SAUDI ARABIA is taking steps to promote renewable energy development, EV charging infra and transport projects via EPC, bilateral and PPP modes of procurment. Some of the major projects & investments are driven by Vision 2030, which provides good opportunities for private sector participation. Bilateral cooperation is being done in emerging sectors like green hydrogen and e-mobility.
Read the key developments in Infrastructure and PPPs in Saudi Arabia in our Q4 2023 insight.
October 2023
KOREA UNVEILS INFRA INVESTMENT AGENCY IN SAUDI ARABIA
The South Korean government has launched an agency in Saudi Arabia aimed at facilitating PPP project collaboration in the Middle Eastern kingdom. The Korea-Saudi Infrastructure Cooperation Centre will serve as a platform for South Korean companies to obtain business information and win orders in the overseas infrastructure investment market. The centre is the fifth infrastructure investment promotion body the South Korean government has launched overseas, following Indonesia, Vietnam, Kenya and Bangladesh.
The Korea-Saudi Infrastructure Cooperation Centre will form tie-ups and liaise with major local companies such as the Saudi sovereign wealth fund (Public Investment Fund), Aramco and NEOM – the developer of a planned new special economic zone in northwest Saudi Arabia. New deals signed between Saudi Arabia and South Korea this week include a digital infrastructure development project (including establishment of data centres) by Hyundai Engineering & Construction and Saudi Telecom, as well as an MOU between NEOM and Samsung C&T.
SINOPEC AND ARAMCO PLAN SAUDI PETROCHEMICAL PLANT
Sinopec, one of the largest oil and gas companies in China, will collaborate with Aramco to co-develop a petrochemical plant in Yanbu city of western Saudi Arabia. The Chinese company signed an agreement with the Saudi peer to co-invest in the complex, which will involve the construction of a new 1.8 Mn tonne/year ethylene cracking unit and associated downstream facilities. The complex will be part of the operational Yanbu Aramco Sinopec Refinery co-invested by Sinopec and Aramco.
The raw materials of the planned petrochemical facility will come from the 20 Mn tonne/year Yanbu Aramco Sinopec Refinery, which commenced operations in 2016. The USD 8 Bn project is 37.5% owned by Sinopec with the remainder held by the Saudi firm. Other products from the planned petrochemical complex - to be named Yanbu Refinery Plus - will include polyethylene and polypropylene.
GEMCORP CAPITAL PLANS USD 1 BN INVESTMENT FUND FOR SAUDI ARABIA
Gemcorp Capital, a global asset management firm specialising in emerging markets, is planning to launch an inaugural investment fund for Saudi Arabia with an initial target of USD 1 Bn. With the fund, the UK-based company aims to offer an opportunity for both global and domestic investors to invest in key projects aligned with the Kingdom’s 2030 vision programme. The fund is being launched in partnership with the Ministry of Investment Saudi Arabia (Misa).
Gemcorp will commit seed funding, while Misa will support the establishment of the fund and provide access to investment opportunities in Saudi Arabia including credit, equity and hybrid debt, complementing existing sources of funding available in Saudi Arabia.
INDIA, SAUDI ARABIA TIE UP FOR ELECTRICAL INTERCONNECTIONS, GREEN HYDROGEN
India and Saudi Arabia inked an initial pact to collaborate in the field of electrical interconnections, green/clean hydrogen and supply chains. The Memorandum of Understanding (MoU) aims to establish a general framework for cooperation between the two countries in the field of electrical interconnection and exchange of electricity during peak times and emergencies. Besides, both the countries aim for co-development of projects, co-production of green/clean hydrogen and renewable energy, and also establishing secure, reliable and resilient supply chains of materials used in green/clean hydrogen and the renewable energy sector.
According to a power ministry statement, India and Saudi Arabia signed the Memorandum of Understanding (MoU) in Riyadh. It was also decided between the two energy ministers that B2B Business Summits and regular B2B interactions between the two countries will be conducted to establish complete supply and value chains in the above-mentioned areas of energy sector cooperation.
