#22/17-S November 2021 AB/ Oman #22/177-S-S NNovember 2021 THE PATH TOWARDS VISION 2040 Areej Mohsin Haider Darwish, chairperson of MHD ACERE, reveals her company’s role in realising Oman’s future ambitionsContents November 2021 SUBSCRIBE NOW +971 4444 3000 www.itp.com/subscriptionswww.arabianbusiness.com C OVER S T O RY Supporting Oman’s Vision 2040 From youth-training to solar energy, MHD ACERE’s goals are perfectly aligned with the sultanate’s targets for the future 10 arabianbusiness@arabian businessarabianbusiness By Nabila Rahal C OMMENT qPartnerships are critical in driving the global shift to cleaner energy” 16 Simon Penney Trade Commissioner AB/ Oman SU PPLEM EN T ENTREPRENEURSHIP SMEs in the sultanate Oman’s economy has lagged, especially as the pandemic hit oil prices hard. With a large youth population, entrepreneurship is key to economic diversifi cation T OURISM Road to recovery Oman’s tourism sector, which has taken a hit as a result of the pandemic, is set to receive a massive shot-in-the-arm as the sultanate reopened its land borders with the UAE 24 3 erships cal in the hift to energy” ey ssionerINDEP TH NEWS S U B S CRIBE NOW www.itp.com/subscriptions +971 4 4443000 EXPER T VIEWS EXCLU SIVE INTERVIEWS PUBLISHED BY AND © 2021 ITP MEDIA GROUP FZ-LLC. NOTICE The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers’ particular circumstances. The ownership of trademarks is acknowledged. 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PO Box 500024, Dubai, UAE Tel: +971 4 444 3000 Offices in KSA, UAE, UK, US, and INDIA ITP MEDIA GROUP CEO Ali Akawi MANAGING DIRECTOR Alex Reeve EDITORIAL EDITOR-IN-CHIEF Rob Corder, rob.corder@itp.com EDITOR Scott Armstrong, +971 4 444 3513, scott.armstrong@itp.com CHIEF REPORTER Lauren Holtmeier, lauren.holtmeier@itp.com REPORTER Nabila Rahal, +971 4 444 3466, nabila.rahal@itp.com REPORTER Lara Abouelkheir, +971 4 444 3420, lara.abouelkheir@itp.com SUB EDITOR Edward Liamzon, +971 4 444 3474, edward.liamzon@itp.com ARABIANBUSINESS.COM DIGITAL EDITOR Gavin Gibbon, +971 4 444 3845, gavin.gibbon@itp.com UK EDITOR Alicia Buller INDIA EDITOR James Mathew DESIGN ART DIRECTOR Adrian Luca DESIGNER Mohammed Irqsosy STUDIO STUDIO MANAGER Abuzar Samo SENIOR IMAGE EDITOR Emmalyn Robles SENIOR PHOTOGRAPHER Efraim Evidor STAFF PHOTOGRAPHERS Ajith Narendra, Fritz John Asuro PRODUCTION & DISTRIBUTION GROUP PRODUCTION & DISTRIBUTION DIRECTOR Kyle Smith PRODUCTION MANAGER Denny Kollannoor PRODUCTION COORDINATOR Mahendra Pawar EVENTS & MARKETING DIRECTOR OF AWARDS & MARKETING Daniel Fewtrell, +971 4 444 3684, daniel fewtrell@itp.com CIRCULATION DISTRIBUTION & CIRCULATION MANAGER Evijin Pathrose DISTRIBUTION COORDINATOR Avinash Pereira CIRCULATION EXECUTIVE Rajesh Pillai ADVERTISING GROUP COMMERCIAL DIRECTOR Saraswati Agarwal, +971 4 444 3352, saraswati.agarwal@itp.com SENIOR SALES MANAGER Pankaj Sharma, +971 4 444 3510, pankaj.sharma@itp.com ITP GROUP CEO Ali Akawi CFO Toby Jay Spencer-Davies CORPORATE WEBSITE itp.com CIRCULATION CUSTOMER SERVICE +971 4 444 3000 WEB arabianbusiness.comarabianbusiness.com 5 S&P Global Ratings could upgrade Oman’s sovereign grade for the first time since 2007 after improving its outlook to positive, following a fi scal turnaround that’s reducing the strain on its public fi nances. While the sultanate’s spell in junk may be far from over, S&P’s change in the outlook from stable is a signal the fi rm is more inclined to raise the rating than cut it. S&P, the fi rst of the major credit assessors to give Oman a non- investment grade, affi rmed its long-term foreign currency rating at B+, on par with Bahrain, Bolivia and Rwanda. “Authorities have outlined a solid path to reduce the historically high fi scal defi cits,” S&P credit analysts including Zahabia Gupta said in a report. “Economic and fi scal pressures on Oman are easing, as the effects of the sharp drop in oil prices in 2020 and the Covid-19 pandemic abate.” Since Haitham bin Tariq Al Said became the new ruler of Oman last year, the country has embarked on a program to reduce subsidies, balance the budget and levy an income tax - a step unheard of in the Gulf region. The government introduced a 5 percent value-added tax in April. The largest oil exporter outside of OPEC, Oman has struggled to cope with the coronavirus pandemic as well as lower crude prices, even raising