Saudi Deputy Crown Prince and Defence Minister Prince Mohammed Bin Salman said yesterday that his country is seeking to increase the purchase of locally supplied military equipment from two per cent to 50. It will be increased by the help of Aramco, which will be transferred to the fund. He expects the fund size to increase to $3 trillion and become a global investment fund. Prince Mohammed said he expected the parent company to be valued at more than $2 trillion, less than 5 per cent of which would be sold in an initial public offer.
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Though the plan stresses the importance of Saudi women in the economy and expanding their job opportunities, it contained little to suggest the kingdom would accelerate its cautious pace of social reforms.
“Only the oil reserves could be worth about $US2.5 trillion at $US10 oil price, so a valuation of $US2 trillion for all of Saudi Aramco is quite cheap”, Danilo Onorino, an energy-focused portfolio manager at Dogma Capital, said from Switzerland.
Prince Mohammed was optimistic about the reform package, predicting that the sales of Aramco stock could make the Public Investment Reform more like a three-trillion-dollar behemoth than its declared $2 trillion target.
Asked if Aramco plans to raise its oil production, Nasser said on Monday that its maximum sustainable capacity remains at 12 million barrels per day and the company would always meet additional demand. He added that subsidiaries of the company would also be sold by IPO. Saudi Arabia, the region’s biggest economy, will see growth at just above 2 percent. Saudi Arabia has deep pockets.
“If Saudi Aramco is listed then it must announce its statements and it will do that every quarter”, he said.
SAUDI King Salman bin Abdulaziz Al Saud took a number of bold but much-needed policy initiatives to accelerate the pace of development, modernize different spheres of life and carve out a place of prominence for the Kingdom in regional and global affairs.
Prince Mohammed bin Salman said Saudi Arabia would be protected from price volatility.
Other reforms announced yesterday include plans for women to have a greater role in the ultra-conservative Muslim kingdom’s economy and for more affordable housing.
He said the economic goals of the reforms are meant to eliminate housing and unemployment problems and ensure that water and energy subsidies go to those most in need.
“I think by 2020, if oil stops we can survive”, Prince Mohammed said.
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What he termed ‘Vision 2030′ envisaged raising non-oil revenue to 600 billion riyals ($160bn) by 2020 and 1trn riyals ($267 billion) by 2030 from 163.5bn riyals ($43.6 billion) a year ago.
