Future Economic Growth and Development in Oman

Economic Report about Oman and the Future Economic Growth and Development in Oman

?CONTENTS:

???Economic Growth and Tourism in the Post Oil Omani Economy

???Review of Omani Economy

???Review of Tourism Potential

???Oman's Education Sector Focuses On Quality And The Right Skills To Meet The Needs Of The Economy

???Growing Health Care Demands In Oman Met By Increased Private Sector Participation

???Agriculture In Oman

???Water And Energy Challenges In Oman

???Demand Side

???Supply Side

?Economic Growth and Tourism in the Post Oil Omani Economy

?Oil and natural gas has been the major engine of economic growth in Oman. Over dependence and emphasis on oil has somehow crippled the development of other sectors in the past. At such a time when Oman realizes the depletion of its natural resources to certain extent and the presence of all pervasive recession causing the lowest ever crude oil price, pondering on alternatives is an expected move. While thinking on the probable alternatives that could fuel the economic growth in the post oil Omani economy, Tourism emerges as one of the most attractive alternatives on which Oman could rest. Following a desk research approach this study reviews secondary data which are then subjected to three major tools of strategic analysis viz. PESTEL framework, Porter’s Diamond Model, and SWOT. The analysis reveals that Oman is at cross roads where there is a need to look for areas which could contribute to her economic development and growth. Tourism and real estate are probable sectors which can help mitigating the problem. There is a need for a strong private sector, skilled human resources, and competencies to keep abreast with the technological progress. To capitalize upon tourism, Oman needs to build a strong repository of product/service offers that appeal to both foreign and domestic tourists. Among the major strengths are Oman’s political stability and leverage created by Oil sector. Lowly developed non oil sectors; absence of a strong private sector; and scanty tourism infrastructure are the major weaknesses. The opportunities such as increasing potential global visitors; job opportunities for locals; and a chance to establish tourism as the main driver of growth and development in post oil Omani economy are too be cashed in view of the most potential threats viz. competition, diminishing oil revenues, and global recession. Success will depend upon how Oman ventures amid the forces of external and internal environment.

Oil is the critical economic contributor to most of the GCC countries and it is estimated that oil will exhaust itself in 20 years . Oil and natural gas sector has been the major engine of economic growth in Oman. Over dependence as well as emphasis on oil has somehow crippled the development of other sectors. At such a time when Oman realizes the depletion of its natural resources to certain extent and the presence of all pervasive recession-causing the lowest ever crude oil price, pondering on alternatives is an expected move. While thinking on the probable alternatives that could fuel the economic growth in the post-oil-based Omani economy, Tourism emerges as one of the attractive alternatives on which Oman may venture. Omani government has expressed its intentions in support of development and marketing of tourism from time to time.

Tourism, so far, has not made any significant contribution to the GDP. Capitalizing on Tourism, therefore, opens a room for exploration. The major aim of this study is to conduct an exploratory study to gain insight into the importance of tourism in the post-oil Omani economy. The study draws out meaningful conclusions after assessing the strategy of diversifying into tourism using three basic tools of strategic analysis viz. PESTEL, Porter’s Diamond model, and SWOT. By resorting to a detailed review of secondary data and by subjecting the acquired information to the selected tools of the strategic analysis, the study derives some important insights for stakeholders who seek diversification into tourism. It is important to note that the tools of strategic analysis that were primarily applicable for an industry are being used for the country (e.g. Oman Inc.) in this paper. The conceptual framework for this assumption is based on the fact that unlike other parts of the world, countries in the Gulf are more-or-less similar in their political, social, geographical, and economic aspects and are less diverse. They compete among themselves within the broader Gulf umbrella and act in a unified manner in their external dealings. The free access granted to citizens within Gulf Co-operative Council (GCC) appears as if the Gulf is a nation and the GCC countries are the individual enterprises competing within and outside the consortium.

Review of Omani Economy

Ministry of National Economy (MONE) projects Oman as a liberal state and a growing economy, full of economic opportunities. The country occupies a distinct strategic location and is politically stable and committed to set stronger democratic mechanisms that encourage freedom, equal opportunity and private and foreign investments (MONE 2008, 1-16; EIU 2008, 1-23). Oman is inarguably better off than many other states in the Middle East, and is stable until economic and political crisis arise simultaneously (Katz 2004, 43-55).

