Saudi Arabia committed to privatization 

(MENAFN - Arab News) Saudi Arabia is firmly committed to the principle of privatization in the development of its water and power industries. Investment partners from inside and outside the Kingdom will continue to form an essential part of the financial mix to address the huge infrastructure projects that will be necessary over the next two decades.

However, the Kingdom will not relinquish ownership of its water resources, which will remain securely in the ownership of the country.

Dr. Bakr Koshaim, power consultant and member of the Majlis-e-Shoura said that the experience of the Kingdom had been that IWPPs and the involvement of the private sector in the development of both power and water sectors was very positive. "They have reduced the costs of production, improved management and run the plants more efficiently," he told delegates.

Asked if, with respect to water and the privatization in the sector whether any kind of tariff structure for end consumers had been decided or discussed in the Majlis, he said that it had not.

Ali Saleh Al-Barrak, president and CEO of the Saudi Electricity Company (SEC), said that the electricity sector had for 20 years been a good example of how the private sector could work effectively in the Kingdom.

"Even when the government stepped in to adjust tariffs, they allowed the companies to continue to be run under private business management and their (the government) influence was very little." He noted two major restructuring periods — in 1977-1980 when large companies were formed to absorb all the small private utility companies and the SEC was created to take over all the domestic and electrical activity in the country.

When it was established, it was then that the principle of private involvement in the industry was firmly established.

"The next restructuring will be starting next year, to create a number of generating companies to divide the assets of the SEC into four generating companies, a transmission company that will own and operate the transmission assets and another for distribution assets and customer service," he said.

Fehied Al-Shareef, governor of SWCC, said that the international financial problem squeezed available money over the last year but that did not mean they had to stop work to evaluate the process of privatization — but not the policy itself. "For SWCC I can say that the privatization will continue, will not be stopped and not be delayed."

By Roger Harrison