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
0

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)


Palestinians in financial crisis after Israel, US moves

Updated 22 March 2019
0

Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.