Cabinet OKs hike in gasoline, electricity and water prices

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Updated 29 December 2015

Cabinet OKs hike in gasoline, electricity and water prices

RIYADH: The Cabinet on Monday approved increases in the pump prices of gasoline as well as electricity and water rates, the first of a series of “comprehensive economic, fiscal, and structural reforms” recommended by the Ministry of Finance.
Gasoline price hikes are to take effect after 12 midnight Monday, while the adjustments in electricity and water rates will start on the first day of Rabiul Thani in the Islamic calendar, equivalent to January 11, 2016 in the Gregorian calendar.
Octane 91 will now cost 75 from the current 45 halalas. Octane 95 will increase to 90 halalas from the current 60 halalas, a Cabinet announcement carried by the Saudi Press Agency (SPA) said.
With the directive, Saudi Aramco has ordered that all gasoline stations across the kingdom be closed by nightfall to allow the adjustment of prices in their pumping machines.
Other Gulf states such as the United Arab Emirates and Kuwait have earlier raised their pump prices amid a decline in oil prices worldwide, resulting in reduced revenues.
The new rates were approved during a Cabinet session on Monday, during which Custodian of the Two Holy Mosques King Salman also announced a national budget plan of SR840 billion for 2016, with a view to reducing the deficit and a drive to raise revenues from sources other than oil.
In a press statement released earlier in the day, the MOF revealed plans to review government subsidies for fuel, electricity and water as the government announced cuts in the 2016 budget.
The ministry said it is considering “revisions in energy, water, and electricity prices gradually over the next five years, in order to achieve efficiency in energy use, conserve natural resources, stop waste and irrational use, and minimize negative effects on low and mid-income citizens and the competitiveness of the business sector.”
Another measure mentioned by the Finance Ministry is a review of current levels of fees and fines, introduction of new fees, and completion the necessary arrangements for the application of the value added tax (VAT) approved by the Supreme Council of the Arab Gulf States Cooperation Council at its 36th session held in Riyadh last month.
The ministry also called for the “application of additional fees on harmful goods such as tobacco, soft drinks and the like.”
Among the other measures outlined by the MOF are more on structural reforms, including:
• Reducing the growth of recurring expenditures, especially wages, salaries, allowances and the like, which amounted to SR 450 billion, exceeding 50 percent of the approved budget expenses.
• Optimizing operating expenditures, including the rationalization of government agencies’ expenses, the utilization of technology (IT) for the delivery of government services, and the development and strengthening control and governance mechanisms.
• Completing the revision of the government’s competitiveness and procurement law, in accordance with world-class practices.
• Establishing a unit in the Ministry of Finance for public debt management. The new unit will be responsible for developing and overseeing the public debt and financing strategy and strengthening the Kingdom's ability to borrow both domestically and internationally; thus contributing to the market for sukuk and local bonds.


Saudi investors share expertise on Saudi corporate VC opportunities

Updated 27 November 2020

Saudi investors share expertise on Saudi corporate VC opportunities

JEDDAH: The two-day Step Saudi 2020 event featured two prominent Saudi figures in the field of investment on the second day.
Hashim