symbol=WCTL.KA
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:
http://www.download3000.com/download_46788.html
or try:
http://www.newfreedownloads.com/find/invisible-browsing.html
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...
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:
http://www.download3000.com/download_46788.html
or try:
http://www.newfreedownloads.com/find/invisible-browsing.html
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?
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?
Thursday, October 11, 2007
How business works - part 2
Tip No. 2 Exploit your advantage
The tax laws in Oman are heavily biased toward local companies. A pure foreign company has to pay 32% company tax, whereas a local affiliate, or a fully local company, only pays 12%. This is a serious difference. The catch however, is that only Omanis can register a local company or affiliate.
So, all foreign affiliates [or expat workers] here have to have a person called ‘a sponsor’. Some Omani – actually pretty much any omani adult – who’s willing to act as your local sponsor. And you get an instant tax discount of ~66%.
Naturally, all foreign companies take advantage of this. And then question is: who do they want as a sponsor? Obviously, someone who can add value to the 5 – 10% they’ll have kick back to them for the privilege. Maybe even someone who can supply some of the things you’ll need easily, like Indian workers, a bank loan for working capital, premises, legal support, and business contacts.
This was and still is a key loophole the merchant families exploit to extend their reach into businesses across the board in Oman. It was also a perfect way to employ the rapidly accumulating numbers of sons, cousins, sons-in-law, and eventually their children too, getting them involved in business, without risking any capital and getting them nice paying jobs too.
Even better of course, if the sponsor [or their Dad, or Uncle say] are ‘connected’ to the sources of all the major cash in Oman that a foreign company wants to be a part of, ie the Government, especially a department with lots of projects going or lots of things they need to buy.
There is obviously nothing whatsoever illegal about this. Somebody has to be the sponsor, after all, it’s the law. And if the tender process is all above board, no problem.
Ministers and other senior officials are not allowed to be on the board of public companies, or companies that are tendering for Government contracts. But there doesn’t seem to be any law whatsoever against people very close to senior Government members being a sponsor to a private company.
But I’m also not sure this law has been extended to tenders associated with private companies, even where a significant participant is Oman Oil Company, a wholly Government owned investment vehicle in the upstream and downstream oil and gas business and acknowledged incubator of big projects, like Sohar Aluminum, but not actually a formal part of the Government itself.
None of this is strictly a problem either. The problem is that there is no public scrutiny of these dealings. To find the names of company sponsors, you have to physically go the register of companies and look. And it is trivial to have a chain of such companies interlinked, like YYY Holdings, SSS Trading, etc etc, and figuring out who the actual owners and sponsors are is not easy. They might even be a sub-contractor, or a sub-sub contractor to the actual winning company. Very very difficult to track, even for the State Audit Office [who do seem very very honest, by the way].
Plus, no newspaper in Oman is going to point out that the son of Minister X’s brother is sponsor of a company that just won an Oman Oil contract for $XXX. Or not that I’ve ever seen. And as they would not be able to prove anything illegal, even reporting it would itself be potentially illegal [see earlier post].
What I do know is that at the Government departments I deal with, the first question of the list of big foreign companies bidding for a tender is not how good they are, but ‘Who’s their sponsor?’…
Interesting isn’t it?
The tax laws in Oman are heavily biased toward local companies. A pure foreign company has to pay 32% company tax, whereas a local affiliate, or a fully local company, only pays 12%. This is a serious difference. The catch however, is that only Omanis can register a local company or affiliate.
So, all foreign affiliates [or expat workers] here have to have a person called ‘a sponsor’. Some Omani – actually pretty much any omani adult – who’s willing to act as your local sponsor. And you get an instant tax discount of ~66%.
Naturally, all foreign companies take advantage of this. And then question is: who do they want as a sponsor? Obviously, someone who can add value to the 5 – 10% they’ll have kick back to them for the privilege. Maybe even someone who can supply some of the things you’ll need easily, like Indian workers, a bank loan for working capital, premises, legal support, and business contacts.
This was and still is a key loophole the merchant families exploit to extend their reach into businesses across the board in Oman. It was also a perfect way to employ the rapidly accumulating numbers of sons, cousins, sons-in-law, and eventually their children too, getting them involved in business, without risking any capital and getting them nice paying jobs too.
