JEDDAH, 22 March 2006 — Saudi Arabia’s strategic privatization program received a shot in the arm yesterday with the Supreme Economic Council (SEC) approving the executive program to privatize Saudi Arabian Airlines.
The SEC, an apex decision-making body chaired by Custodian of the Two Holy Mosques King Abdullah, also approved the principles regulating the private sector’s participation in water and sewage projects.
SEC Secretary-General Abdul Rahman Al-Tuwaijeri said the council endorsed the executive program for the expansion and upgrading of the Haj Terminal at King Abdul Aziz International Airport in Jeddah.
Other major decisions taken by the SEC were: approval to establish special funds by the Health Ministry and the General Organization for Technical Education and Vocational Training to promote their activities; and endorsement of the principles regulating the government’s online operations.
“The new decisions taken by the SEC will strengthen the economy, increase investment, boost privatization and ensure greater participation of the private sector in various economic activities,” the Saudi Press Agency quoted Al-Tuwaijeri as saying.
The government intends to divest control of state-run corporations and institutions with a total value of $800 billion within the next 10 years, according to Khalid ibn Musaed Al-Saif, chairman of the international trade development committee at the Council of Saudi Chambers of Commerce and Industry.
Saudi Arabian Airlines has already taken a series of steps for its privatization. The process is currently focused on transforming non-core units including catering, ground handling services and maintenance as well as the Prince Sultan Aviation Academy in Jeddah into commercial units and profit centers.
Crown Prince Sultan, deputy premier and minister of defense and aviation and chairman of the airline company, signed a contract on Oct. 8, 2000 to conduct studies on Saudia’s privatization.
According to Khaled Ben-Bakr, director general of Saudia, the airline has completed two of the three phases of its privatization plan. The first phase included studies on the airline’s financial, administrative, operational and organizational aspects as well as restructuring of its administration, finance and operation.
Saudia posted a record revenue of SR14.6 billion last year, which is SR1 billion more than the figure of 2004, Ben-Bakr said, adding that it also achieved a net profit of SR500 million in 2005.
Spelling out the national carrier’s achievements over the past year, Ben-Bakr said Saudia transported more than 16.8 million passengers in 2005, with an increase of about one million passengers compared to 2004. It carried more than one million pilgrims from 84 international destinations to the Kingdom during this Haj season.
Saudi Arabian Airlines started out in 1945 with a single twin-engine Dakota DC-3 HZ-AAX given to King Abdul Aziz as a gift by the then US President Franklin D. Roosevelt.
This was followed months later with the purchase of two more DC-3s, and these formed the nucleus of what in later years was to become one of the world’s largest airlines.
The sale of 30 percent of state-owned Saudi Telecom in an initial public offering at the end of 2002 represented the first big step in the government’s ambitious plans in which some 20 major economic sectors will be opened up for private sector participation.
The range of activities targeted includes water and drainage, desalination, air transport and aviation services, railways, roads, seaport services, postal services, municipal services such as cleaning and waste disposal and collection of revenues, building schools, printing of educational books and the management of social welfare organizations, health facilities including some hospitals, government-owned hotels and the future railway network.
