Aramco IPO could push others to list oil assets
‘How it separates assets, liabilities from those of the state will present a challenge’
Saudi Aramco’s initial public offering (IPO) could encourage other Gulf countries to list their oil assets, a leading regional economist said, but the oil giant must clear uncertainties over taxation, Opec policy and ownership of crude.
Nasser Saidi, a former economy minister of Lebanon, told Dubai Eye Radio in an interview broadcast on Wednesday that Aramco has to address how the company will separate its assets and liabilities from those of the state. “Many countries could follow in the region. [The] UAE I think could potentially be attracted to this,” Saidi said.
“We have long discussed the possibility that well-performing state enterprises could be listed, and potentially this could open the road for that,” Saidi, also a former chief economist and head of external relations at the Dubai International Financial Centre, added.
While Aramco is the world’s largest oil firm, the UAE, Kuwait and Qatar also hold major oil assets managed by state companies. The listing of Aramco, expected to be the world’s biggest IPO and to raise tens of billions of dollars, is a centrepiece of the Saudi government’s ambitious ‘Vision 2030’ plan to diversify the economy beyond oil.
When the plan was announced in June last year, it pledged to “transform Aramco from an oil-producing company into a global industrial conglomerate”.
Listing plans
The Saudi government plans to list up to 5 per cent of Aramco next year on the local bourse and international stock markets.
But for the plan to succeed, Saidi said Aramco must address issues related to governance, transparency and “who owns the natural resource wealth of Saudi Arabia”.
“The big issue really is one of public finances and separating out private ownership from public and state ownership,” he added.
Saidi also pointed to questions concerning the 20 per cent royalty and 85 per cent tax that Aramco pays to the government.
“There is a lot of uncertainty as to what sort of taxation regime will be applied to Aramco, whether or not resources under the ground will be included and how do you separate out those from those above and other activities,” he said.