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No plans to divest stake in govt firms: Al Hinai

By A. E. James

MUSCAT: There is no immediate plan to divest stakes in state-owned companies, as the government wants to maintain control on companies that produce essential commodities and the global financial markets are yet to recover from global meltdown, said a senior official at the Ministry of National Economy .

"I don't think the time is right for divesting government stake because the world is still in crisis.

Financial markets across the globe have not yet fully recovered to normal levels and the global economy is still in bad shape. Also, when we hear about food crisis here and there, government wants to maintain its stake in Oman Flour Mills to stabilise prices of essential food items. This is in the interest of consumers," Abdul Malik bin Abdullah Al Hinai, undersecretary for economic affairs at the Ministry of National Economy told Times of Oman.

Oman government still holds majority 51 per cent each stake in Oman Flour Mills and Oman Cement Company.

"The government will not divest its stake in these two companies in the near future. These comapnies are producing goods that are important and used by people in their day-to-day life."

Al Hinai also noted that there is no urgency to privatise other majority state-owned companies since these units are working efficiently. "Most of the state-owned companies are running on a commercial basis. For instance, the state-owned power utility company borrowed money from the market (for expansion)," he noted.

Al Hinai said that the state wants to keep its holding for developmental reasons as well.

2008 plan

In June 2008, when the stock market was buoyant, the Oman government said there was a proposal to partially dilute holdings in several majority state-owned firms, including Oman Flour Mills Company , Oman Fisheries, Oman National Transport Company, Majan Glass and Oman Chromite. Majan Glass has even informed the stock market authorities on the government's proposal to divest its stake in
the company.

Referring to privatisation of private utilities, Al Hinai also said that the authorities are planning to sell stakes only in power generation firms in the near future and "it is too early to decide on privatising transmission lines."

"In most countries, government still owns the grids and transmission lines because of developmental reasons." The government owns only three generation companies -- Wadi Al Nizzi, Al Ghubra and Salalah -- at present.

It appears that the authorities will re-consider selling a partial stake in Oman Telecommunications Company (Omantel) only after stability comes back to financial markets. A government move to sell its 25 per cent holding in Omantel to a strategic investor was put on hold in the aftermath of the global financial crisis, which dampened the scope of getting a reasonable premium. Oman government owns 70 per cent holding in Omantel.

Al Hinai also noted that unlike other countries, there are not many companies to privatise in Oman.

© Times of Oman 2010