Bahraini MPs want to fully privatize some of the country’s biggest companies in which the government has a stake, pumping billions of dinars into public sector coffers. Parliament yesterday proposed an initial 30 per cent cap on the amount of shares the government could have in non-oil enterprises through Bahrain Mumtalakat Holding Company, its sovereign wealth fund.
However, MPs also want a clause that gives the government three years to completely sell off its shares in those companies. It would open up some of Bahrain’s largest firms to private sector investment, including Gulf Air, Alba, Bahrain Airport Company (BAC), Batelco and the National Bank of Bahrain (NBB).
However, the amendment to the Private Companies Law excludes oil and gas-related industries, as well as Bahrain International Circuit. It will now be drafted as a law by the Cabinet and must first be approved by parliament and the Shura Council before taking effect. Parliament financial and economic affairs committee chairman Abdulrahman Buali said the current capital of all companies under Mumtalakat was around BD7 billion.
“It means that the government can free up some of its funds,” he said. The government currently has varying stakes in non-oil companies overseen by Mumtalakat, including 100pc ownership of Gulf Air and BAC, a 69.38pc stake in Alba and a 45pc stake in NBB. Mr Buali suggested that selling off some of the government’s prime assets would not only provide much-needed revenues, but also promote private sector investment in the country. A 75pc drop in the oil price since mid-2014 – from $115 per barrel to below $30 per barrel – has impacted national revenues and forced the government into a cost-cutting drive.
Austerity measures have included the raising of fuel prices, the axing of meat subsidies, a rise in power and water rates from March 1 and increased kerosene and diesel prices, in addition to raising the debt ceiling to BD10bn to allow increased borrowing – despite concerns over growing public debt. However, MP Abdulrahman Bumajeed argued that a sell-off of government shares in some of the country’s biggest operators could actually hurt their performance.
“Privatisation, or the reduction of government shares as a first step, will harm the power of those companies and affect employment there,” he said. “If we fully privatise those companies it means we will be unable to monitor their activities – we are already facing difficulty in that. “We are already probing Mumtalakat’s affairs and should wait for recommendations before approving these amendments.”
Those sentiments were echoed by an Industry, Commerce and Tourism Ministry representative who attended parliament’s weekly meeting yesterday. “Our (the government’s) main role in those companies and shareholdings is to ensure that those companies are solidly structured and able to strengthen the economy, while allowing investment in support of companies that are beneficial to the economy,” he said. “The amendments will not benefit the economy or the people.”
However, parliament first vice-chairman Ali Al Aradi said other countries had adopted a privatisation strategy. “Bahrain depends on oil for 90pc of its revenues to fund its economy,” he said. “I believe opening up the companies (to private investment) will be a golden opportunity for new revenues (from the sale of shares). “There are qualified economists in Bahrain who would like such an opportunity – and we don’t want to be here in 10 years time with the government seeking further borrowing to meet its commitments.”
By Mohammed Al A'Ali
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