Oman market: How rising prices are hitting our pockets

05 Oct 2017
POSTED BY Alvin Thomas

Rising food and fuel prices, raised rents and a hike in household bills are testing the nerves of Omanis and expats alike. Alvin Thomas examines why balancing the books has become a burden for the Sultanate’s hard-working majority, and why more needs to be done to address the problem.

Picture this scenario: you have dressed up in your favourite suit for work, grabbed the keys to your prized car that you worked hard to buy, and begin your journey to work.

Of course, on the way you must pick up your breakfast from the convenience store at the petrol station.

While there, you decide to top-up your tank with some high-grade M95 petrol – you know, the kind that your dealer told you that your “engine deserves”.

All goes as planned: you fill up with 50 litres of fuel, and you hand the tired-looking fuel station attendant your bank card.

You expect the cost of your purchase to be RO9.300 – the amount you just paid a few weeks ago to fill the tank to the brim. However, the SMS (text message) you receive on your phone says a different story. It reads: “Card of a/c 03XXXXX011 used for RO10.250 at Oman Oil” – which is a whole RO1.050 more than what you paid for fuel last time.

You think it is a mistake but then carefully read the prices on the Oman Oil banner outside the station. It clearly states: M91 – 186 baisas per litre, M95 – 205 baisas per litre and Diesel – 211 baisas per litre.

This, ladies and gentlemen, is the price of fuel, today. And by the looks of things, the recently-revealed prices are here to stay.

Unhappy with the surprise increase, scores of residents have taken to the social media platforms Facebook and Twitter to express their frustrations.

“Atrocious,” writes Dr Kevin Sebastien on Twitter.

“Remember when fuel was cheaper than water?” he then asks.

Before the oil crisis of 2015, the price of fuel was pegged at 120 baisas per litre for M95 and 114 baisas per litre for M91 – both slightly lower than the price of a litre of mineral water from the shelves.

Last year, Oman removed its fuel subsidies that led to fuel prices rising by more than 50 per cent. As a result of that, Oman cut its fuel subsidy bill by more than half a billion riyals.

Meanwhile, Omani Ahmed Saleh al Bulushi, a student in Oman, questions the Ministry of Oil and Gas’ move to raise the rates beyond 200 baisas per litre of M95 fuel, through his post on Facebook.

“If careful planning was conducted they (the ministry of oil and gas) would realise that people are not in a state to pay such high amounts for fuel.

“There has been no form of study done – at least one that I know of – whether the people working in Oman are witnessing a change in their salaries.

“Being a student, it is even harder because we have to drive all the way from the city to the college. And car-pooling is frowned upon by the Royal Oman Police (ROP). A few months back, I was stopped by them and asked if I was ferrying people for money.

“Where is the solution?” he asks.

“You cannot simply throw us into the pit and expect us to crawl out of it.”

One British expat who wishes not to be named tells Y: “I have switched fuels. I run my Volkswagen Golf GTi hatchback on M91 – the low-grade fuel.

“It’s a sacrifice I have to make if I want to live my lifestyle like I used to. I love travelling around the country and it was something I did with my wife, spontaneously.

“Now, however, I must make plans and think if I can sustain myself before jumping into my car and going for a road-trip.

“To avert that situation by a bit, I now fill up with M91. My car runs fine but the quality of the fuel is terrible. It is just a matter of time before the fuel pump in my car goes berserk,” he says.

His sentiments are echoed by several others as new data reveals how motorists are ditching the higher-grade M95 fuel for the cheaper alternative.

As per the data from the National Centre of Statistical Information (NCSI) the sale of M91 rose by 30 per cent, to 5.1 million barrels, between January and August this year, compared with last year.

In contrast, M95 sales declined by 14 per cent to 10.2 million barrels this year.

But, making this switch could harm your car and lead to burning deeper holes in your pocket, points out Sami Ali al Zadjali, a chemical engineer working with a petroleum refinery in the Sultanate.

“As it is, the fuel in Oman is of very low grade. It has been noted to be of lesser quality than that available in the UAE and even Saudi Arabia. Moreover, people are only given the choice of RON91 and RON95 (or M91 or M95) – two fuels that are considered to be unfit for performance cars.

“In the UAE, they charge high fuel prices because they provide actual high-grade fuel like RON98 (M98). They are not giving you any sub-standard fuel when you are giving them your hard-earned money.

“This means that a car that ages in Oman will be prone to more damage due to impurities in the fuel or the lack of power due to lesser burning efficiency of the fuel. Because of this, you may have to replace your cylinders or even your fuel pump, especially if you are driving a car with a turbocharged engine or even any performance engine. “My advice would be to stick to M95,” he says.

