Since nationalisation in the late 1990s, the government has embarked on a lavish spending programme at BAPCO. As part of the billion-dollar plans to upgrade and improve the facilities, the most important project is a $685m low sulphur diesel project (LSDP). The technologically advanced process will make BAPCO the only producer outside Europe able to produce diesel that meets the stringent regulations for sulphur content under EU regulations.
Whilst structural reforms, especially in the labour market, become increasingly pressing, it seems that the budgetary relief that Bahrain has enjoyed as a result of the Abu Safa arrangement has not been squandered. The costly nationalisation and upgrading of the oil infrastructure has meant the kingdom’s energy sector has benefited from investment and the much needed restructuring. Alongside efforts to attract further investment for downstream activities and stimulate services, if Bahrain can grasp the social nettle that lurks in its labour market, then Abu Safa could well become less vital to the budget.
Oxford Business Group
The whole world is awaiting what Bahrain is going to do to fix it’s labour market and prepare for the future. As the OBG concludes, a lot hinges on how both the government and the people of Bahrain treat this labour market reform and execute it, failure in that, especially that our traditional benefactor to the west has somewhat shut the oil taps now, will be disastrous.
