29 March 2017
A E James
Muscat: A comprehensive privatisation programme for state-owned companies and standalone investment banks are pre-requisites for developing a vibrant capital market in Oman, according to a top-level official at the Capital Market Authority (CMA).

Although the Oman government had indicated plans for divesting stakes in several state-owned firms, the whole process was slow and several companies are yet to announce a proper plan for disinvestment. 

“I don’t think we are going to see a vibrant capital market without a comprehensive and clear privatisation programme by the government,” Sheikh Abdullah bin Salim Al Salmi, executive president of CMA, told the Times of Oman.

Earlier, he said the market regulator would ask the ministry to come out with a five-year plan for disinvesting its stake in government companies through initial public offerings. This will help investors get clarity on the timeframe for such investments.

“This was discussed in Tanfeedh discussions. The authorities should come up with a five-year programme to let the market know that the government intends to offload its stake on certain dates,”Al Salmi noted.

The number of companies to be privatised will be decided after carefully considering the present financial status of such companies. The Ministry of Finance had said a couple of years earlier that the government planned to divest stakes in at least 11 state-owned companies to raise funds to reduce deficit and improve efficiency, according to an earlier report.

Also, the CMA chief said the Sultanate’s capital market will be able to flourish only with the formation of standalone investment banks. “It is a must. In Oman, we lack standalone investment banks,”

As part of the move, the authorities have already started initial work for selling a 49 per cent stake in the Muscat Electricity Distribution Company (MEDC).

Also, in an attempt to enhance efficiency and facilitate smooth privatisation of state-owned firms, the government has transferred its stakes in several firms to either sector-specific holding companies or investment funds. These holding companies are Oman Food Investment Holding, Oman Global Logistics Group and Oman Oil Refineries and Petroleum Industries Company, while the funds include the Oman Investment Fund.

© Times of Oman 2017