Dubai - As part of a nationwide privatisation drive
spurred by low oil prices, airports will be turned into companies before being handed
over to the Public Investment Fund, to help improve accountability, Faisal
Al-Sugair, chairman of Saudi Civil Aviation Holding Co, said in a phone
interview.
The transfer will also boost oversight as the General
Authority of Civil Authority will no longer be both an operator and regulator,
he said. The kingdom aims to win investment in airports as its seeks to
revive an aviation industry that’s been dwarfed by competitors in nearby Dubai and Qatar.
It’s also looking at privatizing seaports as depressed crude
prices weigh on state spending plans. The wealth fund will take over Saudi
Civil Aviation Holding, which will act as an umbrella company for the airport
operators, Al-Sugair said. The holding company will be worth “billions of
dollars,” he said.
The kingdom also has plans to transfer ownership of oil
giant Saudi Arabian Oil Co. and proceeds from
that company’s initial public offering to the fund. Airport stakes will be sold
off when the operating companies have become stabilized, which could be before
they are handed over to the wealth fund, Al-Sugair said.
A variety of privatisation options are under
consideration, including initial public offerings and private stake sales, he
said. Different airports may be sold in different ways, and the government is
yet to decide what stakes it will retain, he said. Price water house Coopers and
Ernst & Young are advising on the sale process and on turning operators
into companies.
The eventual sales may be hampered by “a very bearish
market,” Al-Sugair said. “I wouldn’t be surprised if you get less interest if
you don’t get very good bids because of the situation in the market,” he said.
That could lead to sales being re-tendered or postponed, he said.
Al-Sugair, declined to comment on the level of interest in
current tenders, which include Qassim, Hail, Ahsa and Taif airports, as he’s
not directly involved in them. Generally, most bidders for Saudi airports
have been European and international airport operators in partnership with
contractors and investors, he said.
The country intends to convert Dammam airport into a company
by July 1, followed by smaller airports and the Saudi Academy
of Civil Aviation, a training provider, in the fourth quarter, Al-Sugair said.
BLOOMBERG