‘Finmin’s decision on KPC profits is a death penalty for oil sector’
Future generations will curse us: Al-Joaan
KUWAIT CITY, May 4: Some individuals find it surprising that the request to transfer the retained profits of Kuwait Petroleum Corporation (KPC) to the public treasury was made during this period when the country is experiencing exceptional circumstances due to the coronavirus crisis; although the issue is old as it was raised years ago, specifically during the tenure of former oil minister Sheikh Ali Al-Jarrah in his interview with Al-Qabas daily on May 12, 2007, reports Al-Qabas daily quoting sources.
In the interview, Sheikh Ali revealed that KPC holds reserve revenue of $15 billion but it is not earning any profit.
Despite this, the proposed budgets of KPC have been approved without any amendment throughout the past years under successive governments through an agreement between the legislative and executive branches.
Sources pointed out it is surprising that the current and former lawmakers launched scathing attacks on KPC for retaining its profits, although they approved the corporation’s proposed budgets in the past years. Sources said this indicates that the performance of these lawmakers is overshadowed by the policy of reactions and affected by street pressure.
Mechanism
Sources explained the former oil ministers, who represented different political groups, proved the need for KPC to retain its profits until the time of former chief executive officer of KPC Nizar Al-Adsani who created a new mechanism through which the corporation resorted to borrowing to finance its projects even if it has enough funds for such purpose.
Sources revealed that in the event of withdrawal of funds from the corporation, the disaster will be great as the global lenders for oil sector projects will start to liquidate their guarantees and loans for fear of any exposure to KPC’s budget, which is suffering due to the low oil price and withdrawal of its financial solvency.
Sources asked: Who will finance the oil projects after withdrawing money from KPC? How will the corporation implement gigantic oil projects, which were delayed or marred by some mistakes due to poor coordination between the oil and electricity ministries?
Meanwhile, banking sector advisor Muhammad Al-Joaan stressed that the decision of Finance Minister Barak Al-Shitan to transfer the retained profits of KPC as one way to support the State financially is a death penalty for the oil sector. “The future generations will curse us if this is implemented,” he warned.
Al-Joaan said in a recent study: “We always criticize the State, saying it has a problem with administration. The finance minister’s action is one of the aspects of this problem, as he is supposed to take decisions based on institutional steps that reflect the country’s credibility and transparency. This is not the time for political maneuvers. The issue has no economic dimension and there is no room for uniqueness of decision under the shadow of governance.”