Presentation

To

MENA Rail & Metro Summit

Tuesday , 6th October, 2015

In-Country Value Strategic Approach

Oman Rail Network

Mazyounah

Thumrait

Salalah

Haima

Duqm

Sur

Muscat

Sohar Shinas

Nazwa

Bahrain

Saudi Arabia

Yemen

UAE Ibri

Ad Dhahirah

Buraymi

Muscat

Ibra

Ash Sharqiyah Sinaw

Ad Dakhliyah

Al Ghabah

Dhofar

Al Wusta

Amal Marmul

Al Batinah

Qatar

Key Facts

• 2,135 km linear network length

• Mainly double track

• Design speeds

– Freight - up to 120 km/h

– Intercity Passenger - up to 200 km/h

• Designed and built to blend of

international standards

– North American heavy haul, 32.4 tons

per axle

– European Train Control System Level 2

• Diesel traction for start-up with option to

electrify

Phase 1: Connects Oman’s 3 deep sea Ports, and GCC network

Heavy-haul network designed for double stack container trains

2

Builds Communities Ibri, Fahud, Dankh,

Quarn Alam, Haima

Amal, Marmul, Thumrait

B

3

A

More Than Tracks – Multiplier Affect

Port Inland

Freight Terminal

Supports Freezones

& Economic Development Areas Sohar, Duqm, Salalah,

Al Dhahirah, SABLA

In-Country Value Opportunities (SMEs)

Expands Investment Opportunities

Supports Global Investment Portfolio

Rail Supports Nation Building

Schools

Mosques

Shops

Hospitals

Homes

Creates

Jobs

Supports Other

Businesses

Project Status Summary

Tender Preparation

Segment 2

Contract Evaluation Stage

Segment 1 Construction

Supervision

Awarded/Mobilized

Integrated Management team

Training Management Consultant

Prequalification for Segments 2 – 4

ICV Strategy

Our ICV strategy was developed along a three step approach based on the Sultanate's long-term aspirations

ICV strategy development approach

1 2 3

> Benchmarking of similar programs

> Derivation of corporate aspirations

> Establishment of high-level ICV objectives

> Identification of potential ICV tendering measures

> Analysis of capacity/capability gaps for different work packages

> Allocation of suitable ICV tendering measures to individual work packages

> Definition of implementation roadmap (including ICV schedule for next tenders)

> Design of monitoring approach

Set ICV objectives Develop program of ICV measures for tendering

Define implementation and monitoring approach

As a result, our ICV vision builds on five key pillars

Oman Rail's ICV vision

Employment Earnings > Create new job opportunities for

Omanis

> Increase attractiveness of private sector

> Maximize revenues of Omani manufacturerers and service providers

> Maximize return on investments in newly established manufacturerers and service providers

Education Entrepreneurship

> Improve skill levels of the current Omani workforce

> Improve the sophistication level of Omani industrial sectors

> Encourage the establishment of new businesses in Oman

> Foster the development of SMEs

Economic diversification > Contribute towards GDP growth

> Increase share of logistics sector in the GDP

> Increase share of manufacturing sector in the GDP

ICV Pillers

ICV Development Framework

Preparatory Works Infrastructure

works Operations and

Maintenance Supporting

Services

Initial study identified more then 260 Products and Services that were then divided into the following categories:

Available in Oman Available but with Gaps Not Available in Oman

Classification of vendors into five tranches

Vendor assessment and classification

1 Registration

2 Pre-qualification

3 Classification

Yes

Maybe

No

1) Non-relevant vendors do not provide products or services required by the railway project 2) Potential vendors are not fully capable of delivering products and services required by the railway project, therefore are classified as maybe

Registered vendors

Non-relevant vendors1)

Tier 1 Vendors

Tier 2 vendors

Tier 3 vendors

Potential vendors

Delisted vendors

Potential vendors2)

Delisted vendors

Pre-qualified vendors

To maximize ICV creation, we will use different measures for different work packages

Tender contract types and work packages

IV Oman Rail procurement

16 work packages

II Signaling and telecom1)

7 work packages

I EPC

26 work packages

1) Signaling and telecom is typically part of the EPC tender

III Operations and maintenance

7 work packages

Tender Development Framework

To achieve our vision, we will rely on five key ICV measures during the tendering process

Overview of key ICV tendering measures

Omanization

Tenderer's plan for employing Omanis for specified positions or overall work package

Local procurement

Tenderer's plan for local procurement for each work package

Training & Development

Tenderer's plan to develop skills for specific positions

Development of Omani subcontractors

Tenderer's plan to improve capabilities or capacity of sub-contractors through joint ventures or partnerships

Alternative ICV creation

Tenderer's plan for ICV-creating measures (e.g. building a factory in Oman)

Tender Development Framework

To ensure successful execution, we developed a comprehensive implementation plan incl. detailed ICV schedule for tenders

