Apr 26, 2018
RIYADH — The privatization program announced by the Council of Economic and Development Affairs (CEDA) on Tuesday will focus on 10 government sectors, according to the CEO and board member of the National Center for Privatization and Public–Private Partnership (NCP) Turki A. Al Hokail.
The NCP-led initiative aims at boosting the contribution of local sectors to the national economy through a range of programs that seeks to transform the economy and make it more robust and dynamic.
The 10 government sectors identified for privatization include environment, water and agriculture; transportation; energy; labor and social development; telecommunications and IT; education; municipalities; health; housing; and Haj and Umrah.
Al-Hokail said the privatization program aims to enhance competitiveness, elevate the quality of service, contribute to economic development, and improve the business environment by privatizing government services.
The program also seeks to eliminate obstacles that may limit the private sector from playing a larger role in the development of the Kingdom’s economy, including developing and operationalizing the legal system related to markets, businesses and drafting a public-private-partnership law that will protect the rights of both users and investors.
“The privatization program is in the interest of Saudi citizens and will bring many benefits, and improve the investment climate. The program’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 program attractive. It will also allow the government to focus on overseeing and monitoring progress,” said Al-Hokail.
The privatization program aims to help increase the percentage of private sector contribution to the Kingdom’s GDP from 40% to 65%.
The National Center for Privatization & PPP established by Council of Minister’s resolution No. 355 is mandated to introduce privatization through the development of programs and regulations and put in place the necessary mechanism and tools to establish entities for private sector’s participation.
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.
Hokail said Riyadh was willing in principle to consider sales of 100 percent stakes in state firms, but decisions on each deal would depend on investor demand and market conditions.
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.
Authorities hope to offer a draft law on PPP frameworks for public consultation and feedback within a week or so, before implementing a final version later this year, Hokail said. He said authorities aimed by 2020 to complete five asset sales, 14 PPPs and four corporatization exercises, in which state projects would be converted into independent firms in preparation for their possible sale at a later date. — With input from Reuters
This article was first published by Saudi Gazette