If saudi arabias oil giant around co has finally been given the green light to go public a part of the crown princes plans to overhaul the sell the economy but come around close i. P. O. Satisfied his ambitions and what if any are the risks this isnt side story. Thank. You. Hello and welcome to the program im dead to saudi arabias crown jewel in the Worlds Largest Oil Producing firm aramco is now set to go public after several delays the initial Public Offering or i. P. O. Will be on the Saudi Stock Exchange how much of the companys for sale and at what price will be determined later part of the crown princes economic plans for the kingdom the flotation aims to raise billions of dollars but estimates of how much it might actually draw vary widely mohamed been sound man once a 2 trillion dollar price tag many bankers put it one and a half trillion dollars and critics of the i. P. O. Say investing in iran could be risky the company suffered a drone and missile attack in september that temporarily shut down half its production osama bin jeff aides reports. The worlds most anticipated Stock Offering is happening after years of hype and several delays saudi aramco the Worlds Largest Oil Producing firm is being listed on the Double Exchange in cheers are expected to be priced in december its no ordinary oil company of the engine driving saudi arabias economy. These truly historic we are happy to announce our attention to this the Saudi Aramco Company at the Saudi Stock Exchange market the i. P. O. Is the centerpiece of crown Prince Mohammed and sell mans vision 2030 and the Stock Offering is meant to bring in enough revenue to diversify the kingdoms economy plans to list on the worlds leading exchanges had to be scrapped because of transparency requirement but theres still talk of an International Offering after the internal listing in saudi arabia the ambitious crown prince sent out a 2 trillion dollars price tag to put that into context the worlds most valuable company such as microsoft and apple stand it hard for what the prince wanted to have been so man appears to have swallowed a lure valuation instead of further delaying the i. P. O. Analysts believe probable and Proven Oil Reserves can vary tremendously and for a listing outside of the kingdom would have to prove its reserves. For Foreign Investors the biggest concern is about the safety of their investment and attacked by yemens who the rebels in september produced the companys Oil Production by half investors a cautious of saudi arabias neighborhood with ice in pockets in the iraqi desert in the north and iran allied hutu rebels in the south a selfinflicted crisis with qatar in the east and brewing tension with iran in the strait of hormuz no one expected that who or any other nonstate actors could be so successful. In disrupting the Oil Production that also had its impact on the lower euro. Investors also have to consider the your pick to your Anti Corruption drive which is widely been seen as a shakedown of wealthy saudis and also a journalist Jamal Khashoggi is gruesome killing which was linked directly to the crown prince of saudi arabia has tried to lure investors from asia to europe and from russia to the United States saudi arabia is reportedly Still Holding government to government meetings to attract investment from soft and real funds Industry Experts believe much of the investment from the listing will come from gulf the saudi families not Foreign Investors its curious timing for such an i. P. O. With a week outlook for oil prices a sluggish Global Economy and increased environmental awareness against the use of fossil fuels osama bin job it is there. So crown Prince Mohammed bin. 2030 Economic Vision more than 3 years ago that plan aims to expand the private sector and diversify the kingdoms economy away from oil this would include investments in Renewable Energy and large scale real estate projects like the planned futuristic city which would cost around 500000000000. 00 it also seeks to increase tourism from 3 percent of Gross Domestic Product to 10 percent and culture and entertainment as well as decrease unemployment for more than 11 percent to 7 as well as get more women into the workforce. For more on this im joined by our guests here in doha with us as well how much a colleague hes an author and senior fellow at the Aljazeera Center for studies joining us via skype from beirut josef also an author and senior fellow at the king feisal a center for research on islamic studies also on skype from rhode island geoff clark colgan hes an associate professor of Brown University and the author of petro aggression when Oil Causes War welcome to you all just a question ill start with you in beirut so its no secret that the proceeds from the i. P. O. Will be used by the kingdom sovereign Public Investment fund to be reinjected into the saudi economy as part of hamad bin sandmans a vision 2030 so would you say that there is a lot at stake for mohamed been sidelined personally with this i. P. O. Since vision 2030 is really has baby it is that it will also help with great deal the kingdom of saudi arabia that it has to address the challenges that it faces and there is no denying the fact that you have a workforce of 40000000 people who only 4000000 are natives which means that. Over 50 percent of the population be less than 25 years old the economy has to create a lot more jobs in the future so this i. P. O. Will help alleviate adds to the economic engine of the kingdom and it will allow for the complete to reinvest some of its resources precisely took me 8 the kind of jobs on which vision 2030 is based if this succeeds it will not only be years for some of been said and the government in general but much more importantly it will be excellent for Saudi Society at large and the rest of the region for that matter i will talk about the economic challenges in a momentum how much of how we the Saudi Arabian Energy Minister recently said that these. How the listing would be a saudi decision 1st of all and specifically a mahomedan sandmans decision so what does this tell you about the personal stake in this world there is a huge difference between the announcement and the potential and i think between august 2018 and november 2019 this deal i p or has lost a lot of money a lot of variation no the saudis have to accept about 500000000000 loss between the 2 trillion that was expected a year and a half ago and the 1500000. 