Saudi Arabian privatization plans accelerate with international tender to build 60 schools

DUBAI: The Saudi Arabian privatization program, a crucial part of the Vision 2030 strategy, is gathering pace with the launch of a tender to the private sector to build 60 new schools for children in the Jeddah and Makkah areas.
In a further sign of progress toward the sell-off of government controlled parts of the economy, it was also announced that the flour milling companies owned by the Saudi Grain Organization (SAGO) could be ready for sale in the first half of this year.
The schools announcement was made by Tatweer Buildings Company (TBC), a government owned company involved in all aspects of educational infrastructure. No value is put upon the contract in the tender documents.
HSBC, the global bank involved in many aspects of the Saudi privatization plan, is financial adviser to TBC. A bank spokesman said the tender was open to Saudi and international bidders.
Education was one of the areas earmarked for involvement by the private sector in a sell-off of state-owned assets that could be valued at as much as $200 billion over the next decade, according to official statements from the Ministry of Economy and Planning last year.
Privatization is regarded as a key component of the Vision 2030 strategy to reduce the Kingdom’s dependence on oil revenue and the public sector.
Tatweer is seeking “a developer or developers forming a consortium to design, build, finance, maintain and transfer public school buildings on various sites in Jeddah and Makkah leased to TBC by the Ministry of Education. The sites will also include, where appropriate, a multipurpose hall and can accommodate children with disabilities, catering facilities and specialist teaching areas in line with the Kingdom’s pedagogic objectives and strategy.
“The ministry will be responsible for providing the education services and information, communication and technology equipment and services. It is also anticipated that the developer or developers forming a consortium would look to develop a third party revenue generation model for any facilities such as the sports facilities when not in use by the ministry,” it added.
Wave 1 of the project will include kindergarten, elementary, intermediate and secondary schools, for boys and girls, TBC said.
An open investor conference will be held in Riyadh next month to gauge interest in the tender from developers, investors, financial institutions and professionals. TBC is also being advised by the UK-based law firm Allen & Overy as international legal counsel.
HSBC also announced that it had made progress on preparing SAGO for sale, in terms of the company’s business model, regulatory set-up and financial accounts for the 2017 financial year.
Details of the sales process will be announced during the second quarter of this year, HSBC said. The bank added: “The milling companies represent a unique investment opportunity in the flour milling sector in Saudi Arabia, the largest economy in the Middle East. The milling companies also present opportunities for expansion into value added product within the Saudi market.”