public_sector – Syria Report

On May 9, the Syrian President issued Decree No. 98 merging the General Company for Roads and Bridges and the General Company for Water Projects into a new entity called the General Company for Roads and Water Projects.

Damascus’ strategy to merge state owned companies in a bid to optimise costs dates back to the early 2000s. However, this new merger is part of a policy adopted by the Council of Ministers since October 2023, aimed at developing these institutions and companies, and enhancing their service, developmental, and economic roles. Regarding issues related to housing, land and property rights, Decree No. 98 of 2024 follows Decree No. 3 of 2024, which established the General Company for the Manufacturing and Marketing of Cement and Building Materials – Omran, replacing the General Establishment for Cement and Building Materials and the General Establishment for Domestic Trade in Metals and Building Materials.

Decree No. 98 of 2024 does not explicitly mention any role for the new company in implementing social housing projects. However, the merged companies have previously, and continue to, undertake infrastructure and service works related to social housing. It is expected that the new company will continue to complete projects previously assigned to the merged companies. The decree stipulates that the new company will assume the rights and obligations of the two former companies and will continue to operate under their existing regulations until new executive instructions are issued.

According to Decree No. 98, the objective of the new company is to develop advanced infrastructure for public entities, optimise the use of human and material resources and technical expertise in the construction sector, maximise the use of engineering machinery and production centres, and ensure coordination and integration between existing construction companies.

Chapter Three of the decree outlines the specialisations and duties of the company: these include construction contracting and public works, both within Syria and abroad. This encompasses the construction of roads, ports, airports, bridges, tunnelling, and dams, divided into two main activities: road and bridge works, and water project works.

The new company is endowed with legal personality and financial and administrative independence, with a capital of SYP 52 billion. It is headquartered in Hama and is affiliated with the Ministry of Public Works and Housing. The company operates as a contractor under state guarantee and engages in all activities specified in Decree No. 98 of 2024 and Decree No. 84 of 2005, which regulates the work of public sector construction institutions. This allows it to establish joint ventures under the investment law in place in the country.

The decree specifies that the company has a supervisory role in several tasks, including providing information and statistics for the construction and contracting sectors. On the operational level, the company will manufacture and import building materials related to its work.

General Company for Roads and Bridges

The General Company for Roads and Bridges was a public sector construction company functioning as a general contracting company and affiliated with the Ministry of Public Works and Housing. It was established in 2003 with a capital of SYP 2 billion under Decree No. 168, already by merging several state-owned companies, including Qasioun and the General Company for Roads (Rodco.) The General Company for Roads and Bridges enjoyed financial and administrative independence, with its work overseen and its objectives set by a Board of Directors composed of nine members, including the Minister of Housing.

Although the primary goal of establishing the General Company for Roads and Bridges was to develop infrastructure for the road transport sector, it diversified its operations into other sectors such as railways, silos and mills, asphalt mixing, and precast concrete. It also undertook some social housing projects. According to official data, the company had been involved in projects in Russia, Lebanon, and Sudan. Before 2011, the company owned 1,757 pieces of engineering, construction, and service equipment. However, like other construction companies, it experienced a decline in operations after 2011, suffering losses, equipment theft, and project damage.

The company completed some infrastructure work at the new Hama University in 2021, valued at SYP 13 billion. According to a statement by its General Manager, Mohammad Assi, reported by the semi-official newspaper Al-Watan in May, the company’s plan for 2023 was to generate revenues of SYP 194 billion, although it exceeded this budget. It also earned profits of SYP 25 billion. Mr Assi added that the company’s revenue plan for the current year was SYP 153 billion.

The General Company for Water Projects

The General Company for Water Projects was a public sector company established in 2003 by Decree No. 167, through the merger of the General Company for Land Reclamation and the General Company for Irrigation and Drinking Water (Rima) The company aimed to construct dams, irrigation and land reclamation projects, irrigation pumping stations, drinking water projects, water filtration plants, sewage projects, and sewage treatment plants. Affiliated with the Ministry of Public Works and Housing, it was originally headquartered in Raqqa before temporarily relocating to Tartous in 2013. The company had legal personality and financial and administrative independence.

Despite not being specialised in housing projects, the company completed several residential projects, notably the construction of youth, savings, and workers’ housing in residential towers 12, 14, and 16 in the Al-Wafaa suburb of Hama city. It also undertook the prefabricated housing units “Sandwich Panel” project for the victims of the February 6, 2023 earthquake in the Lattakia governorate and the youth housing project in Lattakia city.

