US embassy cable - 05MUSCAT506

UNCLAS MUSCAT 000506 
 
SIPDIS 
 
SENSITIVE 
 
NEA/ARPI FOR TROBERTS, DRL/JDEMARIA, DOL/JSHEA 
 
E.O. 12958: N/A 
TAGS: EWWT, ETRD, ELAB, EINV, MU, Ports, Export Control and Border Security 
SUBJECT: SALALAH: PORT EXPANDS, FREE ZONE PENDING 
 
REF: MUSCAT 477 
 
1. (U) This cable contains business proprietary information - 
please protect. 
 
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SUMMARY 
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2. (SBU) In a call on the Ambassador, former Salalah Port 
Services Co. CEO Jack Helton and his successor Tiemen Meester 
(please protect both) privately questioned the government's 
commitment to develop the Salalah Free Zone (SFZ).  They 
spoke of growth and investment through more aggressive 
borrowing and minimizing the Omani government's role in 
future port concessions.  Salalah Port is currently operating 
at full capacity and will quickly absorb the expansion of the 
two additional berths already under construction.  Soon after 
the meeting, Minister of Commerce and Industry Maqbool bin 
Ali Sultan announced that he will lay the foundation stone 
for the long-dormant Salalah Free Zone site on March 29. End 
summary. 
 
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PORT EXPANDING, BUSINESS ASSURED 
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3. (SBU) Former CEO of Salalah Port Services Co. (SPS) Jack 
Helton paid a courtesy call on the Ambassador on March 20 
with his successor Tiemen Meester.  When asked about port 
growth and investment, Helton and Tiemen both stated that the 
port is operating at full capacity and that even with the 
completion of the current two berths (5 and 6) under 
construction, the port, by virtue of its 10-year contract 
with Maersk, would operate at minimum at 70 percent capacity 
regardless of other business.  Both Helton and Meester 
stressed the need for visionary investment, including the 
construction of an additional two berths (7 and 8, per 
reftel).  New CEO Tiemen Meester also said that SPS, an Omani 
joint venture with Danish-owned A.P. Moller-Maersk Group, 
hopes to accelerate growth through more aggressive borrowing 
and reducing the Omani government's role from future 
concessions, allowing growth to move at the company's desired 
pace. 
 
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FREE ZONE - BEGINNING AT LAST 
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4. (SBU) Helton expressed his frustration at what he believes 
is the Omani government's apparent lack of interest in 
anything to do with Salalah, including the Salalah Free Zone 
Company (100 percent government-owned), the port's aggressive 
training program, port expansion, and company growth.  Helton 
also lamented the prospect of a rising tide of organized 
workers committees in Oman, grousing that they could be the 
death of Port Salalah. 
 
5. (SBU) The day after Helton's fulmination over Oman's 
commitment to promote growth in Salalah, however, several 
articles extolling the virtues of the Salalah Free Zone 
appeared in the English-language "Oman Daily Observer."  The 
press coverage cited the signing of an agreement to launch a 
major methanol facility in the Free Zone as an example of its 
potential appeal to investors.  Moreover, a recent seminar 
hosted by the Ministry of Transport and Communication hailed 
the SFZ as a model of economic growth that will create more 
than 2000 job opportunities for Omanis.  The construction of 
infrastructure facilities is expected to be completed by 
March 2006 and will include developed land, roads, fuel, 
electricity and water.  On March 29, Minister of Commerce and 
Industry Minister Maqbool bin Ali Sultan will lay the Salalah 
Free Zone site's foundation stone . 
BALTIMORE