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Saudi Arabia starts process on 4,500 MW-renewable energy projects

Saudi Arabia starts process on 4,500 MW-renewable energy projects
This initiative is part of the National Renewable Energy Program. Shutterstock
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Updated 42 min 11 sec ago
Mohammed Al-Kinani 
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Saudi Arabia starts process on 4,500 MW-renewable energy projects

Saudi Arabia starts process on 4,500 MW-renewable energy projects
Updated 42 min 11 sec ago
Mohammed Al-Kinani 
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JEDDAH: Saudi Arabia will add 4,500 megawatts of renewable energy to its grid after its procurement agency issued a request for qualifications for the sixth round of solar and wind projects. 

The Saudi Power Procurement Co. outlined the key projects, including the 1,500-MW Dawadmi wind project in the Riyadh region, the 1,400-MW Najran solar project, and two solar initiatives in Jazan — Samtah and Al-Darb — each boasting a capacity of 600 MW. Additionally, the Sufun solar project in Hail will contribute 400 MW to the grid. 

This initiative is part of the National Renewable Energy Program, which is overseen by the Ministry of Energy and aligns with Saudi Arabia’s Vision 2030 and the King Salman Renewable Energy Initiative.  

The NREP serves as a strategic framework to diversify the Kingdom’s energy sources, stimulate economic development, and promote sustainable stability. By 2030, the program aims for renewable energy to account for nearly 50 percent of the energy mix used for electricity generation.   

It aims to establish a robust renewable energy industry and advance this vital sector while upholding the Kingdom’s commitment to reducing carbon dioxide emissions. 

The SPPC is tasked with conducting preliminary studies, tendering, and procuring electricity generated from energy projects within the Kingdom. So far, projects totaling over 19 gigawatts have been awarded under the NREP. 

In another move earlier this year, the SPPC finalized power purchase agreements valued at SR12.3 billion ($3.3 billion) for three solar photovoltaic projects with ACWA Power Co., Water & Electricity Holding Co., known as Badeel, and Aramco Power.

These solar projects include the Haden Solar PV and Al-Muwaih Solar PV in the Makkah region, each with a capacity of 2,000 MW, alongside the Al-Khushaybi PV project in Qassim Province, which will add 1,500 MW to the grid. 

In February, the SPPC also announced qualified bidders for its fifth round of renewable energy projects, set to add 3,700 MW to the grid. 

A total of 23 companies, including Abu Dhabi Future Energy Co. or Masdar, GEK Terna, and EDF Renewables, were selected for key roles in these initiatives, which further underline the Kingdom’s commitment to expanding its renewable energy landscape. 

Topics: Green And Blue energy solar power Wind Power

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UAE’s central bank raises 2024 GDP growth forecast to 4 percent amid oil sector expansion

UAE’s central bank raises 2024 GDP growth forecast to 4 percent amid oil sector expansion
Updated 11 sec ago
Miguel Hadchity
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UAE’s central bank raises 2024 GDP growth forecast to 4 percent amid oil sector expansion

UAE’s central bank raises 2024 GDP growth forecast to 4 percent amid oil sector expansion
Updated 11 sec ago
Miguel Hadchity

RIYADH: The UAE’s central bank has revised up its forecast for the country’s GDP growth in 2024 by 0.1 percentage points in light of expected improvements in the oil sector.

The institution had originally slated 3.9 percent growth for the 12-month period, but is now projecting an expansion of 4 percent.

In its second-quarter economic report, the bank maintained its 2025 growth forecast at 6 percent.

The analysis predicted that the non-hydrocarbon sector will grow by 5.2 percent in 2024, rising to 5.3 percent in 2025, while the hydrocarbon division is expected to see a modest 0.7 percent growth this year, increasing to 7.7 percent in 2025.

The report said: “Growth forecasts continue to be driven by tourism, transportation, financial and insurance services, construction and real estate, and communications sectors; while the current levels of oil production during 2024 partially moderate the overall growth.”

