Saudi Arabia set for $11bn asset-sale blitz after slow start
Riyadh, Saudi Arabia - Saudi Arabia could be in for a busy year of asset sales if the kingdom sticks to its plans. The government hopes to generate about US$11bn by 2020 through its privatization program that includes the sale of stakes in utilities, soccer clubs, flour mills and medical facilities. The sales are key to the country’s efforts to wean the economy off oil, but so far have been dogged by delays - most notably the initial public offering (IPO) of oil giant Aramco.
“With the current status of the initiatives and the progress the privatization Supervisory Committees are making, we see these as attainable targets,” according to the National Center for Privatization (NCP) and PPP, which is responsible for most of the privatizations expect certain deals like Aramco and the stock exchange. “Progress in most cases is going according to schedule.”
Saudi Arabia plans to com- plete the sale of four flour milling companies and Saudia Medical Services facilities this year.
Crown Prince Mohammed bin Salman told the world in 2016 that he meant business when announcing the sale of shares in Aramco in what would be the world’s biggest IPO. But it was pushed out from 2018 to late 2020 or early 2021 so the company, known formally as Saudi Arabian Oil Co, could complete a deal to buy a US$70bn stake in the kingdom’s biggest petrochemical company Sabic.
Plans to sell four flour milling companies by Saudi Grains Organization this year will come three years after the idea was announced, and well past the initial target of the end of 2016. Potential buyers had until November to submit bidding qualification applications.
The sale of the US$7.2bn Ras Al Khair power plant on the east coast is expected to be done by 2020.
The kingdom's plans to privatize soccer clubs started in 2016. There are currently no “obstacles” that could derail the timeline to sell the clubs by 2020, the NCP said. Turki al Alshikh, former head of the Saudi Sports Authority, predicted in June that the 16 clubs could raise US$800mn to US$1.5bn. The NCP spent the past year developing the legal and commercial framework to cover the use of advertising, sponsorship deals and broadcast rights, it said.
The NCP said it will also open tenders for municipal assets related to commercial-land for development, renewable energy PPP projects in solar and wind, parking centers; a second cargo license station at King Khalid International Airport, the establishment of an agriculture company and a PPP for independent schools, as well as school buildings on a build-maintain-transfer basis.