Bahraini.TV

Bahrain’s government said it would step up its programme of privatising state-run commercial enterprises and services as part of its commitment to opening up the economy, boosting employment and attracting investment.

The privatisation programme has moved forward on several fronts, Sheikh Mohammad bin Issa Al Khalifa, the chief executive of the Economic Development Board (EDB), told local media on September 30. He said a series of studies has been commissioned to determine the state operations best suited for sale to the private sector.

Operations immediately under review include the post office, one of Bahrain’s oldest state services, and petrol stations, he said, with new legislation expected to be drafted to further open up the tourism industry to private investors.

One of the objectives of the privatisation process is to give Bahrainis a greater stake in the kingdom’s economy, said Sheikh Mohammed.

“Through its privatisation programme, the government seeks to benefit citizens and encourage them to own shares in privatised firms,” he said.

Bahrain first made privatisation a state policy through a decree issued in October 2002 that set out the parameters of the privatisation process and tasked the EDB and the ministry of finance and national economy with oversight of the programme.

The scope of the decree covered most elements of the country’s economy, taking in the tourism, communications, transport, oil and gas, service and manufacturing sectors, utilities, the ports and airport services, and postal services. The decree left the government’s options open by adding the provision that any other services or production sector could be included in the programme’s remit.

One of the driving forces behind the programme was the pressing need to extend Bahrain’s infrastructure and to develop land to meet the fast-moving economic development in the country, Sheikh Mohammad said.

It appears the government’s policy is paying dividends. On October 10, APM Terminal, the Denmark-based company which won the privatisation tender in 2006 to operate Mina Salman and the yet-to-be-completed Khalifa bin Salman Port for a term of 25 years, announced it was investing $62m in new equipment for the Bahrain Gateway facility at the new port. Due to enter service at the end of next year, the new port was part of the privatisation package covering Bahrain’s waterfront trade, which was auctioned off by the state.

The infrastructure being put in place at the Khalifa bin Salman Port will greatly increase cargo-handling capacity, allowing container vessels capable of carrying 6000 twenty foot equivalent units (TEUs) to be loaded or unloaded making it the only port in the region able to handle such ships.

In July last year, a consortium of the UK’s International Power, Suez Energy of Belgium and Sumitomo of Japan paid $738m for the power station and desalination plant in Hidd, which represents one third of the kingdom’s electricity generating capacity. Again, as part of its campaign to push for infrastructure development, the government stipulated in the sale agreement that the new owners build an additional desalination unit with a capacity of 270m litres a day, double the present output.

Even Bahrain’s famous national racecourse and the associated equestrian centre is in the process of being privatised, along with the attached land of 3.7m sq metres for development.

However, Bahrain’s privatisation process has at times met with opposition. On July 22, more than 250 post office employees staged a rally over the proposed privatisation of the service, tentatively scheduled for next year. They were particularly concerned about possible job losses and erosion of workers’ rights.

At the time, Sheikh Bader bin Khalifa Al Khalifa, Bahrain’s assistant undersecretary for post, rejected suggestions the postal service would be downsized if sold off. He said new services and an expanding market would mean more staff would be needed, not less.

“Once the postal service gets privatised, the capacity of workers will increase because in that time we will be working in more than one field,” he said. “We can introduce financial services, transport and logistics and all these will need more employees.”

By tying many of the country’s privatisation projects to infrastructure developments, the government is not only earning millions from the sale of various operations and ending the drain on the state’s coffers to keep them running but it is also meeting at least some of the needs of the economy for new infrastructure – at no direct cost.