Saudi Arabia aims to raise $11bn from privatisation of state assets by 2020
The kingdom is targeting 14 investments through public-private partnership worth up to 28bn riyals
Saudi Arabia, the world’s biggest oil exporter, plans to raise up to 40 billion Saudi riyals ($11bn) in non-oil revenue from privatisation of some of the state assets by 2020 as it forges ahead with economic transformation efforts to wean itself off income from crude.
The kingdom expects to create up to 12,000 private sector jobs and generate net government savings in capital and operational expenses of 25bn-33bn riyals from the sale of government-owned entities and public-private partnerships, it said in a document carried by state-run Saudi Press Agency.
Crown Prince Mohammed bin Salman, who is also the chairman of the Council of Economic and Development Affairs, approved a privatisation programme, which will help boost the private sector’s contribution to the kingdom's GDP from 40 per cent in 2016 to 65 per cent by 2030.
“The Privatisation Programme aims to enhance competitiveness, elevate the quality of service and economic development, and improve the business environment through privatising government services,” said Turki Al Hokail, the chief executive and board member of the National Centre for Privatisation and PPP.
“It seeks to eliminate all obstacles that may limit the private sector from playing a larger role in the development of the kingdom’s economy, including developing and operationalising the legal system related to markets and businesses and drafting a public-private-partnership law that will protect the rights of both users and investors."
The privatisation initiative is one plank of the Saudi Arabia’s Vision 2030: an economic roadmap to lowering the country's dependence on the sale of hydrocarbons for revenues, creating private sector jobs and boosting the government's non-oil income. Part of the overarching vision is selling a 5 per cent stake in Saudi Aramco, the world's biggest oil producer, a public float that could raise as much as $100bn.
Riyadh plans to sell five state assets and initiate 14 PPP investments worth 24bn-28bn riyals, according to a government document released late on Tuesday. The programme, which targets 61bn riyals in non-government investments and contributes up to 14bn riyals to the GDP, has more than 100 potential initiatives in various segments of the economy, it said.
The privatisation and PPP programme covers sectors including housing, health care, education, municipalities, labour and social development, transport, energy, industry and mining, environment, water and agriculture, ICT and Hajj and Umrah, said Mr Al Hokail.
The programme includes selling 100 per cent of Ras Al Khair water desalination plant, and privatising the production segment of Saudi Saline Water Conversion Corporation, some transport services, and flour mills owned and operated by the General Silos and Flour Mills Organisation.
Other initiatives include transforming ports into corporate entities, and the King Faisal Specialist Hospital and Research Centre into a non-profit organisation.
“The Privatization Programme is in the interest of Saudi citizens, will bring many benefits, and improve the investment climate,” said Mr Al Hokail. “The programme’s strong governance foundation, effectively, will be a strong pull factor for global investors and large corporations because it sets the guidelines that will make the programme attractive. It will also allow the government to focus on overseeing and monitoring progress.”
Updated: April 25, 2018 06:52 PM