JEDDAH, 21 October 2004 — Saudi Arabia has made rapid progress in its bid to privatize state-owned five star hotels in the country, according to Finance Minister Dr. Ibrahim Al-Assaf.
“We have estimated their assets and will soon present some ideas to the Supreme Economic Council on the privatization process,” he told Al-Eqtisadiah, a sister publication of Arab News.
However, the minister pointed out that it would take some time to float the hotel shares to investors. He also disclosed plans to sell government shares in some other private ventures.
He called on the investors to get correct information from official sources.
Earlier, addressing the Shoura Council, Al-Assaf said the Kingdom had made strides toward the privatization of 20 major sectors including air transport, water, desalination, electricity and railways.
“The Supreme Economic Council has shown keen interest in the issue of privatization,” the minister told the 120-member Shoura Council.
Two years ago the government announced plans to gradually privatize 21 sectors including government hotels. Other sectors targeted for privatization include telecommunication, civil aviation, highway management, railways, sports clubs, municipal services, health services and desalination plants.
The privatization list, which was released by the Cabinet in 2002, also includes operation and management of social service centers, Saudi employment services, agricultural services, establishment of health facilities and transportation of patients.
In May this year, the Cabinet also decided to privatize the National Company for Cooperative Insurance (NCCI) and Saudi Arabian Mining Company (Maaden). The move is expected to bring at least SR550 million to the national coffers.
SEC Secretary-General Dr. Abdul Rahman Al-Tuwaijeri said the council’s meeting decided to sell state shares worth SR250 million owned by Public Investment Fund in NCCI, which has a capital of SR500 million. The General Organization for Social Insurance and Pension Fund are expected to maintain their stake (25 percent each) in the Kingdom’s only official insurance company, which has five million shares, each with a nominal value of SR100.
Maaden, which is fully owned by the government, is expected to sell 40 to 50 percent of its stake in the precious metals sector in which the company has invested SR600 million. Maaden was established with a capital of SR4billion in 1997 in order to utilize the Kingdom’s rich mineral resources. The company, which is involved in many projects, is now estimated to be worth several billion dollars.
Efforts are also under way to privatize the Kingdom’s desalination plants established at a total cost of SR54 billion.
“All the desalination plants are scheduled for privatization and will be presented to the private sector once the studies are completed,” said Fehaid Al-Sharief, governor of the Saline Water Conversion Corporation (SWCC).
“All the desalination plants are scheduled for privatization and will be presented to the private sector once the studies are completed,” he said.
The governor said the privatization would cover not only the existing plants but also future projects.
“We are working seriously to implement the decision taken by higher authorities on the privatization of SWCC,” the governor said, adding that the corporation has already set up a strategic planning team to set out the privatization program.