SAUDI ARABIA’S PUBLIC INVESTMENT FUND LAUNCHES EV INFRASTRUCTURE COMPANY
Saudi Arabia's Public Investment Fund (PIF) and Saudi Electricity Company (SEC) announced the launch of an electric vehicle infrastructure company. The company aims to deliver EV fast charging infrastructure across Saudi Arabia, accelerate EV adoption, and develop local automotive ecosystem in the country. As part of the plan, it will establish its presence in 1,000 locations and install more than 5,000 fast chargers by 2030 in cities across Saudi Arabia and its connecting roads, in line with applicable regulations and standards.
The company will also promote private sector participation in developing its network of charging stations and support the localization of R&D and manufacturing of technologically advanced materials to build domestic expertise and resilience. The launch of the EV infra company is part of the broader plan to strengthen Saudi Arabia's automotive capabilities and position Saudi Arabia as a leader of the emerging electrified era of the auto industry.
November 2023
EDF CONSORTIUM WINS 1.1 GW SAUDI SOLAR IPP
A consortium of EDF Renewables, UAE energy firm Masdar and Saudi investor Nesma has won a tender to develop a 1.1 GW solar independent power project in Saudi Arabia. The consortium had submitted the lowest bid for the USD 1 Bn (EUR 935 Mn) project to design, build and operate the Al Henakiyah solar plant.
The consortium submitted a strike price of USD 16.84 per MWh to the Saudi Power Procurement Company (SPPC) for the project, with whom it has subsequently signed a 25-year offtake agreement. Financial close is anticipated in early 2024 on the project, based in Al Madinah, with grid connection due in 2025.
The Al Henakiyah project was tendered as part of the fourth round of Saudi Arabia’s National Renewable Energy Program (NREP). The SPPC, part of the Saudi ministry of energy, has awarded over 11 GW of renewable energy capacity under this scheme.
PIF-BACKED RESORT DEVELOPER PLANS SAUDI PPPs
Red Sea Global (RSG), a developer of luxury tourism projects owned by Saudi Arabia's Public Investment Fund (PIF), is looking to launch several projects on a Public-Private Partnership (PPP) structure in 2024 and beyond. RSG is looking to tender 10 projects in renewable energy, water desalination, mixed-use developments, hotels and entertainment. The list is also anticipated to include projects in district cooling. Some of those projects will be located in NEOM, a mega city project being developed in the country's Tabuk region by the PIF and will require debt and equity financing.
Investors will be granted long-term concessions under a PPP structure, with the option to establish joint ventures with prospective investors. The master plan is nearing completion. Upon approval by the PIF and the company's management, transactional advisors will be sought, followed by the launch of tenders one by one. RSG plans to host a seminar in the first quarter of 2024 to invite companies to learn about its upcoming projects.
SAUDI ARABIA LAUNCHES 3.7 GW SOLAR AUCTION
Authorities in Saudi Arabia have launched the 3.7 GW fifth round of the country’s solar auction programme. The Saudi Power Procurement Company (SPPC) issued the RFQ for the fifth round of solar projects under its National Renewable Energy Program (NREP).
The auction will include the development of four solar independent power projects (IPP), the largest of which is the 2 GWAl Sadawi IPP in the Eastern province, followed by the 1 GW Al Masa’a IPP in the province of Hail. The tender round will also feature the 400 MW Al Henakiyah 2 IPP in Madinah and the 300 MW Rabigh 2 IPP near Makkah.
MASDAR WINS BID TO DEVELOP 1,100 MW SOLAR PLANT IN SAUDI ARABIA
Saudi Power Procurement Company (SPPC) has announced that a consortium of global clean energy leaders- Abu Dhabi Future Energy Company (Masdar), French utility major EDF Renewables and Saudi infrastructure specialist Nesma Company – has won the bid to develop a 1,100 MW solar power plant at Madinah in Saudi Arabia. The Al Henakiyah Solar Plant, which is being set up at a total investment of USD 1 Bn, is expected to reach financial close early 2024 and connect to the grid in 2025.
Once operational, the Al Henakiyah Solar Plant is expected to power more than 190,000 homes per year in the Saudi city and displace more than 1.8 Mn tonnes of carbon dioxide annually. It will help achieve the target of increasing the share of renewables in the country’s energy mix to around 50% by 2030.
BUDGET SAUDI AND ELECTROMIN JOIN FORCES TO PROPEL GREEN MOBILITY WITH EV CHARGING INFRASTRUCTURE ACROSS THE KINGDOM
Budget Saudi has signed a significant agreement with Electromin during the EV Auto Show in Riyadh. The partnership aims to establish an electric vehicle (EV) charging infrastructure at Budget Saudi's key facilities across the Kingdom, aligning with Saudi Vision 2030's sustainability goals. It will be focused on achieving a greener future and contributing to net-zero emissions. The agreement reflects Budget Saudi's commitment to providing a seamless renting experience for EV vehicles to its customers. With the flexibility to scale up facilities based on demand, the company aims to cater to the increasing interest in EVs, offering both vehicles and charging infrastructure to retail and corporate customers.
SAUDI ARABIA LAUNCHES KEY PROJECTS AT JUBAIL PORTS
Saudi Arabia has initiated a series of strategic projects at the Jubail Commercial and Industrial Ports with the goal of enhancing capacity and upgrading infrastructure. Saudi Ports Authority (Mawani) emphasized that these projects align with Vision 2030's national strategy for transportation and logistics services. This strategy aims to bolster the Kingdom's position as a global logistics center and a junction for three continents.
Among these initiatives is a railway project that establishes a connection between the northern and eastern railway networks, while also linking the internal railway network with Jubail Industrial City and its industrial and commercial ports. These projects are anticipated to alleviate congestion, reduce the ports’ environmental footprint, and expand maritime operations to make way for innovative and reliable solutions.
JINKO POWER SIGNS DEAL FOR 400 MW SAUDI SOLAR PROJECT
Jinko Power Technology Co., Ltd has inked a deal with the Saudi Power Procurement Company (SPPC) for the development of the 400-MW Tabarjal solar project in Saudi Arabia, boosting its solar portfolio in the kingdom to 700 MW. The 25-year power purchase agreement (PPA) was awarded as part of the fourth round of Saudi Arabia's National Renewable Energy Programme (NREP). Jinko Power won the bidding with an offer of USD 0.0170 (EUR 0.016) per kWh.
The solar park will be built some 17 km northeast of the city of Tabarjal, in the Al-Jouf Province, with construction works planned to take place in 2024 and 2025. The contract marks Jinko Power's second solar project in Saudi Arabia after the 300-MW Saad solar scheme which is currently under construction.
December 2023
SAUDI USD 2.4 BN PORT PPP PIPELINE ON HOLD
A USD 2.4 Bn bundle of 8 port PPPs, launched by authorities in Saudi Arabia in 2022 has been put on hold as authorities reconsider the procurement strategy. Saudi ports authority, Mawani has put on hold the procurement of 8 port projects along the country’s east and west coasts after bidder interest was limited. The demand-risk PPP tenders were launched in January 2022, initially with an anticipated preferred bidder date of July 2022. But the number of projects tendered simultaneously, coupled with the fast-paced procurement schedule, meant that the market did not take the opportunity seriously.
The capex of each port PPP was estimated in 2021 at around USD 300 Mn, adding up to USD 2.4 Bn in total, but that amount is likely to have risen. The ports, planned to be built under 20-year build, operate and transfer contracts, include multipurpose terminals in the east coast ports of Ras Al-Khair, King Fahd Industrial Port Jubail and the Jubail Commercial Port and terminals at the Yanbu Commercial Port, King Fahd Industrial Port Yanbu and Jazan Port on the west coast.
List of Key Transactions - Q4 2023
Source: YOG INFRA analysis
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