00 plus disagree with the gentleman here i mean we may have this potential of investment of this revenues within the infrastructure but there is no guarantee that this is going to trickle down to all the recent luck in a lot of services and the infrastructure is not really what its supposed to be so i would look at it as a decline in business deal with a political momentum for m. B. A. s he needs this hour from now to turn toward that i am in charge. Those that all that have attacked installations back in on september 14th dont affect the process therefore we are now in business and who are involved in not only that the saudis are given some. Kind of excitement to the market by then another 80000000000. 00 to the investors who are willing to come and they are giving them assurances that they will main they will get at least a minimum of 4. 4 percent between now and 2024 just colgan at the time of the i. P. O. The idea of the i. P. O. Was floated or announced and 2016 you said that saudi arabia is interested in selling shares to raise revenue while or prices are low and that the country is running a huge fiscal deficit and thats one way to plug that hole does that argument still stand today. Well i think the the striking thing that were seeing here with the worlds most Profitable Company is that so few International Investors are interested in buying so that that creates a problem for plugging that that deficit and raising the revenues that conference bahamas had hoped to do so and i think the previous comment is exactly right that were seeing a lower valuation in part because of the political circumstances around toronto the attack on the abject facility and of course the questions of the rule of law but theres also some real questions here about Climate Change and norways Sovereign Wealth Fund the largest fund in the world has said no were not interested in buying and the shares of iran go and in part thats because investors around the world are thinking you know long term we have to be worried about stranded assets in fossil fuels and thats a real concern for not just norway but for other investors around the world and joseph. On that point that jeff was just raising the concerns regarding fossil fuel a lot only that the kingdom itself has said that it wants to sort of move away from its dependence on oil and that in fact is part of the vision 23. 00 plan 2030 plan excuse me so is there a contradiction here to be made that theyre launching this i. P. O. Yet at the same time that investment and hydrocarbon at the same time it wants to move away from oil dependency. No there is no contradiction obviously you can see whether the glass is half full or half empty one can make any decision that there want this appeal will raise it made you know if money wraps 50000000000 dollars and trust me there will be a lot more buyers than those who are standing by right now like in the region and there was want to send this is not going to work there are serious time to change issues no denying but the fact that the force of fuels at the pollution in which we live and im sure has been accused since 1965 of producing about 5 percent of all the pollution on the planet which means that everybody else has figures 95 percent nobody talks about the 95 percent so lets cut the chase here there is a fundamental issue boy it is a commodity that is very much in need and not just saudi arabia but all of the gulf countries are in it thick and thin including iran incidentally so therefore one should stop throwing stones at the glass because once one is inside because its lets find out whether or not going to it will yeah go ahead please go ahead. Im sorry could you repeat the question go ahead that no go ahead. You know what i was going to say the i. P. O. Is intended for specific purposes it is to raise funds and only approximately 5 percent of an amp or shares will be put on the stock market which means that there will be a lot more reserves and lets not forget that saudi arabia sits on 230000000000 barrels of the problem now there will be a day when jordan will no longer be used around the world and when fossil fuels will no longer be used but were not there yet and it is in evolution to be believed that this one company that the strength to address internal problems cant just be dismissed as being if theyre there because initial evaluation of 2 trillion is down to 1. 