MP responding to GF loan request.
Al Wasat Newspaper
Sunday 18th March 2012
Local Affairs Correspondent: Hassan Al Madhoob
(Translated from Arabic Text)
Khalid Abdel Aal, a member of the Parliamentary Committee set up to study the financial situation of Gulf Air's , declared that «the government wants to hand over the loan of BD 664 million to Gulf Air in just 25 days from the day of a request submitted to the House of Representatives late last week».
According to Abdel Aal, «through my discussions with the deputies, I think that most of them would refuse to agree to pass this loan so quickly and without the Government providing a feasibility study or define a commercial strategy in return to the parliament loan approval, and especially since the deputies had already agreed to pass the previous grant to Gulf Air, worth BD 400 million in less than a year ».
He added «up to now, there is no conclusive justification to persuade the lawmakers to approve the new loan, and especially since the government says there are no guarantees that such loan (BD 664 million) will lead to the transformation of the company into profitability ».
Abdel Aal, added «Ministers of Finance and Transport told us explicitly that there are no guarantees, and that the losses will continue, but they stated that the loan is important because the company's closing down will hurt the national economy!».
He pointed out that «since the company received the BD 400 million loan in less than a year; it has recorded losses of BD 200 million, and projected annual loss will range between 80 and 100 million dinars.” The MP continued “ is there any greater impact on the national economy than the losses suffered by the company?».
The member of the Parliamentary Committee continued «they (the government) want the parliament to approve the loan and deliver it to Gulf Air in a period of 25 days , while they had a whole month since the formation of the Parliamentary Committee, in which they did have some requests , but did not indicate to us their intention to request an additional appropriation to inject additional funds to the company. Despite the fact that we repeatedly asked them to provide us with all the details and plans related to the company’s recovery strategy, the government surprised the committee at our meeting last Thursday (March 15, 2012) by submitting this request during the meeting and without responding to our requests for information».
Abdel-Aal said «that is a deliberate move by the government to divert the blame on the House of Representatives , by putting us in the status quo with an ultimatum, either approve the loan and open additional credit facilities or the company will close down and the economy will suffer and the national unemployment number will increase in the process».
«the conditions of Representatives for approval of any adoption of additional financial aid package to the company, is quite clear to the government , which are : 1) the complete change of the Board of Directors , because they are part of the causes of the company’s losses, as well as executive management, 2) submission to the committee the current operational performance data of the company, and 3) clearly defined plans on when it will turn to profitability», Abdul Aal stressing «We are not against the survival of the company, But very much against the wastage of public money under the pretext of helping the economy ».
He continued to say «We are well aware that the problems are not caused by the new administration, as during the past 10 years, Gulf Air lost over 1 billion dinars, how long will it continue to lose? and if the argument for keeping the company is a national employment, then retirement program that encompasses handsome financial rewards for all Gulf Air national (local) staff , will not cost the company much more than BD 40 million».
He continued «the House of Representatives has been pressurizing the Minister of Housing on his ministry’s plans for providing housing for the thousands of citizens on the waiting list , while each year thousands of other applications for housing are accumulating . Each housing unit built by the ministry « Housing »cost 40 thousand dinars, the loan that the government demands for Gulf Air with such haste and priority is capable of building 16,600 homes, which is able to solve the third of housing requirement in Bahrain ». The MP added «we have been asking for a small increase in benefits for retirees in the public and private sector, but the government always rejects this proposal claiming that there is a deficit in the budget, if that is the case, then why add a new major deficit?».
Abdel-Aal, concluded by saying: «I refuse to meet this demand, and if the house is true to its oath and pledge towards serving the citizens , then I am sure that the majority will reject it». It is noteworthy that the government referred to the House of Representatives last Thursday a bill to open an additional appropriation in the state budget for fiscal year 2012 and provides for the opening of an additional appropriation in the general budget of the state (BD 691.350.000 dinars), of which BD 664,350,000 will be allocated to support Gulf Air , while BD 27 million is allocated for project expenditure budget of the Secretariat of the Supreme Council for Youth and Sports for the purpose of covering the expenses of the building of a new sports stadium.
It is pointed out that the deficit resulting from the implementation of the additional appropriation is to be covered by the borrowing of funds from Arab and Islamic financial institutions.