• Sultanate of Oman Partnerships for Development
  • April 8, 2014
  • Law Firm: Dentons Canada LLP - Toronto Office
  • Oman has had an 'offset' regime since August 2001 when the Ministry of Defence issued Guidelines for the Partnerships Development Program (the Guidelines). Essentially the regime imposes obligations on foreign companies who contract with the Oman government whereby they should invest part of the value of the contract back in to Oman by way of investing in projects that will benefit the on-going development of Oman. The Guidelines set out these obligations and the process for having projects approved as an offset project. In recent times some significant defence procurement contracts have excluded any offset obligations.

    Responsibility for administering the program moved to the Ministry of Commerce & Industry in 2008. For a number of years there has been discussion of further change and on 3 February 2014 Sultani Decree No. 9/2014 was issued and came into effect immediately and this established the Omani Authority for Partnerships for Development (the Authority). The Authority is a public authority affiliated to the Ministry of Commerce & Industry. Stakeholders include the Royal Office, Ministry of Defence, Ministry of Finance and the Royal Omani Police. The new law sets out the basic parameters of the offset regime and contains the organisation rules, objectives and authority and responsibilities of the Authority. Although the Guidelines - now referred to as Regulations - are not referred to in the new law, it does not contain new guidelines and it is anticipated that the Regulations will continue to be applied by the Authority until such time as new Regulations are issued, although the new law does clarify and extend the Regulations so that the regime now applies to:

    • contracts for infrastructure projects and for the supply of weapons and military and security equipment;
    • contracts with both the Oman government and those with companies in which the government has a stake of more than 50%; and
    • contracts with a value in excess of OMR (Omani Rials) 5 million (approx. US$ 13 million).

    It appears, therefore, that where the above conditions are met, the offset obligation is compulsory.

    The Chairman of the Authority is required to issue the necessary regulations and decisions to implement the provisions of this new law - this has not yet happened so watch this space.