#SaudiArabia Halts Sale of One of World’s Biggest Water Plants - Bloomberg

Saudi Arabia Halts Sale of One of World’s Biggest Water Plants - Bloomberg

Saudi Arabia has halted the sale of one of the world’s biggest desalination plants citing the impact of the coronavirus pandemic on the deal, which had attracted interest from investors including France’s Engie SA and Riyadh-based Acwa Power.

The Ras Al Khair desalination and power plant, on Saudi Arabia’s east coast, had cost more than $7 billion to build. The suspension is a setback for the kingdom’s privatization plans, which the government had been hoping to accelerate this year.

“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 “will have a limited contribution” to the government’s objective, he said, and the government will continue to tender new public private partnership projects and privatizations.

The kingdom aims to raise about $38 billion over the next four years through privatizations, Finance Minister Mohammed Al Jadaan told the Financial Times in May. But previous targets for revenue-raising privatizations have been missed.

The sale of a stake in the Ras Al Khair plant has been in the works since at least 2017, when BNP Paribas was appointed as financial adviser. The country shortlisted bidders earlier this year, including JERA Co. and Marubeni Corp. of Japan, and India’s NTPC Ltd.

The plant, which serves the capital of Riyadh and eastern parts of the kingdom, produces 1.05 million cubic meters of desalinated water per day and 2.65 gigawatts of power.

The winner was supposed to acquire 60% of the facility, while also managing and operating it. Saudi Arabia, much of which is desert, relies heavily on desalinated water.