Overview of ICV schedule

Key elements of ICV schedule

> Carries a 20% weight in technical proposal evaluation

> Background for ICV requirements

> Detailed ICV requirements to be fulfilled by contractor bids for

– Local procurement

– Omanization

– Trainings

> Evaluation methodology for ICV Plan

> Monitoring methodology throughout project execution phase

> Templates to be used by contractors for their bid submissions

Implementation and monitoring approach

Penalties for non-compliance with ICV will be gradual starting with a verbal warning potentially leading to termination/ blacklisting

Non-compliance with ICV plan

Implementation and monitoring approach

Non-compliance for one period

Verbal warning

Non-compliance after 2 verbal warnings

Official warning

Non-compliance after 2 official warnings

Financial repercussion

Failure to abide by mitigation plan

Termination and blacklisting

ICV Non-compliance penalties

SME Overview

We have long-term aspirations to play a pivotal role in SME development based on six key objectives

Strategic objective Goal Implications

Broaden industry base 3 Achieve lasting positive

impact on the industry structure

> Time horizon: 20-30 years

> SME type: Gazelles

> Instruments: Market access, advisory services and investments

Encourage innovation 4 Encourage research

and development by Omani SME

> Time horizon: 20-30 years

> SME type: Innovative SMEs

> Instruments: Investments, market access and human capital development

Foster entrepreneurship 5 Encourage more

Omanis to start-up their own businesses

> Time horizon: 10-20 years

> SME type: Start-ups

> Instruments: Seed funding, advisory services and human capital development

6

Economic diversification

The sum of all four strategic objectives lead to economic diversification

Increase SME participation

Increase number of contracts awarded to SMEs

> Time horizon: 1-10 years

> SME type: All types

> Instruments: Market access

Create employment 2 Increase employment

of Omanis > Time horizon: 2-5 years

> SME type: High growth active in sustainable railway products & services

> Instruments: Lending and market access

1

The SME support landscape has a multitude of support stakeholders with potential to drive the sector forward

Cap

abili

ty

bu

ildin

g Fu

nd

ing

Overview of SME stakeholders in Oman

> Most SME programs are still relatively young and lack scale to achieve visible and lasting impact on the SME sector

> A national SME strategy is underdevelopment to achieve focus and coordination between various stakeholders need

> Current SME support programs are vying for similar objectives

> Need to build awareness and understanding of the available support mechanisms by SMEs

Public sector Private sector

Sup

po

rt f

ocu

s

Route to Market tool

Oman Rail

Prime contractors

Prime contractors

Subcontractors

Sourcing

Contracting

Purchasing

Invoicing

Managing suppliers

Dashboard

and a

naly

sis

Buyers

Registration

Business mgmt.

Catalogue mgmt.

Order mgmt.

Invoicing

Reportin

g

Suppliers

e-Market matching portal

Overview of planned e market matching platform

Training and Development Strategy

Centre of Excellence

Training needs have been identified by prioritizing job categories based on type, skill level, manpower demand and feasibility

Preparation of long-list of jobs (under contractor and Oman Rail)

Filtering of long-list

Development of competency profiles

III

II 275+

30

Assessment criteria

Most critical jobs have been identified using 4 basic filters:

> Type of job:

– Managerial and admin. jobs excluded

– Technical and business professional job categories selected

> Level of skill required:

– Unskilled jobs excluded and only skilled and semi-skilled jobs considered

> Potential volumes of jobs to be created:

– High level estimates drawn to classify job categories by expected demand

– Job categories with at least 20 positions considered

> Feasibility of training:

– Jobs requiring significant experience (e.g. CXOs) cannot be trained for and hence excluded

Prioritization approach

I

Prioritizing Job Categories

A Training Management Consultant is responsible to define training standards and quality control

Needs Assessment Program Requirements Quality Control

1 2 3

✓ > Develop a competency

framework for Oman Rail operations and contractors

> Prescribe minimum safety and competence standards for each job as per international best practices

> Identify training requirements

> Translate requirements to training obligations for the EPC contractor(s) and operations partner through contractual guidance

> Recommend curriculum design and structure

> Monitor compliance to training obligations

> Conduct periodic quality assessments

> Ensure consistency of trainings

> Assess trainees and provide certifications

> Coordinate with regulators for licensing (e.g. for train drivers)

~ 6 months ~4 years

A TMC will be appointed for the initial 4 years, allowing Oman Rail to gradually build its own in-house team

Training Management Consultant

The Centre of Excellence can support Oman Rail's vision of becoming a railway knowledge hub in the region in the long term

Phase I: Local capability building

> Acquire railway expertise through partnership with global operators

– Establishment of O&M training facilities

– Devpt. of skilled workforce by international exchange

> Incorporate international best practice with TMC

– Development of Standards

– Quality Control

Phase II: Export of knowledge and expertise

> Supply Skilled Manpower and experts to railway companies in other countries

> Promote applied research through collaborations with universities

– Develop solutions for problems specific to railways in the unique local environment

– Develop a railway knowledge and competence center

Partnership with global operators for O&M training

Partnership with railway training expert to adopt international best practice

Supply of skilled workers and railway experts Provision of railway knowledge

and research solutions

Railway Knowledge Hub

It’s Character that Creates Impact!

Shukran