• 1 day Iraq Begins To Rebuild Largest Refinery
  • 1 day Canadian Producers Struggle To Find Transport Oil Cargo
  • 1 day Venezuela’s PDVSA Makes $539M Interest Payments On Bonds
  • 1 day China's CNPC Considers Taking Over South Pars Gas Field
  • 1 day BP To Invest $200 Million In Solar
  • 2 days Tesla Opens New Showroom In NYC
  • 2 days Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 2 days Venezuela Sells Oil Refinery Stake To Cuba
  • 2 days Tesla Is “Headed For A Brick Wall”
  • 2 days Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 2 days IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 2 days Goldman Bullish On Oil Markets
  • 2 days OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 2 days Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 3 days Syria Aims To Begin Offshore Gas Exploration In 2019
  • 3 days Australian Watchdog Blocks BP Fuel Station Acquisition
  • 3 days Colombia Boosts Oil & Gas Investment
  • 3 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 3 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 3 days Aramco On The Hunt For IPO Global Coordinators
  • 3 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 4 days India Feels the Pinch As Oil Prices Rise
  • 4 days Aramco Announces $40 Billion Investment Program
  • 4 days Top Insurer Axa To Exit Oil Sands
  • 4 days API Reports Huge Crude Draw
  • 4 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 4 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 4 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 4 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 5 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 5 days Exxon To Start Reporting On Climate Change Effect
  • 5 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 5 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 5 days Forties Pipeline Could Remain Shuttered For Weeks
  • 5 days Desjardins Ends Energy Loan Moratorium
  • 5 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 6 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 6 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 8 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 8 days Mexico Blames Brazil For Failing Auction

Breaking News:

Iraq Begins To Rebuild Largest Refinery

Alt Text

U.S. Shale Sends OPEC Deal Back To Square One

OPEC’s view on U.S. shale…

Alt Text

Huge WTI-Brent Spread Boosts U.S. Crude Exports

The extreme gap between WTI…

Alt Text

Exxon To Disclose The Real Risk Of Climate Change

ExxonMobil has finally given in…

Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

More Info

Saudi Arabia Moves To Privatize Utilities Ahead Of Vision 2030

Saudi Arabia

Moves to privatise utilities assets in Saudi Arabia and expand the reach of its networks through increased investment should create new opportunities for private operators and service providers.

Near-term asset sales

The government is gearing up to sell a state-owned power generation firm and a water desalination company by the end of this year, according to Mohammed Al Tuwaijri, the vice-minister for economy and planning, who said each would be a multi-billion-dollar deal.

The privatisation process for these is “in a very, very advanced stage”, he told the press recently, “not only financial advisers hired, but we have appetite secured”.

The generation firm is the first of four owned by state utilities provider Saudi Electricity Company (SEC) to be privatised over the next few years – one per year – under the country’s five-year development plan released in June 2016, the National Transformation Programme.

The Saline Water Conversion Corporation (SWCC), meanwhile, announced last month it had hired US-based management consultancy DuPont Sustainable Solutions to help optimise its operations and risk management in preparation for a potential sale by year’s end. The SWCC currently supplies 70% of the country’s desalinated water.

The move dovetails with a government target for private partners to supply 52% of the country’s desalinated water requirements by 2020.

“We want to create an environment that will allow SWCC to compete internationally so that ultimately, we have a sustainable business that the people of SWCC and Saudi Arabia can benefit from,” Ali Al Hazmi, its governor, said at the announcement.

Privatisation path

The approaching sales are part of a broader government plan to raise some $200bn by selling state assets over the next few years under its overarching Vision 2030 blueprint for economic and social development. Related: Oil Rises To 8-Week High Following Unexpected U.S. Inventory Draw

In mid-May Al Tuwaijri said authorities had conducted detailed valuations to calculate this figure, identifying 16 entities as top priorities for a sell-off and over 100 opportunities for pursuing public-private partnerships.

This is in addition to revenue from plans to sell an up to 5% stake in the national oil company, Saudi Aramco, next year and invest the proceeds in development projects.

As for the utilities sector, late last year officials announced that SEC – the state entity responsible for generation, transmission and distribution of power – would be divided into four separate companies and transferred to the Public Investment Fund ahead of privatisation. Each of these would have around one-quarter of the company’s current 60 MW of generation capacity at the time of sale.

Investor appetite may be further whetted by the prospect of private sector involvement in power distribution: last year the SEC said it would retain its transmission and distribution operations after selling its generation assets, but was open to an expanded role for the private sector in downstream operations.

Economic transformation

Demand for cost-effective utilities is set to rise as the government pushes for greater efficiency in public service delivery amid lower oil prices, including by cutting electricity subsidies.

“In particular, the public sector will either move to transfer secondary activity to private operators or to co-invest in energy-efficient utilities solutions,” Kamal Pharran, CEO of Saudi Tabreed District Cooling Company, told OBG. Related: Barclays: Oil Could Rise By $7 If U.S. Sanctions Venezuela

The increased investments called for in the National Transformation Programme – in large-scale housing, infrastructure and industrial developments – will also drive demand for utilities expansion, Pharran said, as the country seeks to lift both output and efficiency in delivering water, power and district cooling services.

Among the programme’s goals are to enhance utilities capacity by improving performance, productivity and flexibility as well as expanding coverage. The plan also calls for an optimisation of operations through privatisation.

“The current cash shortage and privatisation drive by the government is only going to lead to more outsourcing,” Pharran told OBG. “Smarter investments in long-term costs savings will be more likely as entities focus on their core businesses and spin off services where they are less efficient.”

By Oxford Business Group

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News