Even better of course, if the sponsor [or their Dad, or Uncle say] are ‘connected’ to the sources of all the major cash in Oman that a foreign company wants to be a part of, ie the Government, especially a department with lots of projects going or lots of things they need to buy.
There is obviously nothing whatsoever illegal about this. Somebody has to be the sponsor, after all, it’s the law. And if the tender process is all above board, no problem.
Ministers and other senior officials are not allowed to be on the board of public companies, or companies that are tendering for Government contracts. But there doesn’t seem to be any law whatsoever against people very close to senior Government members being a sponsor to a private company.
But I’m also not sure this law has been extended to tenders associated with private companies, even where a significant participant is Oman Oil Company, a wholly Government owned investment vehicle in the upstream and downstream oil and gas business and acknowledged incubator of big projects, like Sohar Aluminum, but not actually a formal part of the Government itself.
None of this is strictly a problem either. The problem is that there is no public scrutiny of these dealings. To find the names of company sponsors, you have to physically go the register of companies and look. And it is trivial to have a chain of such companies interlinked, like YYY Holdings, SSS Trading, etc etc, and figuring out who the actual owners and sponsors are is not easy. They might even be a sub-contractor, or a sub-sub contractor to the actual winning company. Very very difficult to track, even for the State Audit Office [who do seem very very honest, by the way].
Plus, no newspaper in Oman is going to point out that the son of Minister X’s brother is sponsor of a company that just won an Oman Oil contract for $XXX. Or not that I’ve ever seen. And as they would not be able to prove anything illegal, even reporting it would itself be potentially illegal [see earlier post].
What I do know is that at the Government departments I deal with, the first question of the list of big foreign companies bidding for a tender is not how good they are, but ‘Who’s their sponsor?’…
Interesting isn’t it?
Tuesday, October 9, 2007
A primer of Omani Business.
This is the first in a series of posts about how things ‘work’ in Oman, and why the so-called big families dominate business in Oman.
BTW, Anonymous emails are welcome from those with any inside knowledge! Your confidentiality is assured. You can email The Dragon at:
undercover.dragon@gmail.com
Any discussion on corruption or business in Oman needs a background in the country’s recent history. There’s an excellent general summary to be found at the US State dept. site here.
http://www.state.gov/r/pa/ei/bgn/35834.htm href="http://www.state.gov/r/pa/ei/bgn/35834.htm">
How does history relate to Corruption?
Essentially, you have to realise that in 1970 the ‘country’ of Oman was essentially non-existent, fragmented along tribal lines and with no true central government, few businesses, and beset by rebels from Yemen and feisty people in the mountains & interior. Oman had no real infrastructure at all, and a population of mainly uneducated peasants fishing and raising goats and dates. The old Sultan was a little crazy, especially following an assassination attempt in 1966, and had a vision that seemed to involve keeping his people as backward and ignorant as possible. That changed radically when his majesty Sultan Qaboos took over in a coup, deposing his father.
Now, the new Sultan had HIS vision – a prosperous, educated, modern country that was wealthy and happy and sustainable for the future. But how could he achieve that? He had hardly any resources, some land and a little money from the oil.
After suppressing the rebellions, with the help of the British Airforce and Army and the Iranian Army plus his considerable skills as a Diplomat in applying the carrot and the stick, one of the first things he did was call upon the Omani disapora, many of whom had made their money in the old Omani Empire in the estates of Zanzibar and East Africa, or in trading businesses in the Gulf States and between Oman and India. As a result they had been able to educate their children abroad, plus they had both capital and expertise in running businesses. The Sultan asked them to return to help rebuild the place.
Many did. As a result, and as large amounts of cash started to flow from the Governments coffers, Oman gained an instant and wealthy ‘Elite’, who were naturally rewarded for their loyalty and assistance with land [one of few things the Sultan had to give], opportunities, and Government funded contracts. These people brought money and expertise, and built the country as we know it today. Of course, somebody had to build the roads, the hospitals, the military bases, the houses, the ports and the schools, and they also had a right to make a profit doing so. This boost also assisted the existing Merchants close to the Royal Family. This is how Oman gained now famous Zawawi’s, Zubair’s, Al Sultan, Al Yahya, and Al Araimi.