Review of Tourism Potential

Tourism that firmly anchors on consumption rather than production based growth has largely been considered a lead sector, globally, for Local Economic Development (LED) . The sector is popularly known as ‘smokeless industry’ and has many direct and indirect benefits to offer. According to Sinclair , the major effects of international tourism on developing countries are favourable balance of payment, income multiplier, and employment effects. While tourism receipts are one of the important sources of foreign currency, tourist expenditure and associated investments result in induced income generation in the host economy and leads to several direct and indirect effects -where employment in formal and informal sector is the most visible one . According to Ball and Stobart , the relationship between tourism and LED extends beyond the conventional notion of jobs, diversification, and income; and provides a valuable self-appraisal opportunity, raises awareness of local economic potentials (to local authorities and linked agencies), and boosts the local policy machine. For communities seeking economic improvement, boosting tourism can not only support jobs in construction, restaurants, hotels and transportation but could be a mighty engine of growth.

Paylor (2007) claims that;

“Oman is fast emerging as a prime tourist destination, especially for travellers trying to escape the Northern Hemisphere winters. Not only does it boasts spectacular scenery and a comprehensive range of leisure and adventure activities, it is much less commercially advanced than neighbouring Dubai and therefore perceived as being less spoiled."

In context of nature, the country witnesses good sunshine and clear sky conditions. The climate is soothing during six months and extremely hot during the rest. While several open air tourism activities such as star gazing and camping could be planned during the former; threats emerging out of the latter can be contained by a cautious design of indoor activities. Oman’s vast sea-cost-stretch has potential for shore-based tourism products, however vulnerabilities associated with sudden cyclones cannot be ruled out.

EIU (2006, 1-23) Country Report reveals a considerable growth in the country’s tourism sector in 2005, where the total number of visitors reached 1m mark, up from 887,000 in 2004. Growth in the number of nights spent by tourists witnessed an increase of 24% (amounting to 5.6m) and the total number of hotel rooms increased by 6%. The general indicators of hotel activities in Oman indicates that though there was a decrease in the number of guests (1584501 to 1501316) visiting in 2007 than the year 2006, but an increase was recorded in the numbers of nights spent (1882973 to 2149797) and in revenue (112.6 m to 124.1 m Rial) (Statistical Yearbook 2008). Europe and Asia were the prime sources of generating visitors to Oman after Arabian countries. To attract more visitors, Oman needs to develop a strong product line of tourism products.

Oman has a rich number of museums that could be a prime source of attraction to visitors. However, the proportion of visitors to the eight large museums to total number of visitors to Oman was observed less than 5% (Statistical Yearbook 2008). In addition to museums, there are more than two dozen castles and forts in her seven governorates (Statistical Yearbook 2008). Hotels and Motels are the supporting blocks to tourism activities. The distribution of hotels across the nine governorates is not homogeneous across Oman especially for the five, the four and the three star hotels. Leaving the Muscat governorate, only 2, 10, and 6 five, four, and three star hotels respectively exist for tourists and this confines tourism to a single governorate. The government of Oman is working persistently to bring Oman to the global tourism map. To ensure self reliance, government is targeting a minimum of 80% of jobs to be filled by Omanis in the tourism sector, envisaging Tourism’s contribution to GDP reaching 3% (with annual growth target of 7% in real terms) over the course of the current five-year plan (2006-10). To start with, joint ventures with Orascom of Egypt, Saraya of Lebanon etc have been made for the construction of additional large-scale facilities. There are plans for more tourism activities for attracting business visitors to hold conventions.

Tourism infrastructure in the country, however, needs some attention. Globally, Oman is not a well known tourist destination. Oman draws most of its visitors from the GCC states, most of them simply drive across the border for a very short stay. Tourism initiatives of Oman are constrained by shortcomings such as poor tourism infrastructure, support services and activities; limited promotional exposure; too much bureaucracy and major dependence on ‘sun, sea and sand marketing’ . At a time when aviation in Gulf is growing fast, the Seeb international port of Oman has reached close to its capacity of 5 million. Seeb has just a single 3585 m runway, only one terminal building, and no attached gates. Plans are underway for parallel channels that will increase capacity to 12 million and 48 million by 2010 and 2050 respectively . Oman still has dependence on other airlines such as Gulf Air for international flights. Public transport infrastructure is not adequate from the perspective of tourism to offer tourists a comfortable, economic and safe journey. The network of roads connecting major tourism destinations also needs planning and development.

