Saudi Arabia completes first major state asset privatisation

Saudi Arabia has completed the privatisation of two flour milling companies, marking the first privatisation under the National Centre for Privatisation (NCP), a body established to divest state assets in line with the kingdom’s Vision 2030 economic reform programme

 

Saudi Arabia has completed the privatisation of two flour milling companies, marking the first privatisation under the National Centre for Privatisation (NCP), a body established to divest state assets in line with the kingdom’s Vision 2030 economic reform programme.

Under the Flour Mill privatisation programme, the kingdom’s Saudi Grains Organisation (Sago) is selling off four milling companies.

The first milling company was divested to the Raha al-Safi consortium for SR2.02bn ($538.7m), with the Al-Rahji-Ghurair-Masafi consortium awarded the third milling company for SR750m.

The completion of the sale and transfer of ownership to winning bidders is subject to  customary legal requirements and conditions, which must be met before the transaction is closed.

The second phase will include the sale of the second and fourth milling companies.

“The successful award of sale of the milling companies in the first batch reflects the attractiveness of Saudi Arabia's flour sector to investors … the qualification phase for the second and final stage of the privatisation of flour milling sector will be launched shortly,” a joint-statement from Sago and NCP stated.

India’s Synergy Consulting provided financial advisory services for the Raha-Alsafi consortium, the bidder awarded the contract for the first milling company.

In 2018, NCP announced it had prepared a $10bn Delivery Plan 2020 to meet the first phase of the kingdom’s privatisation goals under Vision 2030.

In the plan, targets were set to privatise four flour mills, sports clubs and post services and the Ras al-Khair power and desalination plant, the largest asset planned for divestment under the 2020 plan.

Energy & Utilities reported in June that Saudi Arabia’s Saline Water Conversion Corporation (SWCC) had invited firms to submit expressions of interest (EOI) for the privatisation of the existing Ras al-Khair desalination and power plant, a deal which is likely to be worth up to $3.5bn and represents the first major utilties plant that the kingdom is aiming to sell-off to the private sector.

Firms submitted EOIs for the programme by 25 June.

The Ras al-Khair plant has current operating  desalination capacity of 1.05 million cubic metres a day (cm/d) and a power generation capacity of 2.65GW. The plant has a current book value of SR12-13bn ($3.3-3.5bn), according to sources close to the privatisation programme.