Public-private partnership (PPP) and privatisation is one of the cornerstone policies of Vision 2030, the Saudi government’s strategy for transforming and growing the economy. In particular, they will deliver new infrastructure, improved services and increased participation of the private sector.
The programme began to bear significant fruit in 2019: seven PPP tenders were closed, expected to generate $2.4bn (SR9.1bn) in new investment, as well as the first privatisation by strategic sale, of the Saudia medical service.
The momentum has continued into 2020, despite the constraints imposed around the world by the Covid-19 pandemic. So far this year, three PPP tenders have closed, as well as privatisations of two flour mills, and a further eight PPPs and two privatisations are currently being tendered.
Growing PPP momentum
There is a healthy pipeline of more than 100 upcoming projects at various stages of preparation, with more being added all the time. These provide significant opportunities in all sectors, for private investors, suppliers, service providers, financiers and advisers.
As many emerging markets face uncertain prospects and economic pressures as a result of the global pandemic, Saudi Arabia offers a large market, economic and financial strength and a growing track record of successful PPPs and privatisations.
These efforts have begun to come to fruition, and 2019 was a record year, with seven PPPs in the water, health and transport sectors reaching commercial and financial close and now proceeding to execution.
Two new reverse osmosis desalination projects at Shuqaiq and Rabigh will add more than 1 million cubic metres a day (cm/d) to water production capacity, while wastewater treatment plants at Taif, Jeddah airport and West Dammam will add 950,000 cm/d of water treatment capacity.
In transport, a contract was signed for the upgrade and expansion of the Jeddah Port South container terminal that will allow the port to handle Ultra Large Container Carriers (ULCCs) and expand its capacity by 50 per cent, from 2.4 million 20-foot equivalent units (TEUs) to 3.6 million TEUs.
In health, two management contracts were signed to cover the provision of dialysis services across the country, and the first privatisation – covering Saudia Airlines medical services – was completed by strategic sale and is expected to lead to the construction of a new 422-bed hospital in Jeddah.
The south container terminal PPP project at Jeddah Port will expand its capacity by 50 per cent
Programme advancement in 2020
Despite the disruption caused by the global Covid-19 pandemic, several milestones have been reached in 2020. To date, three PPP tenders have closed: two for new desalination plants at Jubail and Yanbu that will add another 1 million cm/d, and the tender for the second cargo terminal at King Khaled International airport.
In July, the strategic sales of two government flour mills were also completed, and the tender for the remaining two is currently at the prequalification stage.
There are eight ongoing PPP tenders that have expanded the sectoral coverage of Saudi Arabia’s PPP programme to include municipal services (more than 6,700 parking spaces in Riyadh), education (two tenders for construction and facilities management of a total of 120 primary schools) and social services (eligibility screening for social care and special needs).
In the health sector, there are tenders to provide radiology and imaging services at government hospitals, construction of a new 244-bed hospital at Al-Ansar and construction of staff accommodation for King Faisal Specialist Hospital.
The King Faisal Specialist Hospital and Research Centre is located in Riyadh
In water, there is an ongoing tender for the privatisation of the Ras al-Khair power and water plant, which has a capacity of more than 1 million cm/d of water production and 2.65GW of electricity.
More than 100 projects are currently being prepared covering most sectors, including water, health, transport, municipalities, social services and more. Many of these are expected to launch in 2020 and 2021, maintaining the programme’s momentum over the medium term.
New projects are meanwhile constantly being developed and added to the list and the outlook for private investors, suppliers and service providers is attractive.
About the article
The above information was submitted to MEED by Saudi Arabia's National Centre for Privatisation (NCP), which invites interested investors to register to find out more through the NCP Investor Portal.
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