Privatisation programme begins with factories lease

24 October 2003
The privatisation of the state-dominated economy began in mid-October when the Ministry of Industry & Minerals issued tenders for private investors to take over and operate 18 state-owned factories on long-term lease agreements. The ministry is seeking international investors to take over the operation of the factories in return for investment in the facilities and guarantees worker job security. The ministry is understood to have a list of over 100 factories it is to offer.

The 18 factories are spread across the country, although the majority are in the north. Among them are four textiles factories, one dairy, five heavy engineering facilities and a cigarette factory. Although the ministry has prepared investment profiles of each factory with detailed technical and economic information, potential investors are also invited to visit the facilities. The deadline for bids for the leases, which have a minimum term of five years, is late November. The ministry intends to award the concessions by mid-December.

As well as guaranteeing workers jobs investors are also required to guarantee they will complete the full term of the lease. The lease terms also state that the concessionaire cannot change the specialisation of the factory, although it will be allowed to diversify the factory's operations.

'This is a kind of compromise. Initially the plan was for a full-scale sell-off but strong opposition to that plan has led to this long lease option. I think one of the things that will attract investors is the fact that the US has a policy to buy Iraqi. That means there is a guaranteed market for these factories' products,' says an Iraqi source.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications