Oman Cables Industry hopes current buoyant demand in local markets will help boost sales which have been weak in the first half of this year and have a long way to go to match 2008 levels.

Demand in Oman is rising out of infrastructure growth, new tourism projects and industrial development, said Nassir Ahmed Baba, the company’s regional sales and marketing manager.

“Demand for power cables in the GCC region is definitely growing at 20 per cent and is likely to continue during the next five years,” Baba estimated.

Oman Cables is trying hard to fight off competition from local and international manufacturers and has to contend with increases in London Metal Exchange prices that might eat into its profits.

Sales in the first half of this year were $237 million, the trend making it likely it will overtake 2009 sales of $403 million by a small margin. Last year was particularly sluggish with sales well below the 2008 mark of $789 million.

Exports in 2009 were $250 million, less than half of the previous year’s figure of $510 million. In the first half of this year, the company reported it exported product worth $116 million.

“One of the major challenges faced by the industry in 2008 and 2009 was the slowdown in the global economic situation and its impact on power cable demand,” said Baba, adding that the global cable industry was still fragmented compared to the supplier industries such as copper and aluminium.

“But starting from 2010 demand has again increased. The increased supply with capacity additions as also new cable companies in the region are likely to put up pressure on the margins.

“In view of this, cost competency would be a major challenge faced by players in the industry.”

Production at Rusayl
From its production facilities at Muscat’s Rusayl Industrial Estate, Oman Cables manufactures a variety of products including medium voltage and low voltage cables, instrumentation and pilot cables plus overhead transmission line conductors and building wires.

It also offers cables that are flame retardant and UV-resistant and have low smoke and fume properties and anti-termite sheaths.

Low and medium voltage cables up to 36 kV provide the bulk of the company’s sales. As well as exports to the Gulf, the company has supplied to markets in Europe, the Middle East and North Africa region and Pacific-rim states.

“The company has customised its products and services, developed strong ties with international EPC majors and opened new sales offices in the Middle East, Europe and the Far East,” said Baba.

It is currently supplying to the RasGas project in Qatar and several power plants in Saudi Arabia as well as to local projects including the 200 kV Barka transmission system and the Shell  Kauther Gas project.

Oman Cables was established in 1984 with Draka of the Netherlands coming in as equity partner in 1995. The Dutch firm now holds 34 per cent of shares with local entrepreneurs owning roughly 24 per cent. The remainder is held by public shareholders.

Draka has entrusted Oman Cables with the management of Associated Cables of India where Oman Cables also has a substantial shareholding.

During the past few years, the company expanded its facilities, building its own PVC compounding plant, which is one of the largest in Asia, and setting up an additional CCV (continuous catenary vulcanisation) line that doubled the medium voltage cable capacity. A sister company, Oman Aluminium Process Industry Ltd (OAPIL), is producing aluminium rods and conductors, opening one more supply source for customers in the GCC and Middle East.