The central bank anticipated strong momentum in the hydrocarbon sector in 2025, with significant production increases. Additionally, it underlined that a rapid decline in interest rates in major advanced economies could boost global demand and encourage capital flows into emerging markets, including the UAE.

The report also revealed that non-hydrocarbon GDP growth stood at 4 percent year-on-year in the first quarter of 2024, down from 6.7 percent in the previous quarter, mainly due to a slowdown in financial and insurance services, real estate activities, construction and manufacturing.

However, the report said that “non-hydrocarbon GDP growth is expected to remain strong at 5.2 percent in 2024 and 5.3 percent in 2025,” mainly driven by strategic plans and policies that the government has undertaken to attract foreign investments and the ongoing structural reforms.

The fiscal balance for the first quarter of the year remained positive at 23.5 billion Emirati dirhams ($6.39 billion), or 4.9 percent of GDP, compared to 23.2 billion dirhams, or 5.1 percent of GDP, in the first quarter of 2023.

The UAE’s consolidated budget revenues grew by 4.3 percent year-on-year in the first quarter to 120.6 billion dirhams, or 24.9 percent of GDP, driven primarily by a 32.5 percent annual increase in tax revenues.

The central bank highlighted that the UAE’s fiscal stability is improving, with tax revenues making up an increasing share of total revenues — rising from 45.8 percent in the first quarter of 2022 to 70 percent in the first quarter of 2024 — mainly due to the recent introduction of corporate taxes.

The report also detailed government spending in the first quarter, saying: “Government expenditure in the first quarter of 2024 totaled 97.1 billion dirhams, or 20 percent of GDP, reflecting a 5 percent year-on-year increase.”

Key spending categories, including employee compensation, goods and services, and social benefits, rose by 6.3 percent, 15.2 percent, and 3.4 percent, respectively. Capital expenditures also saw a significant rise, increasing more than sevenfold to 5.6 billion dirhams.

The Central Bank of the UAE pointed to signs of expansion in the private non-oil sector, with the country’s purchasing managers’ index reaching 53.7 in July, reflecting sustained business confidence. 

Employment data showed that the number of workers covered by the Wage Protection System remained stable year-on-year in June, while average monthly wages increased by 4.8 percent. 

“The 16 non-oil sectors continued their robust growth pattern in Q2 2024, albeit at a more moderate rate,” the report added.

Wholesale and retail trade, manufacturing, and construction remained key pillars of non-oil sector expansion. 

Various comprehensive economic partnership agreements and visa-related initiatives have boosted trade volumes and transactions, while the manufacturing sector “continued to attract greater levels of FDI (foreign direct investment), expanding in line with Operation 300 billion.”

The construction sector also advanced, with numerous new infrastructure projects underway, including Etihad Rail and the Port of Dubai Creek.

Topics: Finance UAE Central Bank uae gdp

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Saudi Arabia’s economy set for 5.3% growth in 2025, driven by reforms: S&P Global

Saudi Arabia’s economy set for 5.3% growth in 2025, driven by reforms: S&P Global
Updated 3 min 50 sec ago
Nirmal Narayanan
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Saudi Arabia’s economy set for 5.3% growth in 2025, driven by reforms: S&P Global

Saudi Arabia’s economy set for 5.3% growth in 2025, driven by reforms: S&P Global
Updated 3 min 50 sec ago
Nirmal Narayanan

RIYADH: Saudi Arabia’s gross domestic product is projected to grow by 1.4 percent in 2024, with an acceleration to 5.3 percent in 2025, according to S&P Global’s latest analysis of emerging markets.

The US-based credit rating agency noted that anticipated rate cuts by the US Federal Reserve will likely benefit emerging markets like Saudi Arabia, which has strong growth fundamentals and increased capital inflows.

Earlier this month, S&P Global emphasized that Saudi Arabia’s economic growth will be supported by its diversification strategy aimed at strengthening the non-oil private sector and reducing dependence on crude revenues.

