Sukuk will fund the new $7.2 billion airport project that is expected to launch in Jeddah within two months, despite a four-week delay of works related to the project, head of the General Authority of Civil Aviation in Saudi Arabia, Prince Fahd bin Abdullah bin Mohammed al-Saud, told Al Arabiya TV.
“We have agreed with the finance ministry and the Saudi Arabian Monetary Agency to launch sukuks,” Prince Fahd bin al-Saud said, adding, “the [$7.2] will be self-financing instruments of the Civil Aviation Authority, but if there is any shortage in the funding, the ministry of finance will cover it to curtail any delays in the project.”
Plans are also in place to change the General Authority of Civil Aviation to a stock-holding company, he said, and it will constitute four companies, specializing in four departments including international airports, domestic airports, air navigation, technology transfer and information.
All these four companies will be open for a general IPO and from a year from now, he said.
When asked whether foreign companies could enter the domestic transport sector in the kingdom, he said only Saudi companies are allowed to do so as it is a sovereignty issue.
Saudi Arabia is also expected to separate its civil aviation from the ministry of defense in the next three months after a royal decree urged the split, he said.
“No doubt [separating the two] will give greater flexibility to civil aviation and enable it to make its own decisions, but in the same time, there will still be cooperation between the ministry of defense and the civil aviation due to the commonality of issues.”
He added that there are committees working almost every day to work on the procedures to finalize the process.
The aviation sector can be an important pillar for the Saudi economy, and can come third or even second after the oil sector, he said, despite challenges such as enhancing the aviation authorities’ system. According to him, the aviation sector can double employment in the kingdom.