Oman's Education Sector Focuses On Quality And The Right Skills To Meet The Needs Of The Economy

Evolving rapidly over a short period, education and training play a key role in Oman’s long-term development plans. From three schools in the country prior to 1970, the sultanate’s general education sector has expanded to include 1647 public, special education, private and international schools, with a total of 724,395 pupils, including kindergarteners and preschoolers. Enrolment is compulsory for 10 years of basic education and free for all Omani citizens. Progress has been reflected in significant improvements in the adult literacy rate, which reached 94.8% in 2015, up from 81% a decade earlier.

In 2013/14 the higher education segment in Oman was served by 18 public colleges, 20 private colleges, a single state university and seven private universities, according to the National Centre for Statistics and Information (NCSI). These academic institutions are regulated by different ministries and organisations than private vocational training centres and colleges of applied science, banking and health. The government acts as regulator and service provider in higher education, by funding scholarships, managing accreditation and providing guidance on strategic objectives for sector improvement.

BUDGET

The budget allocation for education in 2016 reached OR1.65bn ($4.3bn), constituting 14% of total expenditure, while education spending saw a slight decrease in the 2017 budget, falling to OR1.6bn ($4.1bn). Declining oil revenues suggest that the government will not always be able to fund higher education as generously. Some projects are reported to have stalled in the current economic downturn, and demand for training has declined as companies focus on cost-cutting over recruitment. “With the low oil price, many companies and government institutions are cutting back on education and training,” Warith Al Kharusi, executive director of Al Safwa Group and Partners, which provides supply chain management and logistics solutions for the oil and gas sector, told OBG. “However, this is precisely the time that they should be boosting spending in these areas in order to continue the gradual economic transformation and diversification of the country.” Nevertheless, education authorities are moving forward with reforms focused on improving quality assurance and strategic learning objectives to meet the demands of the labour market, underscoring the government’s commitment to upskilling and improving the sultanate’s youth.

General Education

The MoE is responsible for formulating policy, and administering and managing basic and post-basic (secondary) education. It controls standards in state schools and has considerable influence over the operation of the private sector. The country’s general education programme is built around the basic curriculum introduced in 1998 for grades one through 10, and the post-basic curriculum introduced for grades 11 and 12 in 2007.

The Education Council is currently developing the National Education Strategy 2040, aimed at equipping young Omanis with the skills required to succeed in a knowledge-based economy?by t?he numbers. ?Private school education was established at the same time as government schools in the 1970s and has experienced a major expansion over the past decade. From two private schools with a total of 115 students in pre-school and elementary education in the 1972/73 academic year, the total number of private schools in the sultanate has grown to reach 530 in 2015/16, 46 more than in 2014/15. In terms of bricks-and-mortar institutions, Muscat comes in significantly ahead the private education sector with 182 schools, followed by Al Batinah North with 68 and Al Dakhliyah with 56. Total enrolment in general education, including students in the sultanate’s government, private and international schools, reached 724,395 in the 2015/16 academic year according to the NCSI. Of these students, 74.6% were enrolled at various government schools, including around 21,500 at Islamic institutes and schools managed directly by government ministries or agencies. Some 14.1% of students were enrolled at private schools and 8.3% were registered at international institutions.

Muscat University

In November 2016 Muscat University received official approval from the MoHE to begin operations. A complete launch of three bachelor’s programmes, six master’s programmes and a foundation programme is planned for September 2017, co-delivered with two UK-based institutions, Cranfield University and Aston University. The university is 100% privately funded by 37 founders and benefactors from the business world. Its vision is to deliver a high-quality local education option for Omani and expatriate students in the country.

Academic Affiliations

As a means of improving quality in higher education and benchmarking standards against overseas institutions, the MoHE encourages private HEIs to choose reputable universities as partners in academic affiliation agreements. While Muscat University has announced formal affiliation agreements with international academic partners; the MCBS, for example, adheres to the regulating bodies and accreditor commission of affiliated schools, including Amsel University in Missouri and Franklin University in Ohio. Vocational institutions, too, are increasingly linking qualifications to accredited awarding bodies.