In an interview with local daily Times of Oman, Ahmed al Hooti, a member of the Oman Chamber of Commerce and Industry (OCCI) says: “Most people in Oman use their own cars to travel and their salary isn’t a lot so there is an effect on residents. Therefore, we see people trying to cope with this issue using M91.”

Compromises made in fuel expenses is only one side of the story, though, as the residents of the country are now saying that they are now shelling out more riyals than ever before when it comes to purchasing goods and services used for living.

In the span of a few months – since the drop of fuel prices in 2015 – Oman witnessed an increase in the price of food, water, electricity, gas and even housing (real estate).

Farah al Riyami, an analyst who aids in preparing data says: “Oman is expected to see a rise in salaries next year. The rise is expected to be between 3.9 and 4.3 per cent. But, several companies will freeze salaries (not bringing about any change).

“The current market situation is tough, sure. But, people are going to be taking the brunt of this because they have a fixed income and the prices of goods and commodities – not just petrol and diesel – are fluctuating, consistently.

“This instability means more people are confused over their future in the country. Still, there is hope as new laws dictating the payment of salaries on time are expected to begin taking effect,” she adds.

Talking to us, P Sadhashivan, the project manager for a leading telecommunciations company in Oman, says: “It is strange how I have barely been able to save any money ever since November 2015.

“Since then, my rent went up by RO50, the prices of groceries shot up marginally and so has the school fees of my three children.”

Sadhashivan says that he now must “find” an extra RO144 every year for the tuition fees of his children.

“Times are tough, and the schools have also gone on to increment the fee. I am not sure if it is because the teachers have received a raise. I highly doubt that. I would really like to know where all this money is going. It’s hurting our monthly savings very much.

“Also, the rent for my two-bedroom flat, in Wadi al Kabir, has increased by RO50. This has not brought us any change in our living conditions,” he points out.

Christopher, a Scottish resident in Oman, says that he can’t see the benefit of working in Oman anymore.

He says: “The inflation rate is quite low in Oman but so are the salaries. It’s funny how no one takes that into account. I used to pay RO450 for my flat, in Seeb, but now have to give RO590. The change took place in November of 2016 and the rent has remained the same ever since.

“My wife, who compiles all the household expenses, says that we are also paying more than RO100 in groceries now. We’re not buying any more goods than we did before but it seems as if the prices across several outlets have increased.”

As per the information revealed by the NCSI, the Sultanate’s year-on-year inflation in the month of August, this year, stood at 1.03 per cent.

The major cause of the prices rise was a 3.45 per cent rise in furnishings, household equipment and routine household maintenance, in the month, compared to the same period of 2016. Education has become 2.84 per cent costlier this year, too, the report points out.

Meanwhile, housing, water, electricity, gas and other fuels witnessed a 1.47 per cent rise while that of foods and non-alcoholic beverages rose by 1.09 per cent.

Prices of clothing and footwear rose slightly by 0.25 per cent rise compared to August 2016, while education witnessed a 2.84 per cent jump compared to the same period last year.

Health prices rose by 0.39 per cent, those of recreation and culture went up by 0.33 per cent in August this year compared to the same period of 2016. In response to inflation on food, however, several local hypermarkets have come up with initiatives to help customers. For instance, more products are being offered in bulk. The footfall in several new outlets such as Mars Hypermarket and Nesto Hypermarket are on the rise after setting up daily and weekly offers for customers.

This also coincides with the price drop on vegetables by 1.36 per cent, which has made several shoppers happier.

However, the biggest upset came in Oman when the prices of fruits shot up by 3.48 per cent, and fish by a whopping 6.49 per cent.

The price of fish has increased “substantially” says expat Abraham Matthew.

“I used to pay RO3.5 for a kilo of King Fish (King Mackerel) but now it is RO5. This is the case if you go to the local fish market in Seeb or Muttrah. If you shop in the local supermarkets here, the prices will be much higher.

“The price of prawns has shot up to RO4 per kilo, as opposed to the RO3 that I used to pay a few months back.

“This is definitely a problem for us who cannot exclude seafood from our diet,” Abraham adds.

Talking to us, Farah al Riyami, says: “Times are tough now and we don’t expect things to get better overnight. From my 15-years of experience in the field, I have never seen the market take such a blow.

“Oman has always been a country reliant on oil for its income. And as long as the price of oil hovers and remains below the US$60 (RO23.1) mark, things are going to be hard for us.

“Of course, we are slowly shifting our focus to tourism and other fields. But that will take, at the very least, half a decade for us to completely capitalise on that.

“So the answer to all our woes is clear: keep your money close to you and lock it up if you can.”

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