Yemen Pursues Its Privatization Program [Archives:2001/04/Business & Economy]

Mahyoob al-Kamali
The Government intends to pursue the privatization of public organizations perceived as a burden on the general budget, including the General Transportation Corp. and the Yemeni Drug Company.
Offers submitted by a number of foreign companies, including the Adam Smith Institute, Arthur Anderson, K.B.G, Sovrico, Max Wheel Stamp and R.S.M International, have been referred to an ad hoc committee made up of the Ministries of Industry and Transportation, the General Transportation Corp. and the Yemeni Drug Company, for evaluation.
Prime Minister Dr. Abdulkareem Al-Iryani, has recently indicated that the Aden Refinery Company would be the first to be privatized, as the government has finalized plans to sell 51% of its share in the Company.
Aims of Privatization
Through the cautious and slow process of privatization, the government is trying to activate economic development, create new job opportunities, attract local as well as foreign capital, and lessen the burden on the budget.
But how big is the Public Sector?
According to official statistics, there are about 140 public and mixed organizations in the spheres of industry, agriculture and marine wealth, employing more than 74 thousand people. A great part of this number deals with water, electricity, transportation, sanitation and banking, most of which does not burden the general budget! Moreover, about 11% of the total general revenue comes from those organizations according to Ministry of Finance information. So the inefficiency of these projects hardly reaches 10%.
The above table shows a gradual rise in government revenues from 2,449 million rials in 1990 to 20,830 million rials in 1999, indicating increasing profits. For this reason the Privatization Technical Office made a thorough study in cooperation with the WB, of the necessary strategies for privatization including face-lifting organizations to be privatized.
And the history of privatization?
So far 16 industrial institutions have been privatized. In addition, a number of farms and tourist projects have been privatized, rented or returned back to their owners.
As far as the financial sector is concerned, liquidization of the Industrial Bank has been finalized ahead of time and The Housing Bank and the Agricultural Bank are to follow. All shipment and unloading activities in the National Shipment Company have been privatized as well.
So what is the next step?
Three huge cement plants, managed by the General Cement Industry Corporation, are being offered for privatization. These are Bajel Factory which produces more than 200 thousand tons a year, Amran Factory which produces more than 603 thousand tons and Al-Barh Factory which produces more than 546 thousand tons a year. It is likely that only part of the governments share in these plants will be privatized so as to let the private sector shoulder part of their management and this is what is in store for the Aden Refinery Company. The government will offer 51% of its shares after carrying out a number of improvement projects such as building two crude oil reservoirs with a capacity of 20 thousand tons at a cost of USD 7,5 million.
In addition, it built 5 other reservoirs with a capacity of 65 thousand tons each at a cost of USD 8,5 million and expanded the capacity of the gas reservoirs from 2,500 tons to 7,000 tons, at a cost of USD 2,5 million, which helped increase production to more than 90 thousand barrels a day.
With the continuous process of privatizing some of its shares in leading institutions, the government is trying to attract capital to contribute to the relief of deficiency in a way that does not harm employees.

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