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Mon 16 Nov 2015 02:33 PM

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Saudi Arabia says to privatise airports next year

Civil aviation authority announces plan as kingdom seeks ways to support state finances due to lower oil prices

Saudi Arabia says to privatise airports next year

Saudi Arabia will begin privatising its airports and related services in the first quarter of 2016, the country's civil aviation authority has said, as the kingdom seeks ways to support state finances due to lower oil prices.

The announcement is the latest sign the world's top crude exporter is looking at ways to manage the impact of lower oil prices on its budget. The International Monetary Fund has forecast a deficit this year of more than $100 billion.

"The privatisation programme comes in line with the kingdom's plan to improve the productive efficiency of airport systems and ease the financial burden on (the) state budget," Sulaiman al-Hamdan, chairman of the General Authority for Civil Aviation, said in the statement.

Oil prices have more than halved in the past 18 months with supply bolstered by US shale oil output and producer group Opec's refusal to cede market share.

King Khaled International Airport, the main airport in the capital Riyadh, will be the first asset to be privatised in the first quarter next year. Air traffic control and information technology units will followed in the second and third quarters respectively, the statement said.

Other units at the country's international airports, as well as local and regional airports, will also be privatised according to a schedule to run up until 2020, the statement said without elaborating.

Saudi Arabia has privatised units of the national airline in recent years. Saudi Airlines Catering Co and Saudi Ground Services Co have been listed on the stock market and the cargo unit is expected to be next.

The kingdom has been investing heavily in aviation infrastructure to back the industry's expansion plans, including building multi-billion dollar projects to expand capacity at the country's airports.

But the kingdom, the biggest Arab economy and the largest country in the Gulf geographically, still has one of the smallest airline networks in the region relative to its size.

According to GACA 2014 statistics, the latest on its website, there are 27 airports in the kingdom of which four - in Riyadh, Jeddah, Dammam and Medinaare - are international.

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