Exclusive: Saudi state finalized ownership transfer of $10 billion financial district

RIYADH (Reuters) - The Saudi government has finalized terms to transfer ownership of the kingdom’s glitzy $10 billion financial district in Riyadh to the finance ministry and Public Investment Fund (PIF), five sources familiar with the matter told Reuters.

FILE PHOTO: Cars drive past the King Abdullah Financial District, north of Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser/File Photo

The move paves the way for reviving work on King Abdullah Financial District (KAFD), which has been planned since 2006 to house banks and the financial regulator’s headquarters across an area roughly four times the size of London’s Canary Wharf.

The project, owned by the kingdom’s Public Pension Agency, has been plagued by construction delays, cost overruns and uncertainty about the future of its ownership. Cranes at the site have been still for three years.

“It is a transfer (of ownership), not a transaction. The Ministry of Finance will take the legal ownership and PIF will have the operating rights,” said one of the sources, who like others asked not to be identified.

Another source said the government was planning to commit 2.3 billion Saudi riyals ($613.3 million) to fund the completion of the project, including payment of existing claims.

Officials at the Ministry of Finance and PIF were not immediately available for comment.

The completion of KAFD would be a milestone for the kingdom’s economic and social reform drive, launched in 2016 by Crown Prince Mohammed bin Salman.

Talks to transfer the project to PIF began in 2016, around the same time the government said it would rescue the district as part of its Vision 2030 efforts to diversify its oil-reliant economy.

The plan envisages transforming KAFD into a special business zone with distinct regulations and visa exemptions.

However, the PIF talks fell apart the following year and details for the special regulations were never clarified.

Two of the sources said the project’s main contractor, the Saudi Binladin Group, on Wednesday contacted hundreds of workers who have been on leave since the project stalled, and told them to return to work within 10 days.

The government wants the district, whose glassy skyscrapers and Zaha Hadid-designed metro station contrast with drab architecture in much of Riyadh, to be ready in time for Saudi Arabia to host the G20 Summit in 2020.

KAFD will also host a revived film industry in Saudi Arabia, another pillar of the reform program. After almost a 40-year ban, an AMC movie theater opened its doors in late April at a converted part of the district’s conference center.

Reporting by Marwa Rashad, Tom Arnold and Katie Paul; Editing by Ghaida Ghantous and Edmund Blair