YOG INFRA has recently established our third global office in UAE in 2023, and our insight series coverage is being enhanced to cover key economices in the MIdlle East region.
SAUDI ARABIA is a key driver for infrastructure development using PPP modalitiy in the Middle East region. The country has seen interest from local & foreign investors alike, with majority of projects being developed under JV route. A new PPP project pipeline has envisaged projects across sectors - transpot, energy, WASH and urban infra - to be procured as PPPs.
Read the key developments in Infrastructure and PPPs in Saudi Arabia in our Q2 2023 insight.
April 2023
SAUDI ARABIA UNVEILS MEGA PPP PIPELINE
Authorities in Saudi Arabia unveiled a pipeline of 200 planned PPPs including major procurements of airports, highways and environmental projects. The National Centre for Privatisation & PPP (NCP) unveiled details on its website of the pipeline, which spans 17 different sectors and is part of the Kingdom’s plans to diversify the economy away from reliance on oil.
Major projects planned include a 30-year DBFOM PPP for the development of a 136 km highway between the provinces of Asirand Jizan. Other similar highway projects are planned between the cities of Jeddah and Jazan (570 km) and Yanbu and Jubail (447 km).
The Ministry of Transport and Logistic Services, which is procuring these projects, also plans to tender a PPP for the development and operation of a motorway service area for the Jeddah-Makkah road, as well as operation and maintenance of the highway itself.
SAUDI ARABIA PLANS 4 AIRPORT PPP PROJECTS
Saudi Arabia announced that it plans to tender 4 new airport projects under the Public-Private Partnership (PPP) model as part of pipeline. The new planned airports are expected to increase the Kingdom’s passenger handling capacity by 20.8 Mn per annum. The projects would be procured by Ministry of Transport and Logistic Services.
The 4 airport PPP projects are as follows:
Abha International Airport: The targeted capacity for the new airport is 8.5 Mn passengers per annum by 2023, scalable to 13 Mn passengers per by 2053. The new facility will be procured under a 30-year Build-Transfer-Operate (BTO) contract.
Taif International Airport: The targeted capacity for the new airport, which will be procured under a 30-year Design-Build-Finance-Operate-Maintain (DBFOM) contract type, will target an annual passenger handling capacity of 4 Mn by 2030 and 7.4 Mn by 2053.
Hail International Airport: The project intends to develop the airport and service facilities in accordance with the standards approved by the International Civil Aviation Organisation (ICAO). The targeted increase in capacity for the airport is 3 Mn passengers per annum.
Prince Naif International Airport: The project intends to develop the airport in Al Qassim in line with ICAO standards and increase its capacity to 5.3 Mn passengers per annum.
ALFANAR RAISES DEBT FOR PPP TO HOUSE NEOM WORKERS
Saudi construction firm Alfanar has raised debt for a major PPP for temporary villages to house construction staff working on NEOM, marking a crucial milestone in the implementation of the USD 500 Bn mega-project. Three local banks have provided debt to finance the construction of 5 villages that will be built to house workers who will develop the new city.
SABB, in which HSBC owns a minority stake, Alinma Bank and Riyad Bank are the lenders supporting the SAR 10 Bn (USD 2.6 Bn) construction villages PPP. Alfanar won the contract to design, build, finance, operate and maintain the construction villages in year 2022.
The development of construction villages is vital for the progression of NEOM, which involves turning a large expanse of desert into a high-tech population centre, running across 170 km in a linear fashion, known as The Line. It also involves building an all-year round mountain resort and an industrial centre that partially floats on water. Saudi Arabia is procuring multiple bundles of construction village PPPs that are necessary for housing the thousands of workers involved in Neom.
May 2023
ACWA, PIF'S BADEEL INK MEGA SAUDI SOLAR DEAL
Saudi energy giant ACWA Power and the Public Investment Fund (PIF)-owned Water and Electricity Holding Company (Badeel) have inked a SAR 12.2 Bn (USD 3.25 Bn) Saudi Arabian solar deal. The two companies will develop a 4.55 GW solar PV portfolio comprising 3 separate projects across the cities of Ar Rass and Riyadh.
The largest project will be a 2 GW solar PV facility in the city of Ar Rass, west of Riyadh. There will also be another 1.42 GW project, known as Al Kahfah. Finally, a third 1.12 GW project, Saad 2, will be developed in capital Riyadh.
The projects are being developed as a part of Saudi Arabia’s National Renewable Energy Program. PPAs have been signed for each project with the Saudi Power Procurement Company.