Plus, the assistance his Majesty received from key people in the military and Palace during the battle with forces loyal to the old man also deserved and received rewards of privilege, for example positions in the Government, more land, and contracts financed by the oil that was just starting to flow. Some names from this group are the Al Wahaibi’s, and Shanfari’s. A few of the big families from the restful interior had to be placated too, such as the Al Harthy’s…
But the legacy of those understandable decisions remains. Especially in a small and relatively poor country, being rich and well connected tends to create opportunities to make more and more money. It happens everywhere. It’s the power of economies of scale.
And it’s no surprise it happened here too. So, keep that in mind. Some especially younger Omanis might not like it that all the money and the businesses seem concentrated in the same hands, but its really only thanks to the old guard that they even have a country to begin with, let alone one where they can go shopping in air conditioned malls and eat fast food.
So, Oman Business Tip no. 1: Get in early
Get in a country at the entry level, by securing a monopoly for a desired import, or starting a local company in construction. Secure contracts with the Government to build things [like roads], or run things [like ports]. Get a friendly banker. Or even better, start a bank. Staff your business with bright hard working people from India who’ll do what they’re told and not cost too much, and perhaps employ the sons and daughters of those in Government.
Such private companies will tend to get bigger. They get more import monopolies, like those for cars, car parts [especially lucrative], luxury goods, in fact, almost anything imported, and as a result make lots of cash quite legally. They also have ready access to capital through loans, because they are big enough to make banks comfortable or have implicit Government support, and they often own the banks anyway.
Some of those original companies are still private, some now public. For most of the companies below the range of activities and daughter companies is simply breath-taking. I’ll post more about the daughter companies later.
The impressive companies that fall into this category include:
Omzest: The mega-conglomerate of H.E. Dr. Omar Bin Abdul Muniem Al Zawawi, Special Advisor for External Liaison to His Majesty Sultan Qaboos Bin Said, and probably Oman’s richest businessman.
Zubair Corporation: The conglomerate of HE Mohammed bin Ali Al Zubair, Advisor to HM Sultan Qaboos bin Said for Economic Planning Affairs
Taylor Woodrow-Towell Co L.L.C: The conglomerate of His Excellency Maqbool bin Ali bin Sultan, Minister of Commerce and Industry.
Khimji Ramdas: a conglomerate from a long established Indian trading family in Oman
Ghalfar: The conglomerate of Sheikh Salim Saeed Hamed Al Fannah Al Araimi, just gone 40% public. (The Bahwan's have a share too I hear)
Assarain Group: The conglomerate of Sheik Al Wahaibi
Said Bahwan Group: The conglomerate of Saud Salim Bahwan
Suhail Bahwan Group: The conglomerate of Sheikh Suhail Salim Bahwan
MHD: Mohsin Haider Darwish
Yahya Enterprises: Conglomerate of Mr. Yahya Mohammed Nasib, a Governor of Central Bank of Oman CBO. Big on military supplies.
Shanfari Group: The conglomerate of ex Petroleum Minister Said Al-Shanfari. The main power in the Salalah region
OTE: Mr.Saad Bahwan, the Chairman of OTE Group, is the younger son of Mr.Suhail Bahwan
Request: Any info on the background, origins and current interests of these companies would be appreciated.
BTW, Anonymous emails are welcome from those with any inside knowledge! Your confidentiality is assured. You can email The Dragon at:
undercover.dragon@gmail.com
Any discussion on corruption or business in Oman needs a background in the country’s recent history. There’s an excellent general summary to be found at the US State dept. site here.
http://www.state.gov/r/pa/ei/bgn/35834.htm href="http://www.state.gov/r/pa/ei/bgn/35834.htm">
How does history relate to Corruption?
Essentially, you have to realise that in 1970 the ‘country’ of Oman was essentially non-existent, fragmented along tribal lines and with no true central government, few businesses, and beset by rebels from Yemen and feisty people in the mountains & interior. Oman had no real infrastructure at all, and a population of mainly uneducated peasants fishing and raising goats and dates. The old Sultan was a little crazy, especially following an assassination attempt in 1966, and had a vision that seemed to involve keeping his people as backward and ignorant as possible. That changed radically when his majesty Sultan Qaboos took over in a coup, deposing his father.
