Oman Air to be split up to form 3 firms
Muscat, March 21, 2014
Oman plans to break up government-owned Oman Air, the country's loss-making national airline, this year, Minister for Financial Affairs Darwish Al-Balushi has said.
"Oman Air is losing money, so it's going through a restructuring phase. We will have three companies instead of one," he said. "The restructuring will be within the current year of 2014."
It will remain a state-owned company, at least for now, but will be split into three parts that would include shipping and ground operations, he said.
Al-Balushi said Oman is likely to privatise one more state company this year, after offering a minority stake in telecommunications operator Omantel.
"After we are done with Omantel's IPO (initial public offering) ... the next state-owned company to be privatised will be announced," Al-Balushi told reporters after meeting his Qatari counterpart, Ali Sherif al-Emadi, in the Omani capital. "We are looking at privatising a number of companies."
Al-Balushi said the oil and gas sector was not included. But he said Qatar might be interested in investing in hydrocarbons, as well as in tourism.
Oman's government, which faces widening fiscal deficits in coming years, has said it would revive its privatisation programme to raise revenue and stimulate the private sector. The government owns more than 60 companies across various sectors, the minister said in September.
Omantel said earlier this week the first part of the government's sale of a 19 percent stake was 1.99 times subscribed. The sale is expected to raise around $570 million for the sultanate, which is trying to increase its non-oil income and fund rising public spending.
Oman, a small non-OPEC oil exporter, has smaller energy reserves than its wealthy Gulf neighbours. Increases in spending to improve social welfare and create jobs has made it difficult to manage state finances.
The International Monetary Fund warned in June that the country would need to constrain spending growth and raise non-oil income in the medium term to keep its finances sustainable.
The IMF predicted in October that Oman's state budget could slip into a deficit of 0.2 percent of gross domestic product in 2015, widening to as much as 7.1 percent in 2018. - Reuters