Vocational & Technical Training

With the government focused on requirements for practical knowledge and diversification in the labour force, vocational schools and technical colleges are pivoting to develop courses that align with diversification strategies in a variety of sectors, including transport and logistics, mining and tourism. National Training Institute is conducting a broad range of studies aimed at revitalising its training courses to include a focus on sectors identified as priorities in the latest five-year plan, particularly mining. “For over three decades we have been working very closely with the oil and gas industry, and therefore are very familiar with the kind of jobs available, skills required and the training needs of this industry,” Alva told OBG. “However, mining is a new sector for us, and at this point in time we are not geared up with the necessary information to cater to this industry. We are in the process of studying it,” he added.

Qualifications Frameworks

The OAAA is currently working with the Scottish Qualifications Authority to develop the Oman Qualifications Framework as a means of enabling employers, the government, school-leavers and graduates to identify where certificates and qualifications sit in a national framework, and which pathways are available for different qualifications. The effort is aimed primarily at establishing equivalency across the education sector, including technical, vocation and professional schools, and higher education institutions.

?Growing Health Care Demands in Oman Met By Increased Private Sector Participation

The introduction of the mandatory health insurance law in March 2019 is expected to have major effects on care provision in Oman. New regulations now require private sector employers to provide coverage for their expatriate staff, as well as for their spouses and children. This comes as the government takes prudent steps to tighten its budget and looks to shift the cost burden of provision – which has been historically reliant on public coffers – to the private sector. Along with increased efforts to invite private participation in hospital and clinic construction through public-private partnerships (PPPs), the new mandatory health insurance law presents a significant opportunity for providers and insurers to expand their presence in the local market.

Structure & Oversight

Oman has a universal health care system that is free for citizens at the point of delivery and offered to expatriates at subsidised rates. Service provision is overseen by the Ministry of Health (MoH), within which there are several key directorates and departments tasked with supervising and administering specific health care objectives. These include the Directorate General of Medical Supplies, the Directorate General of Pharmaceutical Affairs and Drug Control, the Department of Health Education and Awareness Programmes, and the Directorate General for Disease Surveillance and Control, among others. In addition to the MoH, the Central Quality Control Laboratory is responsible for ensuring the quality, safety and efficacy of pharmaceutical products, while the Oman Medical Specialty Board, established in 2006 by royal decree, serves as the independent supervisory body for all postgraduate medical training programmes in the country.

General Indicators

In 2018 there were 50 public hospitals run by the MoH providing 5027 beds, along with 22 polyclinics affiliated with the MoH, 212 primary health centres and 265 public health clinics. That same year, the private sector provided 25 hospitals and 908 beds, in addition to 298 private medical centres and complexes. According to the MoH, however, the private sector’s contribution to health services is still comparatively small, with government hospitals receiving some 15.5m outpatient visits in 2018, for example, compared to around 3.8m at private facilities.

With annual demand for hospital beds in both private and public hospitals expected to increase at a rate of 3.1% per year to more than 7600 by 2025, the government is prioritising the development of new public facilities to keep pace, and the MoH is overseeing the development of 10 new hospitals and 27 primary health care institutions. Under Health Vision 2050, Oman’s major long-term health policy, the MoH is aiming to increase the total number of hospital beds to over 8600 by 2030 and to more than 14,500 by 2050. The ratio of hospital beds to inhabitants is expected to increase from 25.6 beds per 100,000 residents as of 2018 to around 30.8 beds per 100,000 by 2050.

Government Expenditure

In 2019 the government allocated $3.4bn to the health care sector, accounting for approximately 4.3% of Oman’s GDP. Despite public funding cutbacks caused by lower oil revenue, spending on health care as a percentage of overall public expenditure has steadily increased in recent years, from 6% in 2015 to 11% in 2019.

However, due to rising demand for services, total public and private health expenditure in Oman is expected to expand at a compound annual growth rate of 9.1% to reach $4.9bn by 2022, according to the “GCC Healthcare Industry Report” published by investment bank Alpen Capital.

Disease Burden

Contributing to rising health care costs, incidences of lifestyle-related diseases, such as diabetes and hypertension, are growing in Oman in line with regional trends. While increased investment has expanded health infrastructure and capacity, past efforts have primarily focused on treatment rather than preventive care. According to the latest statistics from the World Health Organisation (WHO), in 2016 non-communicable diseases (NCDs) accounted for an estimated 72% of all deaths in Oman, with cardiovascular disease, cancer and diabetes accounting for 36%, 11% and 8% of all deaths, respectively.