On January 6, Syrian President Bashar Al-Assad issued Legislative Decree No. 3, establishing the General Company for the Manufacture and Marketing of Cement and Building Materials – Omran. This company replaces two previous institutions: the General Establishment for Cement and Building Materials, which was affiliated with the Ministry of Industry, and the General Establishment for Domestic Trade of Metals and Building Materials (also known as “Omran”), which was affiliated with the Ministry of Domestic Trade and Consumer Protection.

Under Decree No. 3 of 2024, these two institutions merged into a single company, enjoying financial and administrative independence. The company, headquartered in Damascus, is affiliated to the Ministry of Industry.

The old systems will continue to apply to the two former institutions for at least the next six months, pending the issuance of the implementing instructions for Decree No. 3 of 2024, according to a statement from the Minister of Industry.

Decree No. 3 consists of 28 articles divided into seven chapters, including the new company’s goals, competencies and tasks, as well as its management, branches and capital. The declared objectives are to achieve integration of the production and marketing chains, to meet market needs and to create development opportunities. The company’s tasks include:

Securing raw materials for cement production and its development.
Covering market needs.
Preparing marketing plans.
Direct distribution of cement.
Maintaining a strategic reserve and determining current and future needs.

The company has a general manager accountable to the Board of Directors and the Minister of Industry. The prime minister’s decision forms the Board of Directors, which consists of nine members. Its tasks include signing contracts that exceed the general manager’s authority, increasing the company’s capital and hiring experts as deemed appropriate.

The decree outlines four regional branches for the company: the Southern Region Branch, which includes the governorates of Damascus, Rural Damascus, Daraa, Suweida and Quneitra; the Central Region Branch, comprising the governorates of Homs and Hama; the Coastal Region Branch, encompassing the governorates of Lattakia and Tartous; and the Northern and Eastern Regions Branch, covering the governorates of Aleppo, Idlib, Raqqa, Deir-ez-Zor, and Hassakeh.

The company’s capital is SYP 2 trillion, consisting of the net assets of the two merged institutions and allocations provided by the state. The company’s resources come from its fixed assets and profits from its activities, as well as loans and credit facilities provided to it, state allocations, and the sale of fixed assets. The company uses its revenues to fund its plans and expenses, with any surplus revenues being deposited into the Public Debt Fund under the Ministry of Finance.

It is not expected that the merger of these two institutions will reduce property prices in Syria. Decree No. 3 of 2024 does not stipulate the abolition of the public sector’s monopoly over the distribution and pricing of cement nor the introduction of competition in the cement market. Instead, it transfers this responsibility from one public institution to another.

It is also not expected that cement will be included in the social support system when the state is reducing other forms of support. Decree No. 3 of 2024 is part of the government’s approach to merging and restructuring institutions with similar functions to achieve greater profitability.

The Council of Ministers discussed a draft of this legislation at the end of November 2023, primarily because the Omran institution monopolises commercial profits as a marketer of cement, while cement-producing companies suffer from losses, according to the pro-government site Syria Daily News.

Under Decree No. 1300 of 1975, amended by Decree No. 177 of 1979, a productive institution named the General Establishment for Cement and Building Materials was founded. Over time, this establishment oversaw ten production companies that produce cement and building materials. These include Adra Cement and Building Materials Company in Damascus, Rastan Cement and Building Materials Company in Homs, the Syrian Company for Cement and Building Materials in Hama, Shahba Cement and Building Materials Company in Aleppo, the Arab Company for Cement and Building Materials, also in Aleppo, Tartous Cement and Building Materials Company, Aleppo Company for Asbestos Cement Products, the National Company for Cement and Building Materials in Damascus, the Arab Company for Porcelain and Sanitary Ware in Hama, and the Economic Unit for Manufacturing Spare Parts in Aleppo. Many facilities of these companies suffered significant damage during the war from 2012-2018.

Meanwhile, the General Establishment for Domestic Trade in Metals and Building Materials – Omran was established by Decree No. 163 of 1970. This intermediary institution’s role was to market building materials produced in the public sector, including cement, iron, wood, paints, and ceramics. Since its inception, Omran has monopolised the trade of cement in Syria. It is authorised to set cement prices, methods and conditions of distribution, and it earns 10 percent of its sales value as profits.

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