Government to retain 75% stake in Kuwait Airways – Move sounds death knell for privatization plan

KUWAIT: The National Assembly’s financial and economic affairs committee and the government yesterday reached a deal in principle for the need to raise the government’s stake in Kuwait Airways to 75 percent and make it the national carrier, a measure expected to delay or even kill the airline’s privatization plan. The move also excludes potential investors such as Jazeera Airways.

The privatization law, issued in 2008, stipulates to privatize the carrier by selling a 35 percent stake to a strategic investor, 40 percent to be given to citizens, 20 percent to the government and five percent to employees. Under the new proposal, the remaining 20 percent will be offered to citizens and five percent to current and retired employees.

Secretary of the committee MP Mohammad Al-Jabri said Communications Minister Essa Al-Kandari agreed in principle to raise the government stake in Kuwait Airways to 75 percent, which means the privatization plan will be dead. Jabri said that the amendment is required due to the fact that Kuwait Airways’ value has increased to around KD 2 billion after its plans to purchase 25 Airbus and 10 Boeing planes, which will make it difficult for local companies to purchase a strategic stake.

Previous proposals put the government’s stake at 20 to 40 percent and allowed strategic investors to own up to 35 percent. Kuwait’s low-cost carrier Jazeera Airways on May 31 said it filed an interest to acquire 35 percent stake in the state-owned carrier. The new proposal would exclude domestic carrier competitors as potential bidders.

The committee and the government also reached an understanding to establish a shareholding company for the recruitment of domestic helpers

Jabri said the committee will vote on the two draft laws in the next session, which could mean that the Assembly is not expected to debate them until the next term opening late October. Jabri said the maids committee will be established with the participation of the pension agency, Kuwait Investment Authority and the cooperative societies union, all of which have agreed to take part.

The public authority for minors’ affairs also agreed to own a stake provided that the proposed company must comply with Islamic sharia. He said that the ministries of defense and interior in addition to national guard have delayed expressing an opinion to take part or not until the next meeting.

Owners of the current private recruitment offices will be excluded from taking part in the new company, whose capital will range from KD 3-5 million, Jabri said. The company will not aim to make profits, Jabri said. The company was proposed in a bid to help cut costs for the recruitment of domestic helpers from abroad, which has skyrocketed in recent years. Meanwhile, the legal and legislative committee yesterday rejected to lift the immunity of MPs Nabeel Al-Fadhl, Hamad Al-Harashani and Mohammad Al-Barrak.

The committee also prepared the study necessary to refer article 111 of the constitution to the constitutional court for interpretation. The article refers to immunity enjoined by lawmakers during summer recess or when the Assembly is not in session and states that MPs will not lose their immunity during the summer recess and other long breaks. But a number of MPs have demanded that such immunity must be maintained, especially for those who continue to work with various Assembly panels during the holidays. They called for sending the article for interpretation to the constitutional court.

By B Izzak

The post Government to retain 75% stake in Kuwait Airways – Move sounds death knell for privatization plan appeared first on Kuwait Times.

Leave a Reply

Your email address will not be published. Required fields are marked *