Now, the new Sultan had HIS vision – a prosperous, educated, modern country that was wealthy and happy and sustainable for the future. But how could he achieve that? He had hardly any resources, some land and a little money from the oil.
After suppressing the rebellions, with the help of the British Airforce and Army and the Iranian Army plus his considerable skills as a Diplomat in applying the carrot and the stick, one of the first things he did was call upon the Omani disapora, many of whom had made their money in the old Omani Empire in the estates of Zanzibar and East Africa, or in trading businesses in the Gulf States and between Oman and India. As a result they had been able to educate their children abroad, plus they had both capital and expertise in running businesses. The Sultan asked them to return to help rebuild the place.
Many did. As a result, and as large amounts of cash started to flow from the Governments coffers, Oman gained an instant and wealthy ‘Elite’, who were naturally rewarded for their loyalty and assistance with land [one of few things the Sultan had to give], opportunities, and Government funded contracts. These people brought money and expertise, and built the country as we know it today. Of course, somebody had to build the roads, the hospitals, the military bases, the houses, the ports and the schools, and they also had a right to make a profit doing so. This boost also assisted the existing Merchants close to the Royal Family. This is how Oman gained now famous Zawawi’s, Zubair’s, Al Sultan, Al Yahya, and Al Araimi.
Plus, the assistance his Majesty received from key people in the military and Palace during the battle with forces loyal to the old man also deserved and received rewards of privilege, for example positions in the Government, more land, and contracts financed by the oil that was just starting to flow. Some names from this group are the Al Wahaibi’s, and Shanfari’s. A few of the big families from the restful interior had to be placated too, such as the Al Harthy’s…
But the legacy of those understandable decisions remains. Especially in a small and relatively poor country, being rich and well connected tends to create opportunities to make more and more money. It happens everywhere. It’s the power of economies of scale.
And it’s no surprise it happened here too. So, keep that in mind. Some especially younger Omanis might not like it that all the money and the businesses seem concentrated in the same hands, but its really only thanks to the old guard that they even have a country to begin with, let alone one where they can go shopping in air conditioned malls and eat fast food.
So, Oman Business Tip no. 1: Get in early
Get in a country at the entry level, by securing a monopoly for a desired import, or starting a local company in construction. Secure contracts with the Government to build things [like roads], or run things [like ports]. Get a friendly banker. Or even better, start a bank. Staff your business with bright hard working people from India who’ll do what they’re told and not cost too much, and perhaps employ the sons and daughters of those in Government.
Such private companies will tend to get bigger. They get more import monopolies, like those for cars, car parts [especially lucrative], luxury goods, in fact, almost anything imported, and as a result make lots of cash quite legally. They also have ready access to capital through loans, because they are big enough to make banks comfortable or have implicit Government support, and they often own the banks anyway.
Some of those original companies are still private, some now public. For most of the companies below the range of activities and daughter companies is simply breath-taking. I’ll post more about the daughter companies later.
The impressive companies that fall into this category include:
Omzest: The mega-conglomerate of H.E. Dr. Omar Bin Abdul Muniem Al Zawawi, Special Advisor for External Liaison to His Majesty Sultan Qaboos Bin Said, and probably Oman’s richest businessman.
Zubair Corporation: The conglomerate of HE Mohammed bin Ali Al Zubair, Advisor to HM Sultan Qaboos bin Said for Economic Planning Affairs
Taylor Woodrow-Towell Co L.L.C: The conglomerate of His Excellency Maqbool bin Ali bin Sultan, Minister of Commerce and Industry.
Khimji Ramdas: a conglomerate from a long established Indian trading family in Oman
Ghalfar: The conglomerate of Sheikh Salim Saeed Hamed Al Fannah Al Araimi, just gone 40% public. (The Bahwan's have a share too I hear)
Assarain Group: The conglomerate of Sheik Al Wahaibi
Said Bahwan Group: The conglomerate of Saud Salim Bahwan
Suhail Bahwan Group: The conglomerate of Sheikh Suhail Salim Bahwan
MHD: Mohsin Haider Darwish
Yahya Enterprises: Conglomerate of Mr. Yahya Mohammed Nasib, a Governor of Central Bank of Oman CBO. Big on military supplies.
