Reporter’s notebook: How far does the rial go in Oman?

Justin Vela looks at why taxi rides cost so much more in Oman than in the UAE.

Oman’s rial currency is pegged to the dollar, but the cost of a taxi ride varies according to the driver. Silvia Razgova / The National

MUSCAT // Why are taxis in Oman so expensive? It’s a question many visitors to the country ask themselves.

Hail a taxi in Muscat and a six-kilometre ride can cost as much as five Omani rials (Dh57.2). In Abu Dhabi, the same ride would cost only about Dh16.

The high price of getting around Muscat can be a huge surprise and makes one wonder: why is the Omani rial so strong? Or are taxis in Oman just so expensive?

For years, the Indian rupee was Oman’s main currency, especially in cities along the coast. The Maria Theresa Thaler, a silver coin from Austria, was used in the interior.

In 1973, the Omani rial was introduced. The currency is divided into 1,000 baisa. There is a 100 baisa note, along with 5, 10, 25, and 50 baisa coins. There are also 1/2, one, five, 10, 20 and 50 rial notes.

Like the UAE and Saudi Arabia, Oman pegs its currency to the US dollar because oil prices are calculated in dollars. Since 1986, the peg has been $2.60 to 1 rial.

Earlier this year, after China devaluated the yuan and Kazakhstan floated the tenge, there was speculation that Oman might decide to devalue the rial, but the central bank affirmed its commitment to the peg.

This means that a strong rial and those expensive taxi rides are here to stay. But the strong currency does not necessarily mean that taxi drivers are well paid. Working as a taxi driver in Oman is usually a part-time job. An Omani man might drive a taxi for extra cash after finishing a shift at his full or part time job. Some Omanis try to make a living from just driving a taxi, but doing so is difficult.

The reason for this is that almost all Omani drivers own their own cars, says a full-time taxi driver from the eastern city of Sur, who works in Muscat. His customers are mainly expats or foreign tourists or business people visiting Oman and the fares are never very much. “Two, four, five rials ... [Always] the same,” he says, listing what he usually earns per ride in an eight-hour shift – equivalent to Dh19, Dh38, Dh48.

While what he earns per ride is roughly equivalent to what taxi drivers in Abu Dhabi earn per ride, and the distance travelled by the passenger is shorter, he is not able to make a decent living from the work, he says. Taxi drivers in Oman are citizens while in Abu Dhabi they are expats that accept a lower standard of living.

Another Omani taxi driver says he makes about 400 rials (Dh3,815) per month. If he made 600 rials (Dh5,723), he could live more comfortably, but there are not enough customers. “Goods are expensive,” he says. “Only gas is cheap.”

While the cost of taxis stand out, most other prices are not greatly different from the UAE.

At a mall in central Muscat, a new 16GB iPhone 6 costs 250 rials (Dh 2,385). At a mall in Abu Dhabi, the same phone sells for Dh2,349.

Puma trainers cost 32 rials (Dh305) in Muscat, while in Abu Dhabi they cost Dh440. The Kite Runner by Khaled Hosseini costs 4.1 rials (Dh39) at Borders in Muscat, and Dh40 in Abu Dhabi.

At Domino’s in Muscat, a large Pepperoni Feast pizza costs 5.25 rials (Dh51) while in Abu Dhabi it costs Dh47.

One key difference is that there are fewer moderately priced hotels, and higher end accommodation can be even more expensive than in the UAE. “Whatever is luxury is luxury,” says Dr Fabio Scacciavillani, chief economist with Oman Investment Fund in Muscat.

“People here can afford it.”

Of course, the main reason why taxis are so expensive is the lack of regulation. Drivers are allowed to charge whatever they want and the meters in the few taxis that do have them are virtually never used, though there is a flat rate from the airport. The lack of customers means that attempts by foreigners to negotiate a fairer price receive quick push back. Some taxi drivers even have laminated cards with the inflated prices.

Mr Scacciavillani said taxi fares are not a good indicator for the strength of Oman’s currency. Price discrimination based on the passenger’s perceived ability to pay means that westerners and other foreigners who appear wealthy are likely to be charged more.

The Omani rial may be strong but, for those in a taxi, it does not necessarily go far.