5 trillion now i think these are semantics at the end of the day finances is all about trust and well see whether or not the International Investors and local and regional investors will perceive that im cool to be a worthwhile. For a company to purchase let me remind you that not only saudis and residents in saudi arabia dont actually purchase stocks but every single g. C. C. Citizen will be allowed to purchase it on course stock thats not too shabby as far as im concerned mohamed sort of joseph was correctly saying that the role of this i. P. O. Is to invest money and its into the Sovereign Wealth Fund as we understand that to be what do you what do you think the role of the Sovereign Wealth Fund is in a country what 1st let me say the International Investment is about perception or is about confidence in whatever a set you are trying to send to the world so its not only about trust so now with the more of these International Investors are asking questions the more flexibility the sound is showing in terms of putting a lot of good on the cake i suppose. For michael so let me go back to due to a question there is that has been a major problems from the owner of the vision 23 it is it. Has a lot of potential there however saudis and other people in you know who are interested in this part of the world still asking questions what are the specifics what is the real strategy of such a plan to be implemented so in other words we have the big title but we dont have the details that are helping these investors or we dont have some of the details when when when we talk about unemployment for example one of the plan from a listen to her about how it would the rates for a rating 450000 nongovernmental jobs and reducing unemployment in fact by by next year is the target here but if it is stupendous only own cash on the generator i think this is good beats the point. In the last 2 years we have seen some news coming to the saudi budget some of the will to businessmen and so they were put in rows killed in this cult and then there was more than 100 1000000000. 00 oliveri but the question is with all these money do we have an idea where this. Shift in the money from one so to the other what im saying trying to say is yes announcements are made but theyre not enough and i think this plan 2030 has not been sold well to the International Market including the im cool 5 percent jeff colgan as i was just saying one of the aims are for the Sovereign Wealth Fund in saudi arabia is to invest money in sector as that will venter and create jobs for saudi nationals specifically yet the economy still has to start wasnt seeing really payoff from this plan unemployment is quite high in saudi arabia at 12. 7 percent so is it still too early to see the fruits of this vision 2030 or is the crown prince simply not on track with this. Well to me to be fair to the crown prince the struggle to diversify an economy thats traditionally been linked heavily toil towards a broader mixed economy this is something that many countries around the world have tried and really struggled with this is something that is very hard to do and to some extent i would say he is correct to think long term about the transition that his country needs to go through but the fact is that the numbers are bearing out yet and the kind of change that needs to happen in saudi arabia i think is not only economic but probably also to a certain degree cultural in the sense of creating a higher work ethic and thats that takes time thats something that doesnt develop overnight and that the challenges that he faces are certainly broader than their remco i. P. O. Itself but as one of the centerpiece of the strategy right now is its not producing the kind of a fact and confidence building that he no doubt would have liked to see and in part thats because of his own mistakes his own missteps around producing the kind of confidence that investors both domestic and International Look for in terms of rule of law and predictability in a Business Plan and does have to say on lets pick up on that point and in fact you raise this at the beginning of the program the issue of the challenges facing the country so the timing of this announcement really is quite interesting a lot of people say just in september as you know we saw that a real attack on iran po facility so to what extent does Political Risk still to what extent is Political Risk there excuse me and will that then effect Investor Sentiment domestically and internationally. No it will not on the contrary i think that the wrists are there of course like in any other businesses and the attacks that occurred when the iranians attacked the facilities through their. Friends and allies if you will like within a matter of one month the repairs were made and the production is now back to what it was the saudis lost 25000000. 00 in the process because all that oil went in smoke but as somebody who works in saudi arabia it was who travels there all the time i am much more optimistic than most other people i see the dynamic changes that have taken place the challenges are there so good it does need to create a lot of jobs the work ethic is changing for i mean i can see it ive been going to get it since 9083 on a regular basis and i spent half of my life there and i see a lot of changes going on and but that doesnt mean that everything has been fixed it doesnt mean that you need to state the housing issues have been resolved that doesnt mean that the demographic situation has a has improved but there are positive signs during the 1st quarter of 2019 of this year the saudi government has the budget has a 10000000000. 