RIYADH , 6 June — A new economic strategy adopted by the Supreme Economic Council will boost the Kingdom’s privatization drive and expand the role of the private sector and foreign investors, Minister of Finance and National Economy Ibrahim Al-Assaf said yesterday.
The strategy, approved on Tuesday, outlines the procedures of privatization, sectors on offer to the domestic private sector and foreign investors and a timetable for transferring certain services to private businesses, Al-Assaf told reporters.
Revenues from the selloffs will be used to pay for the staggering public debt, estimated at $168 billion at the end of last year, Al-Assaf added. The debt is entirely domestic.
"The strategy defines methods of privatization. In some sectors like ports, only services will be privatized. Privatization will be total in other sectors," like the railways, the minister said.
The strategy calls for selling government stock holdings in Saudi companies in accordance with a plan devised not to hurt the stock market, said Al-Assaf.
A major move planned before year-end is the sale in public subscription of a part of Saudi Telecom Co. which has a capital of $3.2 billion. Privatization of services will be on the basis of either build-operate-transfer (BOT) or build-operate-own.
The SEC, meeting under Prince Abdullah, the regent, also decided to invite the private sector into a multi-billion-dollar railway project. It agreed to transfer the state-run postal services to an establishment run jointly by the private and public sectors as a prelude to privatization.
The private sector was also invited to participate in the Kingdom’s giant water desalination plants amid reports that the government is preparing to cut support for the heavily subsidized water sector.
The council approved setting up the Petroleum Services Co., a holding company to develop a domestic energy services industry with a capital of $200 million.
Assaf said the sale of state shares in Saudi companies would boost the role of the bourse and increase the number of investors. Saudis have enough savings locally and overseas to absorb the offered shares.
