Saudi Arabia seals 6 private sector deals worth $3.5bn, plans many more

General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (File Photo: Reuters )
Updated 14 March 2019
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Saudi Arabia seals 6 private sector deals worth $3.5bn, plans many more

  • Hokail said 50-70 percent of the companies involved in each of the six deals so far were foreign

LONDON: 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 privatisation 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 privatisation 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 privatisations that are in the pipeline.
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 privatisation 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 privatisations, 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)


‘Don’t be too optimistic’: Huawei employees fret at US ban

Updated 26 May 2019
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‘Don’t be too optimistic’: Huawei employees fret at US ban

  • This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei
  • Another critical partner, ARM Holdings, said it was complying with the US restrictions

BEIJING: While Huawei’s founder brushes aside a US ban against his company, the telecom giant’s employees have been less sanguine, confessing fears for their future in online chat rooms.
Huawei CEO Ren Zhengfei declared this week the company has a hoard of microchips and the ability to make its own in order to withstand a potentially crippling US ban on using American components and software in its products.
“If you really want to know what’s going on with us, you can visit our Xinsheng Community,” Ren told Chinese media, alluding to Huawei’s internal forum partially open to viewers outside the company.
But a peek into Xinsheng shows his words have not reassured everyone within the Shenzhen-based company.
“During difficult times, what should we do as individuals?” posted an employee under the handle Xiao Feng on Thursday.
“At home reduce your debts and maintain enough cash,” Xiao Feng wrote.
“Make a plan for your financial assets and don’t be overly optimistic about your remuneration and income.”
This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei as a result of the ban.
Another critical partner, ARM Holdings — a British designer of semiconductors owned by Japanese group Softbank — said it was complying with the US restrictions.
“On its own Huawei can’t resolve this problem, we need to seek support from government policy,” one unnamed employee wrote last week, in a post that received dozens of likes and replies.
The employee outlined a plan for China to block off its smartphone market from all American components much in the same way Beijing fostered its Internet tech giants behind a “Great Firewall” that keeps out Google, Facebook, Twitter and dozens of other foreign companies.
“Our domestic market is big enough, we can use this opportunity to build up domestic suppliers and our ecosystem,” the employee wrote.
For his part, Ren advocated the opposite response in his interview with Chinese media.
“We should not promote populism; populism is detrimental to the country,” he said, noting that his family uses Apple products.
Other employees strategized ways to circumvent the US ban.
One advocated turning to Alibaba’s e-commerce platform Taobao to buy the needed components. Another dangled the prospect of setting up dozens of new companies to make purchases from US suppliers.
Many denounced the US and proposed China ban McDonald’s, Coca-Cola and all-American movies and TV shows.
“First time posting under my real name: we must do our jobs well, advance and retreat with our company,” said an employee named Xu Jin.
The tech ban caps months of US effort to isolate Huawei, whose equipment Washington fears could be used as a Trojan horse by Chinese intelligence services.
Still, last week Trump indicated he was willing to include a fix for Huawei in a trade deal that the two economic giants have struggled to seal and US officials issued a 90-day reprieve on the ban.
In Xinsheng, an employee with the handle Youxin lamented: “I want to advance and retreat alongside the company, but then my boss told me to pack up and go,” followed by two sad-face emoticons.