Shanfari Group: The conglomerate of ex Petroleum Minister Said Al-Shanfari. The main power in the Salalah region
OTE: Mr.Saad Bahwan, the Chairman of OTE Group, is the younger son of Mr.Suhail Bahwan
Request: Any info on the background, origins and current interests of these companies would be appreciated.
Legal Disclaimer
Undercover Dragon's Disclaimer:
Reading that previous post reminds me: always 'CYA'. Therefore, and for the record,
I hereby attest and confirm that is the absolute intent and undeflectable aim of this blog to at all times be in total compliance with the laws of the Sultanate of Oman. Any perception that this is not the case is due to an incorrect and inaccurate interpretation of the contents of this blog.
Really.
Its critical that this blog be interpreted in the true spirit of what it called 'The English sense of humour', irony, tongue in cheek, a nod's a good as a wink to a blind man, etc etc. It's a good job Monty Python and the Jon Stewart Show were/are not bound by the contraints of the law below...
Clearly the Western intellegence services should be investing far, far more heavily in Muslim comedians. A large part of the Arab population really could do with a lot more satire, jokes, and learning to laugh at themselves.
Reading that previous post reminds me: always 'CYA'. Therefore, and for the record,
I hereby attest and confirm that is the absolute intent and undeflectable aim of this blog to at all times be in total compliance with the laws of the Sultanate of Oman. Any perception that this is not the case is due to an incorrect and inaccurate interpretation of the contents of this blog.
Really.
Its critical that this blog be interpreted in the true spirit of what it called 'The English sense of humour', irony, tongue in cheek, a nod's a good as a wink to a blind man, etc etc. It's a good job Monty Python and the Jon Stewart Show were/are not bound by the contraints of the law below...
Clearly the Western intellegence services should be investing far, far more heavily in Muslim comedians. A large part of the Arab population really could do with a lot more satire, jokes, and learning to laugh at themselves.
Internet Laws In Oman
Oman – The country of good news
Those who live in Oman will know that there is certainly NOT a free press of any description here. The main newspapers are owned and controlled by establishment figures and are very, very strong on selfcensorship - nothing gets reported at all that might possibly be construed as questioning Government or the establishment figures, no real crime reports, no court reports, no effective questioning of anything important. The Omani papers make the UAE and Bahrain papers seem agressive and open. Really, its that bad.
The only hope for Oman is the internet, you'd think. But wait.
Internet use in Oman is regulated by Omantel’s Terms & Conditions, which mandate that users “not carry out any unlawful activities which contradict the social, cultural, political, religious or economical values of the Sultanate of Oman or could cause harm to any third party …. Any abuse and misuse of the Internet Services through e-mail or news or by any other means shall result in the termination of the subscription and may result in the proceedings of Criminal or Civil lawsuits against the Customer.”
To use the Internet, individuals, companies, and institutions are asked to sign an agreement not to publish anything that destabilizes the state; insults or criticizes the head of state or the royal family; questions trust in the justice of the government; creates hatred toward the government or any ethnicity or religion; promotes religious extremism, pornography, or violence; promotes any religious or political system that contradicts the state's system; or insults other states. Users must also agree not to promote illegal goods or prescription drugs over the Internet.
Omantel imposes additional physical restrictions on Internet access in Internet cafés. Individuals or companies wishing to open an Internet café must submit a floor plan for the proposed site. The plan must be designed so that the computer screens are visible to the floor supervisor. No closed rooms or curtains are allowed that might obstruct view of the monitors.22 Moreover, Internet café operators are asked to install proxy servers to monitor and log user activity.
for more detail see http://opennet.net/research/profiles/oman
Those who live in Oman will know that there is certainly NOT a free press of any description here. The main newspapers are owned and controlled by establishment figures and are very, very strong on selfcensorship - nothing gets reported at all that might possibly be construed as questioning Government or the establishment figures, no real crime reports, no court reports, no effective questioning of anything important. The Omani papers make the UAE and Bahrain papers seem agressive and open. Really, its that bad.
The only hope for Oman is the internet, you'd think. But wait.
