The outage, attributed to the coronavirus pandemic, is seen as a setback for the kingdom’s privatization plans.
Saudi Arabia halted the sale of one of the world’s largest water plants, which had attracted the interest of investors, including France’s Engie SA, in a setback to the kingdom’s privatization plans.
The Ras Al Khair desalination and power facility on the east coast of Saudi Arabia had cost more than $ 7 billion to build. The government, which expected to accelerate asset sales this year, blamed disruptions caused by the coronavirus pandemic.
Saudi Arabia was looking to raise about $ 2 billion by selling a 60% stake, two people familiar with the matter, who asked not to be identified because the information is private, told Bloomberg.
Potential bidders found the plant’s age and use of outdated technology unappealing, the people said. 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 Center for Privatization said on Monday.
Investors’ offers showed that 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 around $ 38 billion over the next four years through privatizations, Finance Minister Mohammed Al Jadaan told the Financial Times in May. The previous objectives for this revenue collection have not been met.
The sale of Ras Al Khair has been in the works since at least 2017, when BNP Paribas was appointed as a financial advisor. The country shortlisted bidders earlier this year. In addition to Engie, they included JERA Co. and Marubeni Corp. of Japan, NTPC Ltd. of India and Acwa Power, based in Riyadh.
The awardee was supposed to acquire 60% of the facility, while managing and operating it. Saudi Arabia, much of which is desert, is the world’s largest consumer of desalinated water.
The plant serves the capital of Riyadh and parts of the eastern part of the kingdom. It produces 1.05 million cubic meters of desalinated water per day and 2.65 gigawatts of power.