Iraq Plans to Sell Shares in $1.3 Billion Grand Faw Port Plan

Holding company structure to sell shares banned since Saddam
Basra city government talking with China, U.S. companies

Iraq aims to sell shares to the public in the $1.3 billion Grand Faw container port first proposed in 2011 before falling oil prices crimped the governmentís ability to support the project on its own.

The local government in Basra in southern Iraq where the port is planned will seek permission in the next few days from the central government to set up a holding company to sell the shares, Sabah Al-Bazooni, head of the Basra provincial council, said in an interview. Iraq has banned the holding company structure since the days of the late toppled leader Saddam Hussein.

Iraq originally proposed Grand Faw in 2011 for $17 billion, all covered by the government and including an oil export platform. Since then, Brent crude prices have dropped more than 70 percent, leaving the government with a budget deficit estimated at 24 trillion dinars ($20 billion) for next year. The oil export platform has been dropped.

Plans for the port have led to tensions with neighboring Kuwait, which is building the Mubarak Al-Kabeer container port project also on the Persian Gulf. Tensions persist since Iraq under Hussein invaded Kuwait in 1990. Iraq had expressed concern that the Kuwaiti port may hamper maritime access to Grand Faw. Plans for the ports aim to become a gateway for Gulf products going to Turkey and Europe.

The Basra provincial council wants to list the holding company on the Iraq Stock Exchange, with the public shares representing a 25 percent stake, Al-Bazooni said. The local government would own 26 percent and foreign investors 49 percent, he said.

The council is in talks with U.S. and Chinese companies to invest in the projects, Al-Bazooni said. He declined to identify them. The port would have 25 to 30 platforms for containers.