Internet use in Oman is regulated by Omantel’s Terms & Conditions, which mandate that users “not carry out any unlawful activities which contradict the social, cultural, political, religious or economical values of the Sultanate of Oman or could cause harm to any third party …. Any abuse and misuse of the Internet Services through e-mail or news or by any other means shall result in the termination of the subscription and may result in the proceedings of Criminal or Civil lawsuits against the Customer.”
To use the Internet, individuals, companies, and institutions are asked to sign an agreement not to publish anything that destabilizes the state; insults or criticizes the head of state or the royal family; questions trust in the justice of the government; creates hatred toward the government or any ethnicity or religion; promotes religious extremism, pornography, or violence; promotes any religious or political system that contradicts the state's system; or insults other states. Users must also agree not to promote illegal goods or prescription drugs over the Internet.
Omantel imposes additional physical restrictions on Internet access in Internet cafés. Individuals or companies wishing to open an Internet café must submit a floor plan for the proposed site. The plan must be designed so that the computer screens are visible to the floor supervisor. No closed rooms or curtains are allowed that might obstruct view of the monitors.22 Moreover, Internet café operators are asked to install proxy servers to monitor and log user activity.
for more detail see http://opennet.net/research/profiles/oman
Sunday, October 7, 2007
Oman Commits to the dollar
As with the other Gulf States, Oman remains fixed to the dollar.
With more than 70% of its exports still from Oil and gas, and with the international prices for these commodities still determined in dollars, this makes sense. Oman committed to peg
Hamood Sangour Al Zadjali, the Executive President of the Central Bank of Oman, has re-iterated that the sultanate is 'firmly committed' to maintaining its peg to the US dollar, despite repeated rumours of possible revaluations by some Gulf states, reported Reuters. Al Zadjali said the peg to the greenback provided 'the strongest source of stability' and was a key factor in attracting trade and investment.
Oman: Monday, October 01 - 2007 at 07:57
However, it is giving Oman some problems. Consumer price inflation officially is now at 6% p.a., and many people feel it is way way higher, especially if you include the horrendous rent increases lately - sometimes more than 75%. The economy is effectively over-heating badly.
Oman's inflation nears 6%
Oman's annual inflation rate reached almost 6% in July, up sizeably on the 5.6% rate recorded in June, reported Reuters citing Ministry of National Economy data. The consumer price index reached 111.6 points up from 105.3 points in the same month last year. An 11.3% increase in the cost of food, beverages and tobacco in July, coupled with an 8.5% lift in rents, have been blamed for the rise in inflation.
Oman: Sunday, September 16 - 2007 at 06:50
With more than 70% of its exports still from Oil and gas, and with the international prices for these commodities still determined in dollars, this makes sense. Oman committed to peg
Hamood Sangour Al Zadjali, the Executive President of the Central Bank of Oman, has re-iterated that the sultanate is 'firmly committed' to maintaining its peg to the US dollar, despite repeated rumours of possible revaluations by some Gulf states, reported Reuters. Al Zadjali said the peg to the greenback provided 'the strongest source of stability' and was a key factor in attracting trade and investment.
Oman: Monday, October 01 - 2007 at 07:57
However, it is giving Oman some problems. Consumer price inflation officially is now at 6% p.a., and many people feel it is way way higher, especially if you include the horrendous rent increases lately - sometimes more than 75%. The economy is effectively over-heating badly.
Oman's inflation nears 6%
Oman's annual inflation rate reached almost 6% in July, up sizeably on the 5.6% rate recorded in June, reported Reuters citing Ministry of National Economy data. The consumer price index reached 111.6 points up from 105.3 points in the same month last year. An 11.3% increase in the cost of food, beverages and tobacco in July, coupled with an 8.5% lift in rents, have been blamed for the rise in inflation.
Oman: Sunday, September 16 - 2007 at 06:50
Wednesday, October 3, 2007
Oman short of Gas?
Everyone thinks so, but why then has Oman given away its gas?
It is common knowledge in the Sultanate and the region that Oman is ‘short of gas’. Given that Oman has always had relatively limited gas resources, this isn’t too surprising. Right now, for example, Oman is running its LNG refineries well under capacity, despite good LNG spot markets, because they do not have enough gas.
