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Privatization of Kuwait national airline gets nearer

As per the latest decision by a Parliamentary committee, the privatisation of national airline in Kuwait, will in-turn reinvigorate a long-stalled programme to open up ownership of other state enterprises, or, part of them to the private sector.

The National Assembly, in early January, announced that it had approved privatization of Kuwait Airways. Exact details of the planned sell-off were not released.

As per the privatization law on Kuwait Airways, that was passed in May last year, 35% of shares in a public-sector asset, which is being opened to private ownership, should be sold at auction to private or foreign investors. Another 40% would be allocated for sale to Kuwaiti nationals through an Initial Public Offering, while the state would retain 20% holding in the company, and the rest 5% will be distributed to employees of Kuwait Airways.

The Minister of Communications and housing in Kuwait, Salme Al Othaina, said that privatization will take up to three years, a period that would take into account a restructuring of the carrier to make it more viable and more appealing as an investment vehicle.

If privatization of Kuwait Airways does get underway, it would be one of the first of such sales, with the next target likely to be the national stock market.

In January, Kuwait’s Capital Markets Authority (CMA) signed a deal with HSBC Bank Middle East to monitor the privatization of Kuwait Stock Exchange. Under the terms set out by the government, 50 percent of the exchange is to be sold to listed companies with a cap of 5% to any single buyer, and balance to be given to Kuwaitis via n IPO.

But, the process hit a hurdle late last year, when it was discovered that a particular clause in legislation establishing the CMA, prevented the agency from involving commercial activities.

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