Development Plans

In line with providing better overall care, Oman’s Health Vision 2050 has established a number of principles to guide sector policy, including the need to provide quality services, focus on measurable outcomes, emphasise disease prevention, be more patient-centric and keep up with emerging technologies. More broadly, Health Vision 2050 aims to create a well organised, efficient and responsive public care system. Initiatives of the plan include establishing enough primary health centres to achieve a ratio of 10,000 people per facility, introducing a national certification for patient safety and quality control in conjunction with the WHO, and several other projects covering health technologies, primary care and professional development.

Public Facilities

Sultan Qaboos University Hospital (SQUH) and the Royal Hospital Oman (RHO), both located in Muscat, are two of the largest public medical facilities in the country. Opened in 1990, SQUH is a tertiary hospital and training institute. In 2018 the hospital had a capacity of 600 beds and performed 7% of all operations in the country.

The RHO, meanwhile, is the main referral tertiary care hospital for the MoH and receives patients who require highly specialised care. It also serves as the main secondary care facility for the Muscat region, offering services within the specialities of surgery, paediatrics, obstetrics, gynaecology, oncology and laboratory medicine. Since opening its doors in 1987 with 630 beds, RHO has expanded its facilities to around 1000 beds, and established a National Heart Centre, a National Diabetes and Endocrine Centre, and a National Hyperbaric Medicine Centre.

Private Health Sector

While government investment is set to bring a raft of new hospitals and clinics on-line, increased private sector participation is also helping Oman meet its health care goals. Currently, the private sector’s contribution to health services in the country remains small, representing around 6% of hospitals beds across Oman. The government has recently expressed interest in opening the sector to greater private investment, with stakeholders looking to expand the use of PPPs. In July 2019 the government released widely anticipated PPP and privatisation laws to open key economic sectors – including health care – to private sector investment. As per the first stages of the law, the private sector is only being invited to design, build and maintain state clinics, with management remaining under the remit of the MoH.

Among segment providers in Oman, Muscat Private Hospital is one of the largest facilities, with 76 beds. The hospital employs more than 200 doctors across 30 specialities, and was the first facility in the country to be accredited by Joint Commission International.

Medical Staff

As part of its long-term economic diversification strategy Oman Vision 2040, the MoH has set an ambitious target for increasing the number of medical staff in the country. By 2040 the sultanate will need to train more than 13,000 doctors if it is to reach its goal of 28 doctors per 10,000 inhabitants. Every year the government has made small, but consistent, strides towards achieving its 2040 goal. As of 2018 there were 20.7 doctors, 3.1 dentists, 5.9 pharmacists and 44 nurses for every 10,000 people in the country, a slight increase from 20 doctors, 3 dentists, 5.9 pharmacists and 43.7 nurses the previous year. To compare, there were just nine doctors for every 10,000 people in 1990. On a regional level, Oman compares favourably. In terms of doctors per 10,000 inhabitants, Oman sits only slightly behind other GCC countries such as the UAE (23.9) and Saudi Arabia (23.9). There is also a high number of specialist physicians in the private sector, at 44% of the 2134 doctors in that segment.

Pharmaceuticals

With local production accounting for 7% of total market demand, Oman has historically relied on private sector importers and distributors to supply the country’s pharmaceutical needs. In 2018 it was reported that Oman spent around $311m annually on pharmaceutical imports and another $300m on medical supplies. The segment remains dominated by local private companies such as Muscat Pharmacy and Stores, which imports pharmaceuticals and medical equipment from over 200 global suppliers. However, Oman’s Health Vision 2050 outlines an ambitious programme to establish local drug manufacturing operations and thereby reduce the country’s reliance on pharmaceutical imports. The government wants to raise local production of pharmaceuticals and medical equipment to 20-30% of total consumption through encouraging further foreign investment.

As of the beginning of 2019, there were three local pharmaceutical manufacturers operating in Oman and one manufacturer of surgical consumables. Together, they account for 3.3% of registered manufactured medical products. The industry has some encouraging projects in the pipeline, including a $365m pharmaceuticals plant in the Salalah Free Zone, which will produce over 100 pharmaceutical products upon completion in 2021. The OR140m ($363.6m) project will include research and development facilities and laboratories, and provide 300 employment opportunities.

Agriculture In Oman

Agriculture in Oman?has been important for centuries. The government's?economic development?policy emphasizes the expansion of such non-oil sectors as?agriculture,?fishing,?industry, and?mining?in its bid to diversify the?economy?and diminish its dependence on oil exports. The goal is to establish a sustainable economic base in preparation for the time when?hydrocarbon?reserves are depleted. The government launched several economic campaigns, naming 1988 and 1989 as Years of Agriculture and 1991 and 1992 as Years of Industry. Through these campaigns, the government has encouraged private-sector investment by allocating generous amounts of cash support for?private industry ?to be disbursed mainly through official development banks.

