LONDON (Reuters) - Saudi Arabia has completed six public-private partnership deals in the past two months worth around $3.5 billion, and plans at least 23 more by 2022 despite some delays in its plan to engage the private sector, the head of its privatization body said.
The government’s aim to attract investment into everything from education to sports, a cornerstone of its effort to trim dependence on oil revenues, has been mired by some holdups and fallout from the murder of journalist Jamal Khashoggi.
“It’s better for the process to take a little bit longer to ensure it is done properly,” said Turki al-Hokail, CEO of the National Centre for Privatisation and Public-Private Partnership (NCP), which is overseeing the process, told Reuters after a visit to London to meet prospective investors.
“We are gearing up for a lot of transactions either in the process or in the pipeline and we want to make sure the process is done correctly,” he said. “The privatization program has so far awarded six projects in two months and is committed to its timetable and initiatives as per the delivery plan.”
The six projects just completed include four water projects, one in healthcare and one in transport. Under such public-private partnership arrangements, private investors build infrastructure and are paid to operate it for a period before it reverts to the state.
Twenty-three more such deals are planned for the water sector by 2022, among more than 40 public-private partnership deals and privatizations that are in the pipeline.
Khashoggi’s killing by Saudi agents in October tested Riyadh’s relations with Western allies.
Without commenting on the impact of Khashoggi’s death on foreign investment, Hokail said 50-70 percent of the companies involved in each of the six deals so far were foreign. Foreign banks had loaned 70-80 percent of the financing for each deal.
He did not identify the foreign or domestic investors in the deals or provide a breakdown of their stakes. Companies from France, Spain, China, Japan, the United States, Scandinavia, Egypt and the United Arab Emirates were among those involved.
Riyadh previously set a goal of aiming to generate 35 billion to 40 billion riyals ($9.3 billion to $10.0 billion) of non-oil state revenues from its privatization program by 2020. Some of that money would come from asset sales, while the rest would come from public-private partnerships.
But that drive has had some false-starts. The most high-profile was the shelving of proposals to float shares in oil giant Aramco, although officials said the sale would happen by early 2021.
Still, plans to sell flour mills, one of the first big privatizations, are moving ahead.
The request for proposals should be launched in several months, with companies from the United States, India, the Netherlands, Spain and other European countries among the more than 10 consortia that have pre-qualified, he said.
A significant plank in laying out how partnerships between the government and the private sector will work is the public sector participation law, which was expected to be approved during the second half of 2019, he said.
($1 = 3.7502 riyals)
Reporting by Tom Arnold; Editing by Peter Graff