“Saudi Arabia’s economic transformation is underway. The country is going through an unprecedented period of social, economic, and political reforms, designed to diversify its economy away from hydrocarbons,” the report stated. It further added, “In the next couple of years, these reforms will continue to raise domestic demand indicators, particularly those related to household spending, tourism, and construction.”

The agency forecasts economic growth of 4 percent in 2026, followed by a slight decline to 3.6 percent in 2027. Additionally, S&P Global anticipates an inflation rate averaging 1.8 percent in 2024 and 1.6 percent in 2025. The unemployment rate is projected to reach 4.7 percent this year and 4.4 percent next year.

Emerging markets outlook

S&P Global also predicts strong growth for India, with GDP expansions of 6.8 percent in 2024 and 6.9 percent in 2025. The agency noted that lower oil prices will benefit most emerging markets globally by improving external accounts and lowering inflation.

“While oil revenue provides fiscal benefits for some EMs through state-owned oil companies, most major EMs are net energy importers. Sustained lower oil prices could further accelerate monetary policy normalization across EMs. However, the potential escalation of the conflict in the Middle East could drive oil prices back up in the coming months,” S&P Global warned.

Southeast Asian economies are well-positioned among emerging markets to attract capital inflows, with Malaysia and Vietnam benefiting from electronics exports and foreign direct investment. The report indicated that industrial production in this region is outperforming that of other global areas.

“In Vietnam, manufacturing output grew about 10 percent year over year in the first half of 2024. The sector can be cyclical, however, and momentum may swing if global demand weakens,” it stated.

In Turkiye, the economy is expected to grow by 3.1 percent in 2024 and 2.3 percent in 2025, hindered by high interest rates limiting fixed investment.

S&P Global noted that real GDP growth forecasts for emerging markets, excluding China, remain at 3.9 percent in 2024 and 4.3 percent in 2025.

Potential risks for emerging markets growth

The report highlighted several risks facing emerging markets, including uncertainty surrounding the upcoming US election and its potential effects on trade and fiscal policy.

“More protectionist trade policies could lower trade volumes, raise inflation, and consequently put upward pressure on interest rates, thereby discouraging capital flows to emerging markets,” S&P Global cautioned. It also noted that expansive US fiscal policy could increase inflation and long-term Treasury yields, tightening financial conditions for emerging markets.

The report expressed concern over the high degree of uncertainty regarding the Chinese economy, which poses downside risks for growth in Asia. Escalation of the conflict in the Middle East could lead to increased energy and shipping costs, adversely affecting activity in that region.

OECD’s economic growth projections for Saudi Arabia

In a separate report, the Organization for Economic Cooperation and Development forecasted Saudi Arabia’s economic growth at 1 percent in 2024 and 3.7 percent in 2025. The OECD projected that the global economy will expand by 3.2 percent in both years, a slight increase from 3.1 percent in 2023.

“The global economy is starting to turn the corner, with declining inflation and robust trade growth. At 3.2 percent, we expect global growth to remain resilient both in 2024 and 2025,” stated OECD Secretary-General Mathias Cormann.

The report also predicted that headline inflation in G20 economies will ease to 5.4 percent in 2024 and 3.3 percent in 2025, down from 6.1 percent in 2023. Core inflation in G20 advanced economies is expected to decrease to 2.7 percent in 2024 and 2.1 percent in 2025.

“Declining inflation provides room for an easing of interest rates, though monetary policy should remain prudent until inflation has returned to central bank targets,” Cormann advised. He stressed the need for decisive policy actions to improve spending efficiency and optimize tax revenues.

The OECD indicated that ongoing geopolitical tensions could dampen economic growth by reducing investments and raising import prices. It called for decisive fiscal actions to ensure debt sustainability and create resources for future spending pressures.