The actions from the Ministry of Oil and Gas to stimulate gas supply recently [see the article below] are designed to try to get more of the marginal gas out of ground without risking the Government’s money to do so, because these gas fields are neither easy nor cheap to produce. I think it’s a great idea to get External Oil Companies, like BG and BP, to risk their money to produce these gas fields and allow the Government to avoid any risk. However, to do that, they have to allow the companies to make a profit if it works, and it’s likely the price will have to be more than $2/mscf.
But, what has made matters worse for Oman are the deals done over the past few years by the Ministries of Commerce and Economy to create the ‘gas based industries’ in Salalah and Sohar. To get these projects off the ground they have commited to sell gas at incredibly cheap prices, often not even allowing for inflation. To put it into context, a gas price of $0.85/Mscf – the value apparently a lot of the Sohar industries got - is equivalent to an oil price of just $5/barrel.
$5 a barrel. No wonder it makes sense to ship Aluminum Oxide in from India, turn it into Aluminum, and ship it out. And often that price has been fixed. No link to oil price. Not even inflation. Wow. What a deal.
This is gas that the country could have sold elsewhere [as LNG] for much higher returns, or could have used in a few years time to produce electricity or desalinate water. Or used right now to make cement. And it is also going to cost Oman a lot more than $0.85 per Mscf to produce gas from these marginal fields.
OK, the Oman economy needs industry to make jobs for Omanis, and to sell things other than just hydrocarbons. The Sohar developments are stimulating a whole region of the country. So maybe it is worthwhile to spend some of the large amounts of money Oman is making on the LNG by subsidising the Sohar industries with below cost gas. Not that that argument is made explicit to the people.
Still, it would be interesting to know who the shareholders are that are benefiting from this give-away price of gas, wouldn’t it? More on that to come folks…
Next post: A primer on Omani Corruption.
The Undercover Dragon
>>>>>>>>>
Report: WoodMackenzie Middle East Report Upstream Insights – October 2007
Oman considers its gas options.
The Omani Ministry of Oil and Gas is considering how to best promote gas exploration and development in its onshore acreage, and help address its looming gas deficit. It is considering plans to offer at least five more blocks for exploration and appraisal by international operators, following the success of similar awards to BG and BP in 2006. If the plans are implemented, successful bidders will have the right to explore and develop some of Oman’s most gas-prospective acreage, under Exploration and Production Sharing Contracts.
Until recently, PDO was wholly responsible for exploring, producing and supplying gas on behalf of the government. In 2006, major gas fields discovered by PDO – Abu Butabul and Khazzan-Makarem - were awarded to BG and BP. This new licensing initiative is still in the planning stage but it is considered that new partners will re-vitalise gas exploration and development, and support PDO’s efforts to address the country’s gas shortfall. It would also allow PDO to focus on implementing its many conventional and enhanced oil recovery projects, to stem the decline in Oman’s oil production. Although the block areas have yet to be defined, the opportunity to explore and develop gas resources in some of Oman’s more prospective areas would attract the attention of many international companies.
Most of the areas on offer have been extensively studied by PDO, which has been successfully exploiting gas resources in Oman since the late 1970s. PDO’s efforts have intensified since 2001, when it embarked on a five year gas exploration programme. A significant volume of reserves were added, following a strategy which focused on the most promising targets and by implication, current and future prospects are likely to be more subtle and potentially lower reservoir quality.
Given the technical challenges, the fiscal terms and pricing policy on offer will need to offer the prospect of commercial projects. This will only be achieved if producers can sell the gas to the government at a price considerably above historical levels. There is no gas price benchmark in Oman, although prices have been underpinned by gas sales agreements signed with major industrial projects in the early 2000s. Gas was sold on long term contracts for approximately US$0.85/mcf.
Oman urgently requires new sources of gas, but this new initiative is unlikely to deliver significant new production before 2013. Incremental supplies from Qatar and possible imports from Iran are also unlikely before 2012.
This latest initiative may be too little too late, and in the short-term, the Sultanate will remain dependent on PDO, BP and BG to deliver gas to maintain economic growth.
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It is common knowledge in the Sultanate and the region that Oman is ‘short of gas’. Given that Oman has always had relatively limited gas resources, this isn’t too surprising. Right now, for example, Oman is running its LNG refineries well under capacity, despite good LNG spot markets, because they do not have enough gas.
