Omani producers face hike in natural gas prices

Oman’s two leading cement producers are looking to mitigate the effects of an impending rise in natural gas prices which are expected to lead to an increase in the cost of cement production.

The country’s Ministry of Oil and Gas (MOG) is to increase the price of natural gas as of 1 January 2015. The price will thereafter increase every year for both companies at rates specified by the ministry. Last week, an advisory body to Oman’s government suggested spending cuts and tax rises to cope with the impact of plunging oil prices on state revenues.

Raysut Cement said that the decision will impact its production by three per cent in 2015. "The company plans to mitigate this financial impact by implementation of certain cost-reduction efficiency enhancement initiatives and restructuring prices," it said in a statement to the bourse.

Rival Oman Cement also warned that the price hikes would add OMR2.1m (US$5.45m) to its own costs in 2015. The company also plans to minimise the impact by improved productivity cost-controls and restructured pricing.