“Stronger efforts to contain spending and enhance revenues, set within credible medium-term adjustment paths, are key to ensuring that debt burdens stabilize. Reinvigorating product market reforms that promote open markets with healthy competitive dynamics is essential for fostering stronger, sustained economic growth and alleviating long-term fiscal pressures,” the OECD concluded.

Topics: main

Saudi Kafalah program exceeds $26.6bn in financing, supporting 23k SMEs, event told

Saudi Kafalah program exceeds $26.6bn in financing, supporting 23k SMEs, event told
Updated 43 min 16 sec ago
Nadin Hassan 
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Saudi Kafalah program exceeds $26.6bn in financing, supporting 23k SMEs, event told

Saudi Kafalah program exceeds $26.6bn in financing, supporting 23k SMEs, event told
Updated 43 min 16 sec ago
Nadin Hassan 

RIYADH: Saudi Arabia’s Small and Medium Enterprises Loan Guarantee Program, Kafalah, has facilitated over SR100 billion ($26.6 billion) in financing guarantees, it was announced at an event in Riyadh.

Through working with a range of financial institutions including Saudi Central Bank, National Development Fund, and the General Authority for Small and Medium Enterprises, the initiative has helped create around 1 million jobs, supported more than 23,000 SMEs, and formed 100 partnerships with public and private entities since Kafalah was launched in 2006.

The figures were revealed at event, organized by the Kafalah program, that recognized the contributions of financial institutions in supporting SMEs, a crucial sector for economic development under Saudi Vision 2030. 

In an interview with Arab News, Humam Hashem, CEO of Kafalah, highlighted the program’s alignment with Vision 2030, focusing on sectors such as tourism, manufacturing, and entertainment.  

“Simultaneously, when we help them, we give them higher exposure. For example, the standard is that we take 80 percent of the risk. This is the ceiling for the regular Kafalah. However, if we are targeting specific sectors, we increase our exposure from 80 to 90 or 95 percent,” he said.  

Hashem added: “We also reduce our fees and help SMEs by giving them better ways to go for better business.” 

The CEO noted that the Kafalah program aims to provide SR22 billion in funding by the end of the year and is on track to meet this target. “Next year, we are aiming for at least a 20 percent increase from the current year to go to the market,” he said. 

Kafalah is also examining its environmental, social, and governance impact to support Saudi Arabia’s green initiatives.

“It’s one of our focal points. We are looking to improve our impacts and give the green Kafalah,” Hashem explained, adding that they are also examining the 17 pillars of ESG to determine which could align with the program. 

Additionally, Hashem noted that Kafalah is working to improve efficiency in the industrial and manufacturing sectors, with the goal of increasing their exposure in these areas. 

During his opening speech at the event, Abdul Rahman bin Mansour, chairman of the program, emphasized the importance of the Kafalah Award for Outstanding Performance in fostering collaboration with the SME sector.  

He stated that this initiative broadens financing access to underserved businesses, significantly contributing to the local economy’s growth and diversification. 

The event was presided over by Youssef Al-Benyan, minister of education and chairman of the SME Bank, who honored success partners from both public and private sectors. 

Recognized government entities included the Saudi Central Bank, National Development Fund, and the General Authority for Small and Medium Enterprises. 

Other recognized entities included the Tourism Development Fund, SME Bank, and Cultural Development Fund, as well as the General Authority for Entertainment, Awqaf, and the National Information Technology Program. 

Private sector awardees comprised Riyad Bank, Arab National Bank, National Commercial Bank, and Bank Albilad, along with companies such as Abdul Latif Jameel, Al-Amthal, and Al-Raeda Finance.  

To date, the Kafalah program has provided 64,494 guarantees totaling SR72.5 billion, with the remaining funds coming from partnering institutions. As a result, 27 medium-sized enterprises funded by the program transitioned to the parallel market. 

Additionally, 8 percent of micro-enterprises expanded into small and medium-sized businesses, while 4 percent of small businesses grew into medium-sized enterprises. 

