US embassy cable - 05MUSCAT900

UNCLAS SECTION 01 OF 02 MUSCAT 000900 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD, NEA/ARPI 
STATE PLEASE PASS USTR/JBUNTIN 
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT 
 
E.O. 12958: N/A 
TAGS: EIND, EINV, EWWT, MU, Domestic Politics 
SUBJECT: SOHAR FIRE: BURNING INFRASTRUCTURE QUESTIONS 
 
REF: A. MUSCAT 888 
     B. MUSCAT 815 
 
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Summary 
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1. (SBU) A major fire destroyed roughly half of a 
polypropylene factory in the rapidly industrializing port 
city of Sohar on May 29.  Authorities needed more than eight 
hours to contain the blaze, drawing on fire-fighting 
resources from over 240 km away.  The incident has raised a 
crescendo of criticism that the massive industrial growth in 
Sohar has not been matched with a corresponding increase in 
the safety infrastructure.  American and other local 
manufacturers are taking careful note, with many of them 
already relying largely on their own means, rather than on 
the local authorities, in the event of future emergencies. 
While the fire is not expected to dampen investor enthusiasm 
for Sohar, both foreigners and local citizens alike will 
doubtless demand government action to improve emergency 
response capabilities.  End summary. 
 
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Up In Smoke 
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2. (SBU) A raging fire broke out in the waste recycling 
portion of the Khaleej Polypropylene factory complex in the 
early morning hours of May 29 in the industrial estate of 
Oman's booming coastal city of Sohar.  Starting at 0200, the 
fire was largely contained only by 1000, though hot spots 
continued to burn until the following day, delaying the start 
of the fire investigation.  The firm's expatriate general 
manager, Prem Chandran, told us that none of the plant's 217 
workers were harmed in the conflagration, despite the fact it 
was fully staffed at the time of the fire's outbreak.  While 
the factory's new production line (visited by Econoff and 
Econ FSN in April, ref B) was spared, all three metalizers 
and the production line for cast card polypropylene were 
destroyed.  The firm has suspended production on all items 
requiring metalization, accounting for roughly half of the 
total output.  A major Omani exporter, Khaleej Polypropylene 
produces nearly 40 thousand tons per year.  The Muscat 
Securities Market likewise suspended trading of the firm's 
shares. 
 
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Emergency Response Not Up To The Task? 
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3. (U) As reported in ref A, the Omani authorities had 
considerable difficulty extinguishing the blaze, leading to 
extensive criticism on Internet message boards.  Despite the 
flood of over $10 billion in industrial investments to the 
Sohar region in the past year (split primarily between the 
industrial port and the industrial estate), there are loud 
charges that the government has failed to keep pace in terms 
of safety infrastructure.  The local fire department 
reportedly had to await reinforcements from as far away as 
Buraymi (120 km) and Muscat (250 km), and even those units 
that showed up had to fight the blaze with water instead of 
the chemical foams more appropriately deployed on such types 
of fire.  The authorities were able, however, to bring a 
fire-fighting helicopter into action against the blaze.  GM 
Chandran also credited an earlier evacuation drill conducted 
with civil defense authorities as contributing to the safe 
removal of all plant personnel. 
 
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Local Firms React 
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4. (SBU) The American managers of Bechtel's Sohar aluminum 
smelter project were out of the country at the time of the 
blaze.  Dow Chemical CEO of Sohar's Oman Petrochemical 
Industries Company (OPIC), Bill Ray (protect), was likewise 
abroad during this period, but told us by e-mail from Zurich 
that OPIC's project scope includes an indigenous 
fire-fighting capability because they cannot assume the local 
authorities' would always be available.  Nevertheless, fire 
and security matters are the subject of active negotiations 
with Sohar officials.  Upon his return, Ray will study the 
conclusions to be drawn from the Khaleej Polypropylene 
experience.  Oman's top exporter, Al Jazeera Tube Mills, is 
immediately next door to the Khaleej factory.  A Jazeera 
company official told us that he believes much of the damage 
at Khaleej could have "been contained if adequate fire 
fighting measures were available."  Al Jazeera reviewed its 
own fire protection systems in the wake of the incident, 
however, and remains confident that it has adequate 
protections in place. 
 
5. (SBU) As reported previously, Sohar is currently one of 
the most rapidly developing industrial areas in the entire 
Gulf region.  The city's landscape is literally changing 
overnight, faster than local officials can comprehend.  Dow 
executives were unhappy during their initial negotiations 
with the Sohar Industrial Port regarding their multi-billion 
dollar petrochemical investment when told by local officials 
that they were expected to finance the creation of new police 
and fire stations to service their part of the port.  Given 
the magnitude of their investment, Dow and OPIC are opting 
instead to make their plant as self-sufficient as possible, 
eschewing even the city's power network. 
 
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Silver Lining 
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6. (SBU) While the fire may have a devastating impact on the 
Khaleej Polypropylene plant, which was only starting to 
recover from significant losses before its second production 
line opened, it is unlikely to significantly dampen the 
torrent of foreign direct investment in the Sohar region. 
Indeed, a $300 million deal to construct an ethylene 
dichloride plant at the Sohar Industrial Estate was inked on 
May 31.  By exposing the apparently inadequate local safety 
infrastructure without the tragic loss of life, the 
authorities may now be spurred to make necessary investments 
that will further burnish the region's attractiveness to 
investors.  The situation, however, will likely remain under 
some scrutiny. 
BALTIMORE