A city of opportunities in Oman

Oman

Salim Al Thuhli, CEO of Khazaen Economic City (KEC), talks to The Energy Year about the project’s aims and ongoing developments, as well as its recent achievements. KEC is an integrated economic city being developed over 52 million square metres of land with features such as a dry port, free zone, strategic location and numerous free-trade agreements.

Can you give us an overview of Khazaen Economic City’s establishment and main aims?
KEC was established in 2018. It represents Oman’s first integrated economic hub and the first partnership model between the public and the private sectors in the development, management and operation of integrated economic cities. KEC is also the country’s largest economic development zone directly connected with strong logistics infrastructure such as the Batinah Expressway, Muscat Airport, Sohar Port, Suwaiq Port and a direct connection to the border of the UAE and Saudi Arabia. It was created due to the need to have a logistics hub connecting economic cities and free zones, in particular between Muscat and Sohar.
The main aim of the city is to diversify the national economy and contribute to the sultanate’s GDP by attracting local and foreign investments and creating an international hub in Oman that addresses multiple sectors, including logistics, industry, commerce, real estate, food and pharmaceuticals.

What are the key recent developments within the city?
When we started the project, the purpose was to create more business opportunities for SMEs and to capitalise on expenditures in services and goods within Oman by keeping these expenditures in the country to create jobs.
At the moment, we are in the middle of the first development phase of the city. We have laid the infrastructure (roads, power and water networks, street lights and fibre optics and stormwater channel network). We further opened 3.2 million square metres in October 2020, where the first project was the Khazaen Dry Port, as the cornerstone of the logistics sector in the City.
In 2022, we leased almost 85% of these 3.2 million square metres, and now we are starting phase 1B, and we’ve already awarded contracts for the construction of an additional 10 kilometres of infrastructure, including all the associated utilities.

Can you walk us through the key achievements accomplished by Khazaen Economic City in 2022?
2022 was a great year for KEC since we managed to attract one of the largest warehousing companies in Qatar, Global Warehousing Company (GWC), which provides logistics services to IKEA and other retail operators and has more than 3.5 million square metres of warehousing across the GCC countries. We are very proud about this achievement because it will add significant value in the domestic logistics sector, diversify the economy and give it a boost. Another key objective we accomplished was the awarding of the labour village, which sits at the core of our mission.
In fact, we are not just a real estate company. We are building an ecosystem by helping investors set up and sustain their projects and achieving their commercial value. We provide them with a full package that supports them in their growth strategy. The labour village serves exactly this wider purpose: when investors come to Khazaen, they will not worry about workers, drivers, transportation means or accommodations.
We have created a labour village in the centre of each block, of the so-far-developed areas of the city, so that facilities and factories will be within walking distance, with the dry port right next door. The first phase for the labour villages is to accommodate 2,500 labourers plus the senior staff.
Besides the business services, they will also feature several amenities (for example, tennis courts, cinemas and clinics) to create an integrated community environment. This is what I mean by shaping an ecosystem: giving investors the best possible conditions to run their businesses.

Can you give us some further details about the synergy you have developed with Khazaen Dry Port?
KEC looks to the dry port as a strategic anchor project and one of the unique selling propositions offered to the investors. In addition, the dry port is an enabler to all the traders, manufacturers and the logistics players. KEC leased the land to the dry port company. However, all the operations and management are handled by the dry port company.
The dry port was inaugurated at the end of 2021 as a PPP between the government – represented by Asyad Group (the investment arm of the government in the logistics sector) and some private-sector companies. It is the country’s first integrated inland port and serves as an important link among seaports, airports and land ports.
Moreover, it connects major business and industrial zones and creates a central trans-shipment point that speeds up the movement of containers and cargo, which have already started coming to Khazaen. From here, the cargo circulates across the country. The port has signed several agreements with international logistics companies, such as Maersk, and with the largest Saudi shipping company, Bahri.
In short, you can export and import from any part of the world directly to the dry port, which works as a multimodal hub, the first of its kind in Oman. The port represents a competitive advantage not only for Khazaen and the rising surrounding industries but also for Muscat.

What is the value of the agreements that you have signed so far?
In addition to our agreement with GWC, in 2022 we also signed a long-term agreement with one of the largest logistics players in Saudi Arabia, NAQEL Express, which is a semi-government entity. They have already started transporting cargo and providing other logistics services from Khazaen.
As we speak, we have signed 100 investment agreements (with 22 in 2022) for a total value of around USD 600 million, and we are in talks to increase the number of agreements consistently. Our target is to focus on increasing the number of FDI agreements.

What role does the energy industry play within your development plans?
We are strongly encouraging any projects that entail renewable energy developments within KEC, particularly from SMEs. We decided not to deal with petrochemical industries given the residential initiatives that will happen soon in the city, but the clean energy sector is one of our targets. Regarding this sector, we already started collaborations with 44.01 and Wakud. The latter is located in the KEC and has the first biofuels factory in the world that is powered by solar energy.
We also signed an NDA in 2022 with Oman Shell, explore opportunities to establish a solar plant in the city that will provide clean energy to investors.
In terms of sustainability, KEC has several projects in the pipeline, including some unique ones, such as one for recycling used car oils or the design of the city itself. In fact, what we think of when talking about sustainability is not just the installation of PV modules. We think of developing an environmentally friendly area right down to the city’s design.
We’re studying solutions that allow mobility in the most efficient and least polluting ways by considering, for instance, the positioning of the various industrial clusters and how to connect them and its workers with transportation services within the city and the labour village.

Why should an investor come to Khazaen Economic City, and what would you say are its competitive advantages?
First, Khazaen’s location is very strategic and is supported by a strong logistics network and infrastructure within the country. The City is a centralised gateway to the borders of neighbouring countries (the UAE, Saudi Arabia and Yemen). The city is two hours from Sohar Port, 35 minutes from the Port of Suwaiq – which is currently being expanded – and one hour from the Muscat airport.
KEC basically sits in the middle of a commercial and residential corridor expansion, and the Ministry of Housing and Urban Planning has included it as part of the Greater Muscat area, which underlines its importance in terms of economic value.
Moreover, we speak the same language as the investors, as we ourselves are a private entity, which provides us with flexibility, decision making and quick reaction times. In fact, the most difficult part for investors and what sometimes scares them away is bureaucracy and the rigged policies. We do not have that in KEC.
We understand the time and the value of the money of our investors, and our aim is to ensure they don’t waste either of them. We treat people interested in investing in KEC with all possible attention and establish a relationship based on mutual trust from the very beginning, which eventually pays off. Our journey with the investors starts from the date of signing the investment agreement.
Investors coming to KEC will find a developing international logistics hub, with all the elements in place to make their projects successful. KEC has a smooth ecosystem with a free zone in combination with a dry port and is located in a geographically strategic position. Its infrastructure is state of the art and can connect you with the KSA and the UAE. Domestically, the city is in the middle of a very populated area that enables you to reach 80% of Oman’s inhabitants in a couple of hours by car. Finally, we have free-trade agreements in place with the United States and Singapore and the Greater Arab Free Trade Area (GAFTA).
To conclude, Oman in general and KEC specifically are gateways to the global markets – in particular the GCC, MENA and East African regions – and if investors are looking for a quick, sustainable way of doing business with promising growth expectations, they will find it in Khazaen Economic City, “the city of opportunities.”

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