A consortium of the local Abdulhameed Al-Sarraf & Partners and the US’ Baker & McKenzie has won a contract to provide legal advisory services on the privatisation of state carrier Kuwait Airways Corporation (KAC).

State-run Kuwait Investment Authority (KIA), which is overseeing the privatisation of the company, told the pair they had won the contract on 25 June. Seven local/international consortiums submitted bids for the deal on 8 June (MEED 18:6:2010).

The firms will be asked to prepare a preliminary report on the legal ramifications and processes required for the sale of the carrier by the end of August and KIA hopes to start bidding for the company by the end of the year, sources with close ties to the authority tell MEED.

The US’ Goldman Sachs is providing valuation services for the airline along with the UK’s Rothschilds.

Kuwait’s National Assembly, or parliament, voted to sell 40 per cent of the loss-making carrier to the public and 35 per cent to a private investor in January 2008. The government had hoped to divest the airline by early 2010, but was stalled by a combination of the financial and political crises which gripped the country in 2008 and 2009.

The privatisation is part of wider plans to bring private sector investment in to the country to ease pressure on the government, which employs 80 per cent of the local workforce, and to create opportunities for the transfer of technology and skills from outside of Kuwait (MEED 25:6:2010.

The National Assembly passed a first draft of a new privatisation bill on 13 May which would allow the government to sell state-owned companies and assets to international investors.

However, senior bankers and lawyers in the country say that a series of clauses in the bill, including a ‘golden’ controlling share for the government, the retention of Kuwaiti staff on their current benefits for up to five years, and mandatory compliance to Sharia law, will make it difficult for investors to make former government entities profitable (MEED 2:6:2010).