Saudi Arabia set for series of privatizations

[ PLEASE SEE ADS IN MY BLOGS [www.atozkerala.in , www.atozkerala.blogspot.com] RIYADH: Saudi Arabia plans a raft of privatizations across four key sectors by early next year, a panel at the Future Investment Initiative (FII) forum heard on Thursday. Economy Minister Mohammed Al-Tuwaijri said the state sell-off would span four sectors: Silos and grains, schools, health care and desalination. The minister was speaking on the final day of the Riyadh conference, in a panel session about the economic models for privatization. Saudi Arabia plans to sell a stake in oil firm Saudi Aramco, which could raise around $100 billion, plus a number of other privatizations worth as much as $200 billion. “Some sectors … are more ready than others,” Al-Tuwaijri told the FII discussion, which was moderated by Arab News business columnist Frank Kane. “Between now and first quarter of 2019, we are going to introduce … opportunities in silos and grains … We’re also going to introduce some assets for education (and) a couple of assets in health care … and also some desalination plants.” He added that there are several challenges to the pace of the privatization drive, including labor market policies and ”massive HR challenges.” Saudi oil giant Aramco is “absolutely ready” for its long-awaited IPO but several regulatory procedures remain, he added. Darren Davis, the acting CEO of Saudi Arabia’s largest mining company Ma’aden, said that privatizations can come in different forms. His own company, for example, is partly government-owned, and partly owned by private shareholders. “The Ma’aden case is an interesting example of the fact that privatization doesn’t come in one size, you need to be flexible in how you apply privatization,” he said. Fellow panelist Bassem Awadallah, CEO of consultancy Tomoh Advisory, agreed that there were different models to pursue when it comes to selling off state assets. “It is very healthy to have different models of privatization because countries need to develop their tailor-made solutions based on individual countries and sectors,” he said. “There is no model that fits all.” Awadallah pointed out that privatization programs had been partly tainted by perceptions of a lack of transparency and corruption in some other markets. “I think it is very important to explain to people what privatization is all about … People need to understand that this is not just another transfer of capital from the public sector to the private sector,” he said. “The more open, and the more transparent the governments are in terms of addressing these issues, and in explaining to people why we need to privatize … is really something that needs to be addressed.” Kirill Dmitriev, CEO of the Russian Direct Investment Fund, pointed to the sell-off of Russian assets. “We went through this painful privatization experience which we believe in the end was a success because now most of the successful private businesses emerged from those privatized entities,” he said.