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Oman tightens the belt to combat recession

Oman PDO implements reduced budget strategy in response to tight oil pricing; company is representative of government move to reduce costs, with the rationalising of power tariffs being one of the pillars

| | May 29, 2017 | 12:33 pm
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In a drive towards responding to the tight oil pricing and recession in the region, Petroleum Development Oman (PDO) has implemented a plan to reduce the 2017 expenditure by almost $1.5 billion, according to a recently released report.

Explaining the baseline for this initiative to Climate Control Middle East, Dr Muthukumar Ramaswamy, Technical Expert of the Royal Estates in Oman, said: “It is not just PDO but almost every government or private sector body that is implementing such initiatives to combat the tight oil pricing and the recession in the country and the region. They are under constant pressure, and they have to identify unique methods to reduce costs and maintain sustainability.” Citing an example, he said: “If you look at the cost of power in the country, the end-user generally pays a lesser amount for power, and the government would pay the difference, which was higher than what the end-user would pay. But now, the end-user will have to pay more in order to reduce the burden on the government.”

Dr Ramaswamy said the government is strategically prioritising investment for projects that are needed for the country. Projects such as oil drilling and infrastructure will not be compromised, because they are a necessity, but a boundary line will be drawn on luxurious project investments. Other projects, like the Oman Museum will be funded from the private fund of H.M. Qaboos bin Said al Said,” he said.

Forecasting challenges that may arise from the situation, he said, “Already contractors are struggling to keep afloat, and some contractors may even lose out on projects because of the recession and tight budgets.”

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