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Oil report

FACTBOX-Economic reforms at stake in Kuwait elections

May 16 (Reuters) - Kuwaitis are voting in parliamentary elections on Saturday, two months after the ruler, Sheikh Sabah al-Ahmad al-Sabah, dissolved the Islamist-dominated parliament to end a long-running dispute with the government.

The world’s fourth-largest oil exporter wants to diversify and revitalise its economy, hit by the global crisis, but several reforms have been delayed in parliament due to the row.

The elected parliament has the power to approve laws and Kuwait’s budget. It can also cancel major deals and projects.

Following is the status of key reform plans:

GOVERNMENT-APPROVED

-- The last cabinet resigned in March, paving the way for the ruler to approve a 1.5 billion dinars ($5.18 billion) economic stimulus package through emergency legislation. The plan, which faced some opposition in the last parliament, still needs to be approved by the new assembly. Analysts say it is more likely to be passed by the new parliament when it convenes for the first time in June because implementation will already be under way.

-- In December, the government launched an investment fund worth at least 1.5 billion dinars to shore up the stock market after it was hit by the global financial crisis.

-- Last year, the central bank saved Gulf Bank GBKK.KW, the fifth-largest local lender by market value, and ordered the bank to restructured. The Kuwait Investment Authority, the country's sovereign wealth fund, bought a 16 percent stake in Gulf Bank when it made an emergency rights issue.

PASSED BY PARLIAMENT

-- Parliament passed a law in October to guarantee bank deposits after the central bank stepped in to save Gulf Bank following derivatives losses worth $1.4 billion.

-- Parliament approved in January 2008 the sale of loss-making national carrier Kuwait Airways [KA.UL] within two years.

-- Deputies approved in 2007 a government-sponsored bill to cut tax on foreign firms to a flat 15 percent from up to 55 percent. Gains on the stock market will be tax-free for foreign investors.

-- Parliament also approved a bill to outsource more activities such as warehousing facilities.

PENDING APPROVAL

-- Kuwait cancelled a tender to build the 615,000 barrels-per-day Al-Zour refinery, the country’s fourth, after deputies mounted opposition, citing alleged tender violations. Kuwait said it had not cancelled the project, but did not say when it would issue a new tender. The new cabinet and parliament are to decide on the fate of the $15 billion refinery.

-- Parliament has yet to pass a law establishing a financial markets regulator to supervise and bring more transparency to the Arab world’s second-largest bourse.

-- Project Kuwait, a plan to pump more oil from northern fields to help boost output capacity, has never made it beyond committee level because of opposition from some MPs to the involvement of foreign companies in the vital energy sector. Kuwait’s fields are off-limits to foreign investors. The multi-billion-dollar project has been on hold for over a decade.

-- The government wants to speed up the sale of state firms and increase the private sector’s role in investments. Kuwait also wants to privatise the oil sector to revitalise the country’s largest source of revenue. But parliament has yet to approve a privatisation bill which has been in the works for more than a decade.

-- The government has also said it wants to allow foreigners to own property as they are allowed to do in some other Gulf countries, but no details have emerged yet.

-- Kuwait is seeking to create a regulator for the telecommunications sector but no bill has been passed by parliament so far.

Reporting by Rania El Gamal; Editing by Lin Noueihed

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