The disruption, blamed on the coronavirus pandemic, is seen as a setback to the kingdom’s privatisation plans.
26 Jul 2021
Saudi Arabia has halted the sale of one of the world’s biggest water plants, which had attracted interest from investors including France’s Engie SA, in a setback for the kingdom’s privatization plans.
The Ras Al Khair desalination and power facility on Saudi Arabia’s east coast had cost more than $7bn to build. The government, which had been hoping to accelerate asset sales this year, blamed disruptions caused by the coronavirus pandemic.
Saudi Arabia was looking to raise about $2bn by selling a 60% stake, two people familiar with the matter told Bloomberg, asking not to be identified as the information is private.
Potential bidders considered the plant’s age and use of outdated technology unappealing, said the people. Its poor environmental credentials were another deterrent, they said.
“One of the main reasons for the cancellation of Ras Al Khair was the economic conditions resulting from the pandemic and its effect on transactions of this size,” a spokesman for the country’s National Centre for Privatization said on Monday.
Bids from investors showed the deal would make “a limited contribution” to the government, he said, adding that officials will continue with other public-private partnerships.
The kingdom aims to raise about $38bn over the next four years through privatizations, Finance Minister Mohammed Al Jadaan told the Financial Times in May. Previous targets for such revenue-raising have been missed.
The Ras Al Khair sale has been in the works since at least 2017, when BNP Paribas was appointed as financial adviser. The country shortlisted bidders earlier this year. As well as Engie, they included JERA Co. and Marubeni Corp. of Japan, India’s NTPC Ltd. and Riyadh-based Acwa Power.
The winner was supposed to acquire 60% of the facility, while also managing and operating it. Saudi Arabia, much of which is desert, is the world’s biggest consumer of desalinated water.
The plant serves the capital of Riyadh and eastern parts of the kingdom. It produces 1.05 million cubic meters of desalinated water per day and 2.65 gigawatts of power.