Iraq plans to help raise funds to build the Faw container port terminal on the Gulf by selling shares in the company behind the project, as low oil prices squeeze the government's finances, officials said on Saturday.
The terminal has been planned for several years and suffered numerous delays, but it has taken on increased urgency in the past 18 months as the rise of Islamic State of Iraq and Syria (ISIS)- which controls large swathes of Iraq and Syria - has made it more difficult to move supplies by land to and from neighbouring countries.
Officials plan to create a company - Basra Holding Co - that will own 51 percent of the project in Faw, in the southern province of Basra. They will sell shares in the firm to help raise the roughly $1.4 billion needed for the first phase, the head of the provincial council, Sabah al-Bazoni, told Reuters.
Iraq relies on oil sales for 95 percent of its revenue, and its finances have been hammered as crude prices have more than halved since June last year.
Bazoni said officials had not yet decided whether to list the holding company on the Baghdad bourse or sell the shares in private transactions. The sale would first be open to residents of Basra province and then the rest of the Iraqi population, he added, without specifying a timeframe or how many shares would be sold.
Iraqi officials are seeking an international partner for the terminal, who will take a 49-percent stake and carry out the construction work, according to Bazoni and project director Asaad Abdul Raheem.
The partner would operate the terminal for 30-40 years, under Iraq's plan, recouping its investment and making a profit, before relinquishing its stake to the Basra council, they said.
Chinese companies have already expressed interest in building and operating the port, Bazoni said, without giving further details.
Iraq’s other ports on the Gulf, Umm Qasr and Khor al-Zubair, do not have the capacity to handle all its container traffic, and the country relies on ports in neighboring Kuwait for much of its non-oil trade.
The first phase of the Faw project provides for building six quays, five for containers and one for general cargo, according to Raheem. It will be able to handle about 2 million containers a year, he said.
While no timeframe has been given for the completion of this phase, and no plans for subsequent phases have been public, Raheem said the land allocated for the project was big enough for 80 quays.