Agriculture

Oman has five distinct agricultural regions. Going roughly from north to south, they include the?Musandam Peninsula, the?Al Batinah?coast, the valleys and the high plateau of the eastern region, the interior oases, and?Dhofar?region, along the narrow coastal strip from the border with?Yemen?to?Ras Naws?and the mountains to the north.

In the early 1990s, interior farming areas accounted for more than one-half of the country's cultivated land.?Rainfall, although greater in the interior than along the coast, is insufficient for growing crops. Most of the water for?irrigation?is obtained through the?falaj?system, in which a vertical shaft is dug from the surface to reach water in?porous rock. From the bottom of this shaft, a gently sloping tunnel is dug to tap the water and allow it to flow to a point on the surface at a lower level or into a?cistern?or underground pool from which it can be lifted by bucket or pump.

A falaj may be many kilometers in length and require numerous additional vertical shafts to provide fresh air to the workers digging the tunnels and to permit the removal of the excavated rock and soil. A falaj requires tremendous expenditure of labor for?maintenance?as well as for?construction. Because private maintenance efforts during the 1970s and early 1980s proved inadequate, the government initiated repair and maintenance of the falaj system to increase the quantity of water available to cultivated areas.

The cooler climate on the high plateau of the?Al Jabal al Akhdar?enables the growing of?apricots,?grapes,?peaches, and walnuts. The Al Batinah?coastal plain?accounts for about two fifths of the?land area?under cultivation and is the most concentrated farming area of the country. Annual rainfall along the coast is minimal, but moisture falling on the mountains percolates through permeable strata to the coastal strip, providing a source of?underground water?only about two meters below the surface.?Diesel motors?are used to pump water for irrigation from these shallow wells. By the mid-1980s, the?water table?along the Al Batinah coast had dropped to a low level, and?salinity?of the wells had increased, significantly reducing the?water quality. This was caused by the combined effect of cultivating land too close to the sea and pumping more well water than was being recharged by nature, thereby permitting?seawater?to encroach.

Overfarming?and attendant water problems caused the government to establish the Ministry of Water Resources in 1990 with the mandate of limiting?water consumption?and improving irrigation. A freeze on new wells was imposed in addition to delimiting several "no drill zones" in areas where?groundwater?supplies are low. The ministry is also considering the installation of?water meters.?Recharge dams?are designed to hold?rainwater?in the?wadis?for a period of time to facilitate the trickling of water down into the ground; replenishing?aquifers?have been built mainly in the northeastern Al Batinah region, where the groundwater levels are up to five meters below sea level.

The area under cultivation increased by almost 18 percent to 57,814 hectares over the period from 1985 to 1990.?Fruits?were grown on 64 percent, or 36,990 hectares, of the area under cultivation in crop year 1989-90. Dates accounted for 45 percent of the total area, or 70 percent of the area under fruit cultivation. Grains such as?barley,?wheat, and?corn?accounted for 19.2 percent, or 11,092 hectares, and?vegetables?accounted for 16.8 percent, or 9,732 hectares, of the total area under cultivation.

In the same five-year period, overall?agricultural production?increased by 3 percent to 699,000 tons.?Field crops, largely?alfalfa, accounted for more than one-half of total production, or 354,300 tons, a 40 percent increase in the five-year period. Fruit production (including?dates?and?limes) was 182,400 tons, up from 154,500 tons. Vegetable production totaled 162,300 tons, an increase of almost 50 percent.

Water And Energy Challenges In Oman

Challenges in Oman’s water sector are numerous.?Some of the major ones are: water shortages; energy-intensive desalination; high water consumption in the domestic sector; unsustainable groundwater use in the agricultural sector; misdirected subsidies; and the lack of appreciation of integrated water resources management (IWRM) principles by decision makers.

Water Shortages

Groundwater in Oman is overused. Continuous abstraction lowers the water table depth and in some cases deteriorates water quality due to seawater intrusion. For example, the agricultural demand for water increased from 1,152 MCM in 1990 to 1,546 MCM 2011 and, consequently, supply from groundwater aquifers increased from 899 MCM in 1990 to 1,269 MCM in 2011.

