Infrastructure & PPPs in Saudi Arabia - Q3 2023 Update
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 Q3 2023 insight.
BROOKFIELD-BACKED X-ELIO FORMS GCC RENEWABLES JV
Brookfield Asset Management-backed renewables developer X-Elio has formed a joint venture with UAE infrastructure conglomerate Dutco to develop renewable energy projects across the GCC. The JV, known as X-Noor, will develop a varied renewables portfolio comprising on-grid and off-grid solar projects for industrial and commercial use as well as utility-scale solar plants and solar-powered hydrogen plants. The GCC region covers the markets of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.
CHINESE DEVELOPER PLANS HYDROGEN INVESTMENTS IN MIDDLE EAST
Chinese state-owned energy developer CIMC ENRIC Holdings is planning to invest jointly with Riyadh-headquartered asset manager eTWP Arabia Capital to develop hydrogen projects in Saudi Arabia. The 2 companies have signed an agreement and have identified green methanol and other clean energy developments as areas of interest. The push into Saudi Arabia is part of efforts to expand overseas in the areas of refueling, fuel cell vehicles, hydrogen storage and transportation. The company will also look to build projects in other countries in the region.
eTWP Arabia Capital is backed by investors including China's Alibaba Group and Saudi Arabia's Public Investment Fund. It invests primarily in projects taken up by Chinese developers in the Middle East and in North America. 13 of its portfolio companies have a presence in Saudi Arabia with 4 of them planning public listings. Saudi Arabia, which is planning to transition to green energy would invest SAR 1 Trn (USD 267 Bn) in hydrogen to become one of the largest exporters of the energy source.
GREEN RIYADH IMPLEMENTS 1,350 KM OF WATER NETWORKS TO IRRIGATE 7.5 Mn TREES IN THE CAPITAL
The Green Riyadh Program implements water network projects with a total length of 1,350 km to irrigate 7.5 Mn trees in the Saudi capital. Water network projects will transfer 1.7 Mn cubic meters per day of treated water to increase its use for irrigation purposes by 100%. This comes with the aim of achieving sustainable irrigation of green spaces for Green Riyadh projects, in addition to development projects in the city.
As for the implementation process, the project has been conducted in accordance with the latest technologies and practices to speed up the process in a way that ensures not affecting the traffic movement in Riyadh. Green Riyadh is also dependent on the best technologies of irrigation via using a control and monitoring system to manage the irrigation water remotely. This is due to it being one of the main enablers to achieve its goals that is based on the principle of sustainability in irrigation using 100% treated water, which confirms the commitment of the program to benefit from renewable resources.
SAUDI PIF SIGNS MOU WITH JAPANESE POWER GENERATOR JERA TO DEVELOP GREEN HYDROGEN
Saudi Arabia's Public Investment Fund, the kingdom's sovereign wealth fund, has signed a memorandum of understanding (MoU) with Japan's biggest power generator JERA Co., Inc. to explore opportunities to develop green hydrogen projects and derivatives.
The MoU paves the way for the 2 parties to begin feasibility studies for the potential development of green hydrogen and derivatives projects that would be aiming to support domestic and international markets. Earlier this year 2023, JERA signed an MoU with Abu Dhabi National Energy Company, also called TAQA, to develop low or zero-emission thermal power projects and other green projects in the Middle East.
SAUDI'S NEOM SIGNS UP ASSYSTEM TO CONDUCT STUDIES FOR 7 SOLAR PV PARKS
Leading global engineering and project management services company Assystem has been appointed by Saudi-based Enowa to conduct a suite of pre-development studies for 7 planned solar photovoltaic parks in the Tabuk and Duba regions of the kingdom.
Enowa is the water and electricity subsidiary of NEOM, the developer of the mega Saudi futuristic city coming up in the country's northwest on the Red Sea. The sites earmarked to host the solar parks stretch over 420 sq km, potentially amounting to more than 20 GW (accounting for around 65% of land use) in energy generating capacity. These solar parks will directly contribute to NEOM's vision to become the world's most advanced renewable energy hub and the first at-scale fully renewable electrical system.
