China’s state-owned utility company State Grid has acquired a 49 percent stake in Oman’s state-owned Oman Electricity Transmission, according to media reports.
State Grid will pay $1 billion to Oman’s Electricity Holding Company for the stake in Oman Electricity Transmission.
The deal is a part of the Omani government plan to privatise state-owned entities in the kingdom in order to raise cash from asset sales and increase its cash reserves, which have depleted over the past few years by a slump in oil prices.
State Grid made the announcement on its website; however, the financial details of the deal were not mentioned.
According to Fitch Ratings, Oman faces one of the largest budget deficits in the Middle East. As oil prices continue to remain low, the Omani government is now forced to look for alternate sources of funding.
The deal is also part of Chinese President Xi Jinping’s plan to revive ancient trading routes under his ‘One Belt, One Road’ initiative- a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes of the Silk Road.
State Grid’s investment in Oman marks its first major investment in the Middle East and also the largest investment made by a Chinese company in Oman.
According to the Chinese Ambassador to Oman Li Lingbing, the two countries have worked closely in recent times and Chinese companies have undertaken projects in oil and gas exploration and production, electricity, communications, fisheries, and processing industries in the kingdom with a total business volume of over $6 billion.
During the first half of this year, trade volume between the two countries reached $10.6 billion, a 6.3 percent increase from the same period last year.