00 profit i mean surplus as opposed to a year ago so therefore there are lots of changes vision 2030 is very ambitious and it will take a generation for it to be put in place in this city to assume that it will be done in 2 years or 3 years or 4 years one has to be very patient and all of us is on dictatorship of saudi arabia up to a school to responsibilities and helped create wealth i peel off will is just one arm of this tremendous transform ation that the south economy is undergoing right now there are lots of other projects to create all. Kinds of a specific useful tourism or playgrounds etc etc and time will tell whether or not all of this will be successful one cant be very pessimistic will force and say no no the saudis stand up maybe thing right there. There are. Parts one can say lets wait and see whether or not the work ethic is changing the economy is improving investments are coming and it is true as well ahmed said a moment ago that perception is very important but i would add to it that perception goes along with trust and confidence building right thats already out on the issue of perception on the show perception jeff gold jeff when you look at the sort of the International Community and the way that its perceived that the kingdom specifically in the wake of the killing of journalist. So some would say that the kingdom actually faces a tarnished image abroad i think that that killing of his i. V. Is not something that just disappears you know that its something that lingers and it changes peoples perceptions over a long period of time and so to to try to change perceptions back to something around saudi arabia being a reliable country that respects the rule of law there needs to be a track record there performance by the crown Prince Mohammed mohammed said probably you know i dont say this is i dont think its a combination of 2 things that dont get together you have a value been financial asset with a political liability and i believe the this momentum of who has been missed 2 years ago could have been much better time to put it in the market and get to where theyve been money was it was supposed to become i think that it may not even reach 100 to one in 130 in. Dollars between now and december when Foreign Investors will decide whether to go along or to be careful as recently asked them as between 1. 00 to 1. 00 or whatever last plus i also see that besides the lack of confidence because of the negative perception of the market now there is also the overspend then all of the High Expectations now the saudis promise in Foreign Investors that they would get a certain ratio or a certain divident and it would cost them more so i look at this mess that is losing more eggs between now and december and beyond the next 2 years or so. Vision 2030 may be very. Promising and many ways in terms of bringing in some jobs and Better Services and but the infrastructure but my concern isnt is this gap between what we plan and what we can exit cute or not and i think this is a struggle here and the mechanism the consultants are good at creating this image of this wonderland 2020 saudi arabia but the my question is how pragmatic saudis can be we do this i. P. O. And with other plans that are associated with the whole vision of 2030 so we should not be optimistic we should not be also to kind of missing the point and sometimes details make it or break the 30 seconds to just a crisis and jeff koga because i saw you both nodding at just a few 1st. No i mean i think that mohamed is right we should not be too optimistic spread on the other ad you have to be honest with yourself we should not be pessimistic either i mean like to stay. Problematic. And jeff colgan pessimism or optimism or do you stand i think thats exactly right that the gap between the projections and the reality of implementation is real and so my hope is right that to focus on you know lets make sure that you know the results are as good as can be delivered are right on that note ill leave it there thank you very much effort joining us thanks to all my guests. Here in doha jeff colgan over in the u. S. And. Speaking to us from beirut thank you thank you for watching you can see the program again any time by visiting our website aljazeera dot com for further discussion you can go to our Facebook Page thats facebook dot com forward slash a. J. Inside story you can also join the conversation on twitter. At a. J. Inside story for myself and the whole team here in doha thanks for watching but i try not. November on the edges of planet s. O. S. Returns with a new series to sit out the facts and the Science Behind the climate and ecological crisis affecting our planet. Spain will hold its 4th election in 4 years after abels inconclusive vote join us for coverage of the new series brings people together to discuss some of the big issues of our time turkish president aragon will meet with u. S. President donald trump at the White House Well bring you the latest and exiled explores the Historical Context of the Rohingya Crisis and the increasing violence in mind. 8. November on. Rewind to tangs with. Brand new updates best about to see. Remind continues with rendition its inside libyas prison when the rebels came to tripoli. So she ended with gaddafi regime it was an office of spying thats understand documents which reveal the collaboration between british and Libyan Intelligence Services on aljazeera. Aljazeera. And. Logan peter will be here in doha with your top stories from aljazeera iran is taking another step away from the 2050 nuclear deal on rouhani says from weapons to iran will start injecting uranium gas into more than 1000. 00 centrifuges that process was banned under the existing agreement but rouhani didnt say whether it will be used to enrich uranium irans gradually been shutting its commitments to the deal. More as fogdog irans 4th step will be launched at the ford our Nuclear Facility and i will advise the Atomic Energy organization to start as of tomorrow i feel
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