the possibility of assistance from its neighbours. The country is also rated below investment grade by Fitch Ratings and Moody’s Investors Service. Oman’s fi scal defi cit may narrow to 4.2 percent of gross domestic product in 2021, from 15.3 percent in the previous year, according to S&P. The government wants to achieve budget balance by 2025. The country’s public fi nances, long among the weakest in the Gulf region, remain vulnerable as Oman faces exter- nal debt maturities of $11 billion over 2021-2022. S&P’s base-case scenario is for the government’s net debt to increase to 30 percent of GDP in 2024, from about 13 percent in 2020. Still, S&P questioned Oman’s resolve, especially as oil prices rebound. “The authorities may choose to slow or postpone the implementa- tion of some of its fiscal measures if necessary, to appease public dissent,” it said. “If oil prices rise enough to ease the pressure on the government’s budget, we think execution of the fi scal consolidation plan may also weaken.” S&P also said: – Debt stock at government-related enterprises amounts to about 40 percent of Oman’s GDP. – Government’s liquid assets estimated at 50 percent of GDP in 2021. – Real GDP is expected to grow 1.7 percent this year and 3.1 percent on average in 2022-2023. – Proceeds from the 5 percent value-added tax seen at slightly above 1 percent of GDP in 2021. – Total funding needs will average about 12 percent of annual GDP through 2024. – Total external debt is expected to increase to 92 percent of current- account receipts by 2024, from 37 percent in 2019. u Oman’s fi scal defi cit may narrow to 4.2 percent of GDP in 2021, from 15.3 percent in the previous year, according to S&P OMAN’S FIRST S&P UPGRADE IN OVER A DECADE COULD BE ON THE CARDS S&P, the fi rst of the major credit assessors to give the sultanate a non-investment grade, affi rmed its long-term foreign currency rating at B+ E C ONOMY “Economic and fi scal pressures on Oman are easing, as the effects of the sharp drop in oil prices in 2020 and the Covid-19 pandemic abate”AB/Oman Supplement COMMENT / By Simon Penney, Her Majesty’s Trade Commissioner for the Middle East and Her Majesty’s Consul General in Dubai WORSENING CLIMATE CHANGE and a need to diversify away from fossil fuels has spurred global action to transform the way we produce and consume energy. Investment in new power generation is expected to be $13.3 trillion before 2050. Clean growth presents the most significant u The global transition to clean power needs to advance at least four times faster than at present COMMENT / By ByByyyyy Simon Pen economic growth opportu- nity of the 21st century. We will make the most of the UK’s COP26 presidency in November to encourage busi- ness, governments, and inves- tors to commit to change. The UK pledged to reduce greenhouse gas emissions by 78 percent by 2035, the fastest fall in greenhouse gas emis- sions of any major economy, bringing the UK closer to its ambition of achieving net zero carbon emissions by 2050. Since 1990, the UK economy has grown by two thirds, while emis- sions have fallen by over 40 percent, demonstrating that economic growth goes hand-in-hand with protect- ing the environment. The UK’s £40m Clean Growth Fund will super- charge the private sector’s development of next generation clean, low-carbon technologies. The Transi- tion Export Development Oman part of Middle East charge towards greener energy starts with collaboration Ahead of the UK’s hosting of COP26, the global UN Climate Change Conference, how partnerships are critical in driving the global shift to cleaner energy, writes Simon Penney, Her Majesty’s Trade Commissioner for the Middle EastC OMMENT ArabianBusiness.com 7 Q NOW IS THE TIME FOR US TO WORK EVER MORE CLOSELY TOGETHER, NATIONS AND BUSINESSES ALIKE, TO HELP SHAPE A GREENER, CLEANER AND MORE PROSPEROUS FUTURE” Guarantee (TEDG) from UK Export Finance is a new facility set up to support UK exporting companies with working capital to invest in low-carbon growth markets including renewables, hydro- gen and decarbonisation. Wood became the first company to access the guarantee, securing a $600m/£430m loan that will enable the company to capitalise on opportunities emerging as the energy tran- sition gathers further pace. Cross-border parnerships We are making progress, but the global transition