JEDDAH, 12 October 2006 — The board of directors of Saline Water Conversion Corporation (SWCC) met in Riyadh yesterday and decided to convert SWCC into a holding company in order to privatize the organization.
The board meeting, which was chaired by Water and Electricity Minister Abdullah Al-Hussayen, made the decision after weighing three options, the Saudi Press Agency said quoting an official statement. The meeting also authorized the governor of SWCC, Fehaid Al-Sharief, to carry out restructuring of the organization in preparation to privatize it.
SWCC runs about 30 desalination plants on the Kingdom’s western and eastern coasts to supply 60 percent of the country’s water requirements. Saudi Arabia is the world’s largest supplier of desalinated water.
Yesterday’s SWCC board meeting was dedicated to discussing the organization’s privatization plan in the light of reports presented by consultants after conducting detailed studies that took about eight months to complete.
The meeting discussed three options. The first option was to convert SWCC into a joint stock company with private sector participation, selling part of its shares in an initial public offering. A strategic partner was to be appointed under this option to provide administrative and technical support.
The second option, which was accepted by the board, included converting SWCC into holding company with other affiliated firms and with the participation of the private sector. Under the third option, SWCC was to be converted to a holding company with regional companies and participating the private sector through agreements of special rights, the statement said.
The Kingdom has already started privatization of desalination plants. Last November it awarded an SR9.1 billion ($2.43 billion) contract to a consortium of Saudi and Malaysian companies to set up Shuaiba-3, a dual purpose independent water and power plant (IWPP) designed to supply 194 million gallons of water daily as well as 900 megawatts of electricity.
The project is one of the four IWPPs approved by the Supreme Economic Council. The others are Shuqaiq-2, Ras Al-Zour, and Jubail-3, which will be carried out by the private sector on build-operate-transfer basis.
The total cost of the four projects is estimated at SR30 billion ($8 billion). The private sector will contribute 60 percent of their cost while the state-owned Public Investment Fund will have a 32-percent stake and Saudi Electricity Company will own 8 percent.
The combined production capacity of the four projects, which are expected to boost the Kingdom’s total desalination capacity by 80 percent, will be 492 million gallons daily and 4,500 megawatts.
