Plans are underway for Bahrain Petroleum Company (Bapco) to operate independently, but still be government-owned, said Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa.

He told MPs that parliament's proposal to have Bapco's finances separated from the government has already been approved by the Cabinet and was under study, our sister newspaper, the Gulf Daily News reported.

"All of the possible scenarios will be presented to parliament and most likely the government will repay what it owes to Bapco through instalments in a similar fashion to what it has done with Alba in the past before moving it to Mumtalakat," said Shaikh Ahmed.

"The funding will be done through borrowing and arrangements in that regard will be made whenever parliament approves our plans."

Shaikh Ahmed stressed that the government's dependence on oil and gas revenues, which has increased to 88 per cent, has to end.

"We need capital to diversify our sources of income, borrowing is the easiest solution, but if we are looking for plans in the long-run then we should have a strong financial infrastructure that is capable of accommodating change," he said.

"When we speak about real contributions then we should have solid contributors."

He said fees collected by the government do not cover the cost of services provided and is much lower than many countries across the region.

"We have a problem in our other sources of income considering that spending is more than the income," he added.

Shaikh Ahmed said the government needs parliament's support in redirecting subsidies.

"We want subsidies directed towards those in need and not everyone. It is illogical to give electricity, water and fuel services to international companies at the same rates as household domestic consumers," he explained.

"It is like giving free services to those companies, while we are striving to get more revenues to fund government projects."

Shaikh Ahmed was speaking as MPs rejected the closing budget statement for 2011, describing it as a showcase of the government's "failure" to carry out projects properly during that year. – TradeArabia News Service