A LEGISLATION that forces companies owned by the government to transfer at least 50 per cent of their net profits to state coffers has been referred back to the National Assembly.
His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince Prime Minister, referred the legislation to National Assembly and Parliament Speaker Fouzia Zainal after it was drafted as a proper law by the Legislation and Legal Opinion Commission.
Review
During Parliament’s weekly session on Tuesday, it will be sent to the financial and economic affairs committee for review.
The move targets companies listed with the country’s sovereign wealth fund, Bahrain Mumtalakat Holding Company, and the Oil and Gas Holding Company (Nogaholding).
Both the entities would also be required to present financial reports of all companies under them within five months of the end of the financial year.
The Finance and National Economy Ministry previously warned MPs that the move was unconstitutional since it interfered with the affairs of independent companies formed differently from ministries and government bodies.
“Both the organisations have contributed funds to the 2019-2020 national budget following negotiations and without affecting their ability to meet financial commitments and intended development,” said the ministry.
It has requested MPs to rethink on the new legislation saying it deviated from the intention with which separate companies were set up.
The commission has also warned that the move would be catastrophic.
“This move would also mean amendments to the 2002 Budget Law as the government will be responsible to cover losses from state coffers as it receives surplus,” it said.
“Since state companies are independent, public coffers are spared damage should huge losses occur.
“Contributions are already being made to the budget by state-owned companies willingly.”
Oil Minister Shaikh Mohammed bin Khalifa Al Khalifa also told MPs previously that Nogaholding mostly transfers 100pc of its profits to the state coffers.
He said companies under its umbrella have directly borrowed amounts from across the world without any burden on the government.
“The new legislation will cause unnecessary confusion with money markets as it is considered interference and would make it difficult for us to finance our projects that include Bapco Refinery expansion amongst others and we have covered Banagas operation expansion by the company itself.”
Both Mumtalakat and Nogaholding have said that their contributions to the national coffers are dependent on liquidity and investment plans and opportunities.
“We have invested BD832 million since we were set up in 2006. We are self-governed and have not taken any government financing but depended on borrowing through $600m bonds issued last year and $500m collected through seven-year bonds this year,” said Mumtalakat.
“We are also committed to contributing to the national budget over the years.”
Nogaholding said its profits were low compared to government revenues.
“Our companies are already treated as a funding source for the government and it already takes money to fund state projects under the national budget; what is left is only operational and can’t be taken,” it said.
mohammed@gdn.com.bh
&uuid=(email))