Schools and Water are Priorities as Saudi Launches Privatisation Plan

School buildings and desalination facilities producing fresh water will feature in some of the first deals as Saudi Arabia transfers a quarter of its economy to private hands.

Turki A. Al Hokail, Chief Executive of the National Centre for Privatisation and Public-private Partnerships, was speaking as the Government formally launched a vast privatisation program, focusing on 10 sectors of the economy.

Riyadh is working on new rules to attract foreign as well as local capital to the scheme and will address potential investors’ concern about their level of control over projects, including their ability to hire and fire workers, Hokail said.

“This is a big change in the economy as the Government is moving from operating projects to monitoring and regulating them,” he added. “Operations will be the job of the private sector.”

Riyadh announced recently that it aimed to generate 35 billion to 40 billion riyals ($9 billion to $11 billion) of non-oil state revenues from the privatisation program by 2020; part of a drive to cut Saudi Arabia’s reliance on oil exports.

Some of the money is to come from asset sales in sectors such as education, water, telecommunications and health care. Some of those sales could occur through initial public offers of shares, while others might be direct transfers.

The rest of the money would come from public-private partnerships (PPPS) deals in which private companies invest in infrastructure and are paid to operate it for a period, before eventually transferring it to the state.