Threatening its way towards Oman for nearly a week, tropical cyclone Gonu had luckily leveled to a category-1 storm when it finally hit the coast of Muscat on June 7. Gonu’s weakened state, however, was not enough to hold back the ravaged city’s inevitable economic costs of $3.9 billion, according to early government estimates.
Gonu, which means “bag made of palm leaves” in the Dhivehi language of the Maldives, shut Oman down for days after it battered the sultanate with torrential rains, wind gusts of 83 km/h (51 mph) and waves 10 to 12 meters high.
The Ministry of National Economy sent an army of surveyors to assess the resulting damage in the badly hit regions of Muscat and Sharqiyah. In addition to the 60 lives it claimed, Gonu caused the displacement of 20,000 people and the destruction of 70,000 homes.
The insurance industry will assume the massive rebuilding costs, as most insured Omani properties have storm and flood coverage, according to a June 13 report by BankMuscat on the cyclone’s economic impact. Large insurers will be exempt from making claim payments, as 90% of property risks are reinsured. This is expected to bring on more economic headaches as reinsurance rates rise and minor insurers are not “able to pass on the entire cost to the consumers, due to competition,” BankMuscat said.
The government will step in to control cement prices to facilitate reconstruction. Oman Cement, the sultanate’s largest provider, escaped damage to its facilities but lost gas supply, cutting output that will shave 2% off profits for 2007.
Not much damage, just costly
Oman’s infrastructure took several hits, including the demolished main water pipes in Muscat and 12 kilometers of the main Wadi Adai highway. The excessive flooding led the government to plan the construction of three dams and a large canal to contain future flood waters, at a cost of $62 million.
The Muscat Securities Market closed for three trading sessions, after technical problems closed the bourse the Sunday after the storm.
Fortunately for the heavily invested tourism sector, it escaped with minimal damage. The Grand Mosque was temporarily closed, along with certain shopping areas and some inaccessible beaches. Although flooding rendered many roads traveled by sightseers unusable, “post-cyclone tourism in Oman is healthy and going full-fledged,” Mohammed bin Hamdan al-Toobi, under-secretary of tourism, said at a June 18 press conference. “There wasn’t any major damage to hotels or resorts during the cyclone, except a few minor incidents that are being rectified and things are going back to normal in a quick pace.”
A report released in May by London-based think tank Global Futures and Foresights put Oman’s current investment in tourism at $464 million, an amount expected to rise to $904 million by 2017. The report said Oman’s goal is to raise tourism’s contribution to GDP from 0.3% in 2007 to 3% by 2020.
Seeb International Airport temporarily halted flights, but the main gateway has since bounced back, with most regional and international carriers resuming normal flight schedules.
But this fluke storm, as it is being widely referred to, begs the question, what’s in store for the Arab oil industry as global warming looms ever larger? Although there is no direct evidence linking Gonu to climate change, some wonder why such a storm made it to a region typically immune from climate fury; and what happens if this is just a sign of what’s ahead?
When Gonu hit, it caused the Sur liquid natural gas terminal southeast of Muscat and the Al-Fahl oil terminal to stop shipments for three days, costing $200 million in lost revenues, according to government estimates. If similar or more intense storms are to be expected in the area, offshore oil refineries could be irreparably damaged, oil exports would become intermittent and costly, not to mention the punitive damage of consuming nations responding to increasing price hikes. This might leave oil-producing nations to wonder whether it wouldn’t be wiser to throw their full support behind such measures as the Kyoto Protocol.
