Saudis may sell 1pc of Aramco to foreign investor

Discussions are underway to sell a 1pc stake of state-controlled Saudi Aramco to a foreign investor, Saudi Arabia's Crown Prince Mohammad bin Salman said in a nationally televised interview this evening.

Prince Mohammad, who oversees the Saudi economy, gave no information on the identity of the prospective foreign investor, or a time frame for the deal.

He indicated additional stakes in Aramco were likely to be sold to foreign investors over the next two years, "... and discussions are currently underway to sell 1pc of Aramco to a foreign investor."

"Aramco has an opportunity to be one of the largest industrial companies in the world," said the Saudi crown prince, referencing the company's plans to use up to 3mn b/d of its crude output as feedstock for petrochemicals and other downstream industries by 2030.

Prince Mohammad revealed in late January that Aramco — which raised just under $30bn from the flotation of 1.5pc of the company's value in a 2019 initial public offering on the Saudi stock exchange — would list more shares over the next few years to help boost the country's sovereign wealth Public Investment Fund (PIF) to SR4 trillion ($1.06 trillion) by 2025. The remaining roughly 98pc of Aramco shares are still owned by the government.

The crown prince appears to be using Aramco as a cash cow to fund the PIF's activities and investments, which he hopes will help diversify the Saudi economy away from its dependence on the oil revenues earned by Aramco. At the government's behest the company bought the government's 70pc stake in petrochemicals firm Sabic last year, and is paying the PIF $69.1 bn for the purchase in installments until 2028.

"We aim to boost the PIF's assets to SR10 trillion ($2.66 trillion) by 2030, and the current purpose of the fund is to achieve growth," said the crown prince, who also heads the PIF.

But he also pointed out that the PIF is expected to bolster Saudi government revenues, adding that it will spend SR160bn within the country this year. The PIF's current return on investment is 6-7pc, he said.

A tripling of the country's value added tax (VAT) to 15pc last year to help the government deal with the double blow of the collapse in oil prices and the economic fallout of the Covid-19 pandemic is a temporary measure that will be reversed, said the crown prince.

By Samira Kawar