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Kuwait has allowed its main public oil company to run on a pure commercial basis without interference from the country’s public auditors in a bid to upgrade its performance.
An Emiri decree amending some provisions of Law No. 6 of 1980 establishing the Kuwait Petroleum Corporation (KPC) follows the recent Middle East war, which disrupted crude exports of Kuwait and other Gulf hydrocarbon producers after Iran closed the Strait of Hormuz.
“The decree aims to revise the legislative framework of KPC and amend certain provisions of its founding law to enable it to keep pace with changes and developments in the global oil industry, as well as to maximise oil revenues and maintain its leading regional and global position,” decree, carried by the state news agency this week, said.
KPC, which manages Kuwait’s hydrocarbon industry, will now operate on “commercial basis” and its budget shall be prepared “in accordance with commercial budgeting practices and modern accounting principles,” the decree said.
The Arabic language daily Alseyassah quoted an unnamed oil official as saying the state bureau’s control of KPC finances had delayed important investment decisions and that the new system would allow the Corporation to expand sources of income.
“The Iran crisis has underscored the dramatic development in the oil market and the need for KPC to cope with such developments,” the official said.
The decree also gave KPC greater autonomy in managing its financial and administrative affairs by reducing the powers of the supreme petroleum council.
“SPC powers are transferred to KPC, mainly those pertaining to the management of the Corporation since they are not related to setting the country’s general oil policy,” it said.
“These powers include the approval of regulations governing the rules, procedures, and provisions for tendering, awarding, and concluding contracts of the Corporation and its wholly-owned subsidiaries, whether directly or indirectly.”
Oil Minister and KPC Chairman Tariq Al-Roumi, affirmed on Monday that the issuance of the decree represents a qualitative leap in developing the legislative framework governing the corporation's operations.
Al-Roumi noted that the amendment comes more than 46 years after the original law was issued, enhancing the corporation's ability to keep pace with the rapid changes in the global oil industry and enabling it to maintain its leading position and to maximize oil revenues.
“The amendments, which have now come into effect, reinforce the commercial nature of the corporation and its management according to modern commercial principles, which will enhance performance efficiency and strengthen the ability to achieve sustainable returns,” he added.
(Writing by N Saeed; Editing by Anoop Menon)
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