From 2019 to 2023, Kafalah saw a 166 percent increase in guarantees issued, accompanied by a reduction in processing time from 48 working days to just 36 hours, thanks to artificial intelligence-driven systems. 

The program has also supported 18 initiatives linked to Saudi Vision 2030. A study with King Fahd University of Petroleum and Minerals found that companies supported by Kafalah created 17.3 percent more jobs compared to similar businesses receiving conventional financing.  

Furthermore, the program has contributed an estimated SR27 billion to Saudi Arabia’s gross domestic product over the past five years. 

Topics: main Kafalah small and medium enterprises (SMEs) Saudi economy

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New Zealand, UAE reach trade pact 

New Zealand, UAE reach trade pact 
Updated 26 September 2024
REUTERS 
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New Zealand, UAE reach trade pact 

New Zealand, UAE reach trade pact 
Updated 26 September 2024
REUTERS 

SYDNEY: New Zealand on Thursday reached a trade deal with the UAE, which it said would unlock economic opportunities for exporters and boost supply chains with one of its most important trading partners in the Middle East. 

The trade deal will remove duties on 98.5 percent of New Zealand’s exports with that proportion expected to rise to 99 percent within three years, Trade Minister Todd McClay said in a statement. 

“This will create new opportunities for New Zealand businesses in the dynamic UAE market, contributing to our ambitious target of doubling exports by value in 10 years,” McClay said. 

Two-way trade between the countries was valued at 1.3 billion New Zealand dollars ($813.5 million) in the year to June 2024. 

The agreement was concluded in over four months following the beginning of talks in May, making this New Zealand’s fastest-ever trade agreement negotiation, McClay said. 

Australia and the UAE concluded a similar trade deal earlier this month. 

Topics: Finance New Zealand UAE trade

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Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting

Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting
Updated 25 September 2024
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Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting

Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting
  • IMF executive board scheduled to meet today to discuss approval of $7 billion loan for Pakistan
Updated 25 September 2024
Arab News Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif said on Wednesday Pakistan had met the “tough conditions” set by the International Monetary Fund with the help of Saudi Arabia, the UAE and China, as the global lending agency’s board meets today to discuss the $7 billion loan program for the country.

Pakistan reached a staff-level agreement with the IMF in July for a fresh loan to keep its fragile economy afloat. Finance Minister Muhammad Aurangzeb had earlier expressed hope of sealing the deal by the end of August. However, delays were caused by an external financing gap, which prompted Pakistan to seek commitments from key allies and request debt reprofiling.

Just a day earlier, the finance minister again expressed optimism about securing the loan program after the IMF board meeting, while emphasizing the government’s commitment to structural reforms.

“[Today] is the IMF board meeting, and we have fulfilled all of their conditions, very tough conditions, but praise be to God, we have completed them,” he told the media in New York on the sidelines of the 79th United Nations General Assembly Session. “I want to express my heartfelt gratitude once again, to our trusted brother nations, Saudi Arabia, China and the UAE. Without their immense support, this would not have been possible.”

“At the final stage, the conditions were related to China, and just like in the past, the Chinese government once again held Pakistan’s hand and offered immense support,” he added. “I am deeply grateful to the Chinese leadership.”

Pakistan’s last $3 billion IMF program helped avert a sovereign default in 2023 amid a sharp decline in foreign exchange reserves, currency depreciation and record inflation.

The government has already maintained that the country’s macroeconomic indicators have improved, though it needs the 37-month-long IMF program to solidify those gains.

“You have to grow and build from a stable base,” Pakistan’s finance minister said on Tuesday while addressing a high-level private sector dialogue, ‘CPEC-II and the Region.’ “We have reached that level now. Now, we can say that we have a good foundation on which we can build from here.”

“Now we need to move forward and stay with the reform agenda whether it’s on the taxation or energy side [or] on the state-owned enterprises or privatization side,” he added.

Topics: main

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