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Saudi Arabia Starts First Privatization Program in ‘Rabigh 3’

The Saudi Ministry of Environment, Water and Agriculture signs a deal to implement the first privatization program in the Kingdom. (SPA)
The Saudi Ministry of Environment, Water and Agriculture signs a deal to implement the first privatization program in the Kingdom. (SPA)
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Saudi Arabia Starts First Privatization Program in ‘Rabigh 3’

The Saudi Ministry of Environment, Water and Agriculture signs a deal to implement the first privatization program in the Kingdom. (SPA)
The Saudi Ministry of Environment, Water and Agriculture signs a deal to implement the first privatization program in the Kingdom. (SPA)

The Saudi Ministry of Environment, Water and Agriculture signed on Monday an agreement to implement the first privatization program in Saudi Arabia.

The initiative lies in signing of Rabigh 3 Independent Water Project (IWP) from the desalination plant at Rabigh with a design capacity of 600,000 cubic meters of desalinated water per day.

The new project will benefit the Makkah area to meet the growing demand for desalinated water there.

It was offered to investors under the build–own–operate–transfer (BOOT) system and was won by the ACWA Power consortium.

Saudi Minister of Environment, Water and Agriculture Eng. Abdulrahman al-Fadhli, who also chairs of the Board of Directors of the Water and Electricity Company and the Supervisory Committee for the Privatization of Environment, Water and Agriculture Sector, signed the project’s agreement in the presence of Minister of Economy and Planning Mohammed bin Mazyed al-Tuwaijri in the Ministry’s headquarters on Monday.

Fadhli explained that the project is located on the Red Sea coast (150 km north of Jeddah) with a planned capacity of 600,000 cubic meters per day of potable water, using the desalination technology of seawater reverse osmosis, and it is expected to begin operating in 2022.

Signing the agreement comes within the projects of water production and sewage treatment of which the government intends to offer to investors in accordance with the Kingdom’s Vision 2030, Fadhli explained.

He added that it also comes in line with the cabinet’s approvals to offer a number of water production and sewage treatment projects to investors with four projects for water production and three wastewater treatment projects.

These projects aim at raising the level of services, improving the efficiency of spending, benefiting from private sector expertise and financing and increasing its participation, the minister said.

He highlighted the ministry's success in reducing energy consumption levels in independent water production projects by 20 percent.

"The ministry has increased local content to 40 percent at the beginning of the project, gradually reaching 70 percent after the first five years of operation," Fadhli explained.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.