The actions from the Ministry of Oil and Gas to stimulate gas supply recently [see the article below] are designed to try to get more of the marginal gas out of ground without risking the Government’s money to do so, because these gas fields are neither easy nor cheap to produce. I think it’s a great idea to get External Oil Companies, like BG and BP, to risk their money to produce these gas fields and allow the Government to avoid any risk. However, to do that, they have to allow the companies to make a profit if it works, and it’s likely the price will have to be more than $2/mscf.
But, what has made matters worse for Oman are the deals done over the past few years by the Ministries of Commerce and Economy to create the ‘gas based industries’ in Salalah and Sohar. To get these projects off the ground they have commited to sell gas at incredibly cheap prices, often not even allowing for inflation. To put it into context, a gas price of $0.85/Mscf – the value apparently a lot of the Sohar industries got - is equivalent to an oil price of just $5/barrel.
$5 a barrel. No wonder it makes sense to ship Aluminum Oxide in from India, turn it into Aluminum, and ship it out. And often that price has been fixed. No link to oil price. Not even inflation. Wow. What a deal.
This is gas that the country could have sold elsewhere [as LNG] for much higher returns, or could have used in a few years time to produce electricity or desalinate water. Or used right now to make cement. And it is also going to cost Oman a lot more than $0.85 per Mscf to produce gas from these marginal fields.
OK, the Oman economy needs industry to make jobs for Omanis, and to sell things other than just hydrocarbons. The Sohar developments are stimulating a whole region of the country. So maybe it is worthwhile to spend some of the large amounts of money Oman is making on the LNG by subsidising the Sohar industries with below cost gas. Not that that argument is made explicit to the people.
Still, it would be interesting to know who the shareholders are that are benefiting from this give-away price of gas, wouldn’t it? More on that to come folks…
Next post: A primer on Omani Corruption.
The Undercover Dragon
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Report: WoodMackenzie Middle East Report Upstream Insights – October 2007
Oman considers its gas options.
The Omani Ministry of Oil and Gas is considering how to best promote gas exploration and development in its onshore acreage, and help address its looming gas deficit. It is considering plans to offer at least five more blocks for exploration and appraisal by international operators, following the success of similar awards to BG and BP in 2006. If the plans are implemented, successful bidders will have the right to explore and develop some of Oman’s most gas-prospective acreage, under Exploration and Production Sharing Contracts.
Until recently, PDO was wholly responsible for exploring, producing and supplying gas on behalf of the government. In 2006, major gas fields discovered by PDO – Abu Butabul and Khazzan-Makarem - were awarded to BG and BP. This new licensing initiative is still in the planning stage but it is considered that new partners will re-vitalise gas exploration and development, and support PDO’s efforts to address the country’s gas shortfall. It would also allow PDO to focus on implementing its many conventional and enhanced oil recovery projects, to stem the decline in Oman’s oil production. Although the block areas have yet to be defined, the opportunity to explore and develop gas resources in some of Oman’s more prospective areas would attract the attention of many international companies.
Most of the areas on offer have been extensively studied by PDO, which has been successfully exploiting gas resources in Oman since the late 1970s. PDO’s efforts have intensified since 2001, when it embarked on a five year gas exploration programme. A significant volume of reserves were added, following a strategy which focused on the most promising targets and by implication, current and future prospects are likely to be more subtle and potentially lower reservoir quality.
Given the technical challenges, the fiscal terms and pricing policy on offer will need to offer the prospect of commercial projects. This will only be achieved if producers can sell the gas to the government at a price considerably above historical levels. There is no gas price benchmark in Oman, although prices have been underpinned by gas sales agreements signed with major industrial projects in the early 2000s. Gas was sold on long term contracts for approximately US$0.85/mcf.
Oman urgently requires new sources of gas, but this new initiative is unlikely to deliver significant new production before 2013. Incremental supplies from Qatar and possible imports from Iran are also unlikely before 2012.
This latest initiative may be too little too late, and in the short-term, the Sultanate will remain dependent on PDO, BP and BG to deliver gas to maintain economic growth.
>>>>>>>
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