Saudi Arabia to set up Centre for Privatisation

24 November 2016

New body to manage Vision 2030 change

Saudi Arabia’s Council of Economic & Development Affairs (Ceda) has approved the establishment of a Centre for Privatisation, according to Fahad AlDehais, partner & general manager of Dhabaan & Partners in Riyadh, associated with the UK’s Eversheds.

Bylaws for the new body, under the Ministry of Economy & Planning, are expected to be fast-tracked over the next few months.

They can then be adopted by the Council of Ministers and approved by the king.

The Centre for Privatisation will oversee the privatisation framework, identifying and preparing assets for sale, as well as public private partnerships (PPP).

It will coordinate work currently being carried out by individual ministries and government bodies. This has led to fragmentation, and lack of coordination as each body followed its own priorities and outside advice.

The National Transformation Plan includes a much larger role for the private sector in the Saudi economy, and implementation is now the main priority.

“The Centre for Privatisation seems to be an initiative to expedite things,” says AlDehais. “In Saudi Arabia each ministry has recently had the authority to work alone and the Ministry of Economy & Planning assisted backstage to the most extent possible within the boundaries of the approved policies, the National Transformation Plan and the 2030 Vision. But too much time has been wasted on privatisation planning so far, so now it seems the Ministry of Economy & Planning has been mandated to take the lead.”

The office builds on Saudi Arabia’s 2002 privatisation roadmap, which resulted in the stock market flotation of the Saudi Electricity Company (SEC) and the Saudi Telecom Company (STC). However, the privatisation of other state-owned entities such as the Saline Water Distribution Company (SWCC) did not go ahead.

“It is not exactly replacing the existing and previously approved privatization roadmap, but adding, for example, the Ministry of Health and its assets such as hospitals, the Ministry of Education and its assets such as schools,” says AlDehais. “They will also look at issues such as public sector workers at these companies and any crossing paths, intertwined fields or cross ownerships.”

The board of the new centre is expected to be led by the Minister of Economy & Planning Adel bin Mohammed Fakeih. The board may also include other ministerial stakeholders such as the Ministers of Finance and Labour.

“There are many different stakeholders so it is better to have one centre which is responsible,” says AlDehais. “Rather than having the SEC restructuring or energy companies under the Ministry of Energy and the SWCC under the Ministry of Environment each independently, there will be one comprehensive plan and coordinated efforts across the spectrum. This will ultimately better serve the 2030 Vision and faster achieve in a practical manner the privatisation plans speculated within.”

This would give the Centre for Privatisation high level authority and allow the different stakeholders to coordinate.

Until the Centre has been fully established however, it is unlikely that any privatisation plans, for example the carve-out and sale of SEC and SWCC assets, can get approval from Ceda.

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