to clean power needs to advance at least four times faster than at present. The world has spent trillions of dollars over the last decade trying to decarbonise, but emissions in the global power sector are still rising, driven by increased demand in emerging economies. The only way to achieve the required shift to green energy is through cross- border partnerships with other countries and regions, including the Middle East. Working together, we can develop zero emission solu- tions faster, increase econo- mies of scale, and bring down costs more quickly. Middle East’s renewable energy push Here in the Middle East, innovations from the UK are helping to accelerate the region’s shift from fossil fuels to renewable energy, such as green hydrogen, waste-to-energy, and solar. Wood recently completed its role as owner’s engineer on Oman Shell’s first utility-scale, photovol- taic (PV) solar project in the Middle East, designed to cut emissions from industrial activities. The develop- ment, consisting of more than 80,000 solar panels in northern Oman, will supply renewable electricity to a large ferrochrome produc- tion facility, displacing the equivalent gas-fired power generation taken from the grid and saving more than 25,000 tonnes of CO2 emis- sions annually. Qatar has established a ten-year, $70m Qatar Carbonate and Carbon Storage Research Centre in collaboration with Imperial College London, which aims to advance research in the feasibility of carbon capture for enhanced oil recovery (EOR) and storage of CO2 in local geological formations. The winning car in the first ever Extreme E race in the Saudi Arabian desert in April was charged with a zero-emission hydrogen power generator, developed by UK-based AFC Energy. AFC Energy also signed a Memorandum of Under- standing in 2021 with Alta- aqa Alternative Solutions, one of the world’s largest providers of temporary power solutions, with the intention of establishing an exclusive dealership for the distribution of AFC’s fuel cell systems in Saudi Arabia and the MENA region via a strategic partnership. Their new partnership presents an opportunity for both companies to drive the transition to a cleaner tempo- rary power market. Saudi Arabia’s sustain- able city NEOM, which aims to be powered by 100 percent renewable energy, is working with British company Solar Water Plc to install the world’s first completely carbon neutral hydro-infrastructure proj- ect that uses the concen- trated power of the sun to desalinate seawater and solve water scarcity. The thermal energy processes seawater inside a steel dome, in an affordable and sustainable manner. Meanwhile, Bee’ah, a pioneer in sustainability in the Middle East, is progress- ing plans for the region’s first waste-to-hydrogen project in the UAE, in collaboration with British firm Chinook Sciences. The project includes a green hydrogen generation plant and hydrogen vehicle fuelling station. Chinook’s gasification and pyrolysis technology will break down hydrocar- bons from waste through advanced thermal treatment to release and recover green hydrogen. When the green hydrogen is charged into vehicles, it emits only water and no carbon emissions. As the world’s attention turns to Glasgow in Novem- ber, this is the moment for us all to redouble our efforts to achieve the goals set out in the Paris Agreement and act with renewed urgency to tackle the causes and the impacts of climate change upon our planet. Now is the time for us to work ever more closely together, nations and busi- nesses alike, to help shape a greener, cleaner and more prosperous future. 78 The reduction of greenhouse gas emissions the UK aims to achieve by 2035 QTHIS IS THE MOMENT FOR US ALL TO REDOUBLE OUR EFFORTS TO ACHIEVE THE GOALS SET OUT IN THE PARIS AGREEMENT” u NEOM City in Saudi Arabia is aiming to develop 100 percent renewable energy source in the futureBIG PICTURE / Visitors to the 2,200 sq m Omani Pavilion at Expo 2020 Dubai will experience the sultanate’s rich cultural history, innovations and future vision. The idea of the pavilion is inspired by the Boswellia sacra, a tree in the Burseraceae family in which frankincense – an aromatic resin used in incense and perfumes – is harvested. Frankincense has played an important part in Oman’s cultural heritage for hundreds of years. Photo courtesy of Expo 2020 DubaiNext >