High Water Consumption in the Domestic Sector

The Gulf Cooperation Council (GCC) countries have the highest per capita water consumption in the world, although Oman has the lowest consumption within the group. The average annual water consumption per household was estimated at 519 m3/yr for the Qurm district in Muscat, for instance, and 440 m3/yr for the Seeb district. The average per capita consumption was 289 L/cap/day and 173 L/cap/day for Qurm and Seeb respectively, which is far above the international average[3] ?of 90 L/cap/day. The increase in domestic water demand can be attributed to a lack of conservation measures, the low price of water, misdirected subsidies and a lack of awareness.

Unsustainable Groundwater Use in the Agricultural Sector

The extraction of groundwater beyond safe yield levels has resulted in the pollution of the existing groundwater aquifers due to the intrusion of seawater and the upconing of brackish and saline water supplies from lower aquifers.

Energy-Intensive Desalination

The total desalination capacity in Oman in 2010 was nearly 600,000 m3/d. In ?(2018), that figure is more than 1.3 MCM/d. Despite the technological advances and successes in reducing energy requirements, mainly in membrane-based processes (which currently dominate the Omani market), desalination remains an energy-intensive process, hence contributing to climate change. Energy-efficient methods for water desalination are increasingly being adopted as the growing number of projects may soon have an impact on energy requirements in the country, according to authorities.

Misdirected Subsidies

Several subsidies are available in the water sector that are intended to benefit locals, industries and businesses. This has sometimes resulted in unintended consequences that are environmentally negative. For instance, subsidies have increased per capita consumption of domestic water. Targeted social support is more effective than low tariffs (or the absence of tariffs) to combine investment in water supply and sanitation systems and affordability for poor households.

Lack of Appreciation of IWRM Principles

Economic efficiency, equity and environmental sustainability, which are the bedrock of integrated water resource management (IWRM), are lacking in the water management of the region, as is the participatory approach. There are various reasons for this, including a lack of trained manpower, reliance on expatriate consultants and professionals, reliance on engineering solutions as funding is relatively abundant and a lack of stakeholder participation in decision making.

Public Awareness and Education Campaigns

The government, NGOs, international organizations located in Oman as well as student groups are at the forefront of public awareness and education campaigns. These include direct communications; symposia and lectures; exhibitions; educational tests; international conferences; school curricula; radio and TV shows; and articles in print and online media.

Climate Change Mitigation and Adaptation

The following policies below have been recommended that will result in a ‘greener’ water sector and help adapt to the likely impacts of climate change on Oman’s water sector.8 The recommendations are divided into three categories: demand side, supply side and others.

Demand Side

v The water price should reflect the true cost of production.

v Subsidies provided to consumers must be targeted to the needy and incentives given for water savings by consumers.

v Installation of water-saving devices must be made compulsory for all new residential, commercial and industrial buildings.

v Urban water demand management should be given the highest priority as this sector uses the water that is produced and delivered at high cost. Tariff structures should encourage conservation; subsidies for retro-fitting, compulsory installation of water-saving devices in new buildings, leakage detection and education campaigns should be part of a comprehensive water demand management action plan.

v Groundwater abstraction should be regulated including for farmers. All should pay for such water depending on its use.

Supply Side

v Managed aquifer recharge should be encouraged, with strict control over the quality of injected water.

v Collection and use of treated wastewater should be given high priority. Such use may include not only irrigation but also managed aquifer recharge, industrial use, saline water intrusion control and toilet flushing.

?CONCLUSION

??The use of renewable energy in the desalination industry should be encouraged. If it is not possible to use alternative sources of energy directly in the desalination industry, then energy use for water production must be compensated by producing the same amount of energy through alternative sources and supplied to the grid.

??Maximum overall savings in the water sector will result from improved water use in the agricultural sector. Use of good-quality groundwater for non-economic, high-water-consuming agricultural production is to be avoided. Biosaline agriculture should be encouraged. Use of smart technology (hydroponics, drip irrigation, metering, controlled environment agriculture) should be encouraged and desalinated water for agriculture should be permitted only for high-value crops that make economic sense.

??The adoption of water management plans reflecting the IWRM principles should be compulsory. All alternative water resources that are cost effective and environmentally sound should be brought under the integrated management plans.

??A national water information system, including a decision support system, should be introduced to better aid water decision makers and monitor the sector’s key performance indicators.

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