CHINA RAILWAY EYES MIDDLE EAST OPPORTUNITIES
China Railway Construction Corporation (CRCC) is interested in project opportunities in the Middle East markets, in both traditional and green infrastructure. CRCC will actively pursue opportunities in Middle East countries such as Saudi Arabia, Qatar and UAE, given the robust economies and government fiscal conditions there.
CRCC will seek projects that can generate steady cash flows with shorter project implementation cycles. In terms of markets, CRCC would like those with stable political economic conditions and rich natural resources such as mining with lower foreign currency risks.
PIF TO PARTNER DIGITALBRIDGE IN SAUDI ARABIA DATA CENTERS DEVELOPMENT
Digital infrastructure firm Digital Bridge will have the Public Investment Fund (PIF) as the new investor in a project to develop data centers in Saudi Arabia and the Gulf Cooperation Council (GCC).
The partnership will initially prioritize investments in the data center sector, but is also expected to explore other segments of digital infrastructure in the future, including macro towers, fiber, small cell, and edge infrastructure.
RFP ISSUED FOR SAUDI SEWAGE PLANT PPPs
The Saudi Water Partnership Company (SWPC) is seeking proposals to develop a cluster of small sewage treatment plant (SSTPs) as PPPs. The Saudi Water Partnership Company has issued requests for proposals (RFPs) for the design, build and finance of 12 SSTPs and an accompanying 1,348 km collection network in the southern region of Jazan.
The project, initially for 20 SSTPs but since reduced in scope, is due to deliver a total capacity of 74,700 m3/day, with the expected operational timeline set for the third quarter of 2028.
SAUDI ARABIA’S PPP AGENCY AND ICBC SIGN TIE-UP
Saudi Arabia’s National Center for Privatization (NCP) has signed a cooperation agreement with the Industrial and Commercial Bank of China (ICBC). The agreement will help attract potential investors from ICBC’s client base who are interested in exploring the privatisation and PPP opportunities in Saudi Arabia. It will also help ICBC strengthen the bank’s engagement in providing financial advisory services for PPPs.
NCP and ICBC will also cooperate on the organisation of local and international events and promote knowledge sharing and teaming in various areas, including project financing.
SAUDI GREEN HYDROGEN PROJECT RAISES USD 6.1 BN
ACWA Power-backed NEOM Green Hydrogen Company (NGHC) has reached financial close on the world’s largest green ammonia project with the backing of over 23 lenders. NGHC, which is jointly owned by ACWA Power, New York-listed Air Products and NEOM, raised USD 6.1 Bn (EUR 5.6 Bn) of non-recourse financing from a consortium of local and international banks for the USD 8.4 Bn project.
Total financing consists of USD 5.85 Bn of senior debt and USD 475 Mn of mezzanine debt facilities. Saudi Arabia’s National Development Fund provided USD 1.5 Bn on behalf of the National Infrastructure Fund, while Saudi Industrial Development Fund provided USD 1.25 Bn.
The plant, which is currently being built at Oxagon, in Saudi Arabia’s NEOM region, will integrate up to 4 GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen by the end of 2026, in the form of green ammonia. NGHC has secured an exclusive 30-year off-take agreement with Air Products, with the latter having also in place EPC agreements worth USD 6.7 Bn for the mega-project.
June 2023
KSA AWARDS PILOT DIAGNOSTIC IMAGING PPP TO ALTAKASSUSI
Saudi Arabia has awarded a public-private partnership (PPP) in the healthcare sector promoting a diagnostic imaging project that will benefit more 1.5 Mn patients across 7n hospitals, to Altakassusi Alliance Medical.
The IFC supported project, awarded by the Ministry of Health following an open tender, will help deliver better radiology and imaging services. It will also offer the country’s first truly collaborative network to support staff across each of the hospitals, which will greatly enhance the quality of care provided in more remote parts of the kingdom.
Altakassusi Alliance Medical will work with more than 450 staff and will be responsible for managing patient services in the hospitals’ respective radiology and nuclear medicine departments. Through Altakassusi Alliance Medical’s 10-year capital investment plan, the PPP will improve the quality and efficiency of medical imaging services by introducing new information and technology capabilities, while helping to maintain or replace vital equipment when required. In addition, healthcare workers will be given training and development opportunities to hone their skills in line with global best practices.
List of Key Transactions - Q2 2023
Source: YOG INFRA analysis
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