SAUDI WATER AUTHORITY PLOTS MAJOR PPP PROGRAMME
The Saudi Water Partnership Company (SWPC), Saudi Arabia’s water authority, has set out plans to tender 8 desalination plants and 11 large-scale sewage treatment projects as PPPs by 2028. The SWPC also listed strategic reservoirs, water transmission pipelines, and smaller sewage plants as part of a list of 50 projects it intends to tender via PPP structures, as part of its recently released 7-year planning program.
Saudi Arabia wants the private sector to produce 100% of the Kingdom’s desalinated water by 2030. Desalination already accounts for the vast majority of water supply as ground and surface water is scarce. SWPC wants to meet 92% of the country’s urban water demand with desalinated water, including 100% of demand in 9 out of 13 regions. Overall demand is expected to reach 18 Mn cubic metres per day (m3/d) in 2030, from 14.5 Mn metres per day m3/d in 2022.
3 BIDS FOR SAUDI RESERVOIR PPP
3 Middle Eastern consortia have returned RFPs for the Juranah Independent Strategic Water Reservoir (ISWR) PPP in Saudi Arabia. Local contractor Abdul Aziz Al Ajlan Sons has submitted a bid with Egypt's Orascom for the 30-year project.
SWPC, also received bids from an all-Saudi team comprising construction firm Nesma, water specialist Al Jomaih and investor Buhur; and a final partnership comprising Saudi investor Vision International, Kuwait-based Gulf Investment Corporation and UAE energy firm TAQA. The project, for which SWPC prequalified 17 firms last year 2022, will involve the DBFOM of 15 reservoirs with a storage capacity of 170,000 cubic metres each, resulting in a total capacity of 2,550,000 cubic metres. The reservoirs are expected to become operational in 2027.
INDIAN DEVELOPER AVAADA TO EXPLORE MIDDLE EAST RENEWABLES
Indian developer Avaada Energy has formed a strategic partnership with Al Jomaih Energy and Water (AEW) for generating renewable power in Saudi Arabia and other regions in the Middle East.
The alliance will explore the potential for solar, wind, hybrid and battery energy storage ventures and Avaada Energy will provide development and technical expertise. The collaboration will extend to engineering, procurement, and construction as well as operations and maintenance. Avaada Energy is the renewables unit of Avaada Group, a green energy platform which recently closed an equity funding of USD 1.3 Bn from Brookfield Renewables and Global Power Synergy, a unit of state-owned Thai oil and gas company PTT.
MIDDLE EAST DEVELOPERS PARTNER FOR SAUDI HEALTHCARE PPPS
Listed Dubai-based investor Amanat Holdings and Saudi Arabian infrastructure developer Mada International Holding will collaborate on PPPs in Saudi Arabia's healthcare sector. The duo will participate together in PPPs focused on the long-term care and rehabilitation segment, starting with an upcoming tender for the provision of long-term care facilities in Riyadh and Dammam. The partnership will support Saudi Arabia’s Vision 2030 and the Kingdom’s efforts to address an estimated 16,000 bed supply gap in post-acute care. Saudi consortium was appointed as preferred bidder for the country’s inaugural hospital PPP, involving the DBFOM of a new 240-bed hospital in the city of Madinah.
CHINESE SOLAR DEVELOPER JINKO PLANS 450 MW SAUDI PROJECT
A consortium led by Jinko Power will develop a 450 MW solar project in Saudi Arabia. The Tabarjal project will cost an estimated USD 315 Mn. The consortium, which comprises of Jinko Power (HK) Company, Sun Glare Holding Co and Sunlight Energy Holding Co, won the project in a renewables auction.
Jinko will now seek outbound investment approvals from the Chinese authorities including the State Administration of Foreign Exchange and the National Reform and Development Commission. The company has not signed an offtake yet. The project will be located in Al-Jouf district, 17 km from Tabarjal city, and will produce an output of 1.245 Bn kWh annually. Construction is scheduled to be completed in 21 months and the consortium must operate the plant for 30 years. About 35% of the total cost will be funded through equity, which Jinko said it would arrange through a bridge loan. The remaining will be non-recourse debt from financial institutions.
List of Key Transactions - Q3 2023
Source: YOG INFRA analysis
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