Oman Is Said to Mull Cement Stake Sale in Privatization Push
(Bloomberg) -- Oman is considering the sale of its stake in Oman Cement Co. SAOG, according to people with knowledge of the matter, as Gulf nations increasingly lean on state assets to bolster their finances.
The sultanate is speaking to advisers about selling its nearly 54% holding in the company, according to the people, who asked not to be identified because the information is private. The stake could be worth just over $100 million based on its current market price.
No final decisions have been made and the state may also decide to retain the stake.
Oman Cement’s chief executive officer, Salem AlHajry, said there’s no plan for now to divest shares in the company and the government’s focus is on growing the business. The Oman Investment Authority, the country’s wealth fund that controls the stake, couldn’t be reached immediately for comment.
The government has been seeking ways to tame its budget deficit and steady an economy hit by last year’s decline in oil prices and the coronavirus pandemic. It’s pushed through reforms including cutting spending, slashing government jobs and introducing a value-added tax in April.
Over the last decade, Oman Cement has been facing intense competition from producers of the building material from the United Arab Emirates.
Competitive pricing, coupled with increased operating expenses in the form of higher energy costs, has weighed on the business while construction activity has slowed. Oman Cement has lost around half its market value in the past five years, according to data compiled by Bloomberg.
Oman is the largest Middle Eastern crude exporter outside of OPEC, pumping around 700,000 barrels a day. The country is also studying options for state energy company OQ SAOC, including a potential initial public offering.
In December 2019, State Grid Corp. of China agreed to buy 49% of Oman Electricity Transmission Co. SAOC in a deal that was said at the time to value the firm at about $2 billion. The sale marked the first major privatization by Oman.
The government has raised additional funding from the ownership transfer of some gas pipelines to Oman Gas Co.
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