Saudi Crown Prince discusses Vision 2030, reveals plan to sell Aramco stake to energy firm
Now Reading
Saudi Crown Prince discusses Vision 2030, reveals plan to sell Aramco stake to energy firm

Saudi Crown Prince discusses Vision 2030, reveals plan to sell Aramco stake to energy firm

The kingdom has no plans to introduce an income tax, Prince Mohammed confirmed

Saudi Arabia’s Crown Prince said the kingdom is in talks to sell a 1 per cent stake in state oil giant Saudi Aramco to a “leading global energy company” as he forecast a rebounding economy in the aftermath of the coronavirus pandemic.

The kingdom is looking at the potential sale — which could be worth about $19bn, based on the company’s market value — as a way to lock in customer demand for the country’s crude, Crown Prince Mohammed Bin Salman said in a rare interview on a Saudi television channel late Tuesday. While providing few details on which company is involved in the talks, he said the sale could take place in the next two years.

“I don’t want to give any promises about deals finalising, but there are discussions happening right now about a 1 per cent acquisition by one of the leading energy companies in the world,” Prince Mohammed said. “This deal could be very important in strengthening Aramco’s sales in the country where this company resides.”

China is the largest buyer of Saudi Arabian oil. Almost 30 per cent of the kingdom’s crude exports went to the Asian country last month, according to data compiled by Bloomberg. Japan was the next biggest importer.

The Crown Prince is increasingly leaning on Aramco, the world’s biggest oil company, to help finance his plan to transform and diversify the Saudi economy — an initiative dubbed Vision 2030. That effort has faced hurdles in recent years.

Aramco’s 2019 initial public offering — in which it sold about 2 per cent of its stock on the Riyadh bourse — raised almost $30bn. The money was transferred to the kingdom’s sovereign wealth fund and was meant to support investments to shift the biggest Arab economy away from a reliance on oil sales. Since then, Aramco has also taken on debt and started selling off some non-core assets to maintain a $75bn dividend, most of which goes to the state.

Battered by the coronavirus pandemic, the kingdom last year saw its economy shrink the most in more than three decades, according to estimates from the International Monetary Fund. But the outlook has since improved. The budget shortfall is projected to be 4 per cent of gross domestic product by the end of this year, narrower than last year’s 12 per cent gap.

Speaking on the fifth anniversary of the launch of Vision 2030, Prince Mohammed said the nation’s unemployment rate will fall below 11 per cent this year as the kingdom’s economy goes through a “V-shaped” recovery.

“Unemployment will fall to less than 11 per cent this year, then it will reach around 10 per cent, then 7 per cent in 2030,” he said in the interview on the Rotana Khalejia television station.

Unemployment among Saudi nationals fell to 12.6 per cent at the end of last year, after peaking at 14.9 per cent in the quarter ending in September.

Prince Mohammed also touched on the delicate ties with the US, where President Joe Biden’s administration has said it wants to re-calibrate a relationship that was a centrepiece of former President Donald Trump’s Middle East strategy.

‘Neighbouring Country’

“There will never be 100 per cent agreement between two countries,” Prince Mohammed said. “Between different White House administrations, the margin of differences could increase or decrease but we agree with the Biden administration” about 90 per cent of the time, he added.

Asked about the kingdom’s regional rival, Iran, the crown prince softened his tone from previous statements, saying that Saudi Arabia was working to solve its differences with the Islamic Republic.

“In the end, Iran is a neighbouring country,” he said, adding that the kingdom wanted Iran to prosper but took issue with its nuclear programme and support for regional militias.

“We’re working today with our partners in the region to find solutions to these issues and we hope to overcome them and have a good and positive relationship with them,” he said.

Throughout the 90-minute interview, Prince Mohammed also said:

* Some of the government’s shares in Aramco could be transferred to the sovereign wealth fund, known as the PIF

* The decision to raise the value-added tax to 15 per cent last year “will be temporary from one to five years maximum, with VAT target at 5 per cent to 10 per cent”

* The kingdom has no plans to introduce an income tax

You might also like


Scroll To Top