COMMUNICATIONS MINISTER OUTLINES WAY FORWARD ON

UNCLAS KUWAIT 001161

SENSITIVE
SIPDIS

DEPT FOR NEA/ARP, EEB/CIP/BA

E.O. 12958: N/A
TAGS: ECPS EAIR ELTN PGOV KU
SUBJECT: COMMUNICATIONS MINISTER OUTLINES WAY FORWARD ON
MAJOR PROJECTS


1. (SBU) Summary: Kuwaiti Minister of Communications Abdul
Rahman Khalid Al-Ghunaim told Ambassador on November 23 that
the recent steep drop in oil revenues and the global economic
crisis would not affect implementation of the previous
ministry's priority projects, the government's overall 'Five
Year Plan.' Ghunaim outlined three projects in a program to
partially privatize Kuwait's international exchange network,
fiber optic network and a copper network. He also confirmed
a telecommunications regulatory agency is expected to be
established next year and welcomed U.S. telecom sector
participation. He said the airport expansion project and
approval of three rail projects were proceeding apace with
expected completion dates of 2016 and 2018 respectively. The
privatization of Kuwait Airways Corporation was also on track
with the valuation process expected to be concluded in five
months. Ghunaim also said that a new tender for all of the
nation's postal services would be offered shortly. According
to the Minister, all of these projects were uncontroversial
for members of Kuwait's notoriously obstructionist National
Assembly. End summary.


Telecommunications Projects
--------------


2. (SBU) Kuwaiti Minister of Communications Al-Ghunaim
detailed the current state of the Government of Kuwait's
(GoK) major telecommunication projects during a November 23
meeting with Ambassador. Ghunaim said the Ministry, working
with French and British consultancies, had completed the
first phase of a project to partially privatize the MoC's
international exchange network, its fiber optic unit and
copper network unit. He said all three divisions would be
"spun off" as public companies with the GoK holding a 24%
stake in each, the operating partner owning 26%, and 50%
publicly traded. Dr. Adel Zerai, Advisor to the Minister,
stressed that the GoK wanted to encourage the participation
of U.S. telecommunications companies in these projects.


3. (SBU) The Minister also noted the MoC had proposals before
the National Assembly to establish a telecommunications
regulatory agency (TRA). Dr. Zerai said the agency would be
established by a telecommunications consultancy and operated
by the MoC. He added that the MoC expected legislation
establishing the TRA to be put before the National Assembly
by March 2009. Ghunaim said he believed the National
Assembly supported the telecomm projects and he did not
expect opposition.


Infrastructure Projects
--------------


4. (SBU) In response to Ambassador's question on the impact
of falling oil revenue on projects contained in the GoK's
recently announced 5-year plan, Ghunaim said the Higher
Planning Council was reviewing the plan and that the Council
of Ministers had given initial approval for the plan's
budget. He added that despite the recent steep decline of
oil prices, since Kuwait based its budget revenue projections
on a rate of $50 per barrel, he did not anticipate budgetary
obstacles to hinder the progress of the projects.


5. (U) Ghunaim elaborated on three proposed rail
transportation projects involving monorail, metro and GCC
railway systems. He said all three projects would be
established under separate companies with a budget of
approximately $250 million dollars. The companies would be
governed by a public authority. He said the routes for the
projects had been identified and included a segment to
Boubiyan Island, Um Qasr and linking with the Iraqi rail
system in southern Iraq. He added that the GCC rail project
was expected to be completed by 2018.


Kuwait Airline Privatization
--------------


6. (SBU) Ghunaim said the privatization of Kuwait Airways
Corporation (KAC) was proceeding smoothly. He observed that
KAC had collected all of the necessary documentation to allow
Gulf Investment Corporation and Rothschild, the two
consultancies analyzing the valuation of KAC, to complete
their work. He said he expected the consultants to finish
the valuation process in five months.


Airport Expansion
--------------



7. (U) Ghunaim said the expansion of Kuwait International
Airport was budgeted at 211 million Kuwaiti Dinar (USD 790
million) and would be able to accommodate the anticipated
increase in passenger volume from the current seven million
persons annually to 50 million passengers in 2025. He said
the project was to be completed by 2016. He said the new
third runway would help the development of Kuwait's three
Airline companies and also be able to accommodate the Airbus
A-380.


Postal Service
--------------


8. (SBU) Ghunaim said a large tender for postal services will
be submitted to the Central Tender Committee shortly and that
it would specify three contracts, each administering postal
services for two of Kuwait's six governorates. He added that
a new Postal Authority would be established to oversee the
service providers.


Comment
--------------


9. (SBU) The elephant in the room, of course, is whether the
government, and the Minister, will survive a threatened
dissolution given serious, ongoing frictions between the
Prime Minister, primarily, and National Assembly members.
The minister expected a decision in this regard would be made
by the GoK leadership within the week. End comment.








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