Qatar has taken the first step towards the privatization of its public sector by transferring operation and maintenance of a power plant and water desalination plant to a public company, Reuters reports. The government has also signed an agreement covering the output of the plant.

The power and water sales-and-purchase agreement was signed with the Qatar Electricity and Water Company (QEWC). This agreement takes effect from July 1998. A World Bank report suggesting large scale privatization of other government-owned industries is also being reviewed by the government.

Following the partial privatization of QEWC, 43 per cent of the company, with a capitalization of $275 million, is owned by the government. The majority stake, 57 per cent, is owned by Qatari investors. The government will buy 80 per cent of QEWC’s output.

QEWC will operate the Ras Abu Fontas B power and water desalination plant. The power station has a generating capacity of 650 MW and produces around 125 000 m3 of drinking water each day.

Qatar’s two other power and desalination plants, Ras Abu Fontas A and Ras Abu Aboud, will continue to be operated by the ministry of electricity and water.

Qatari citizens are exempt from power and water tariffs but expatriates pay for both. The tariff is 40 per cent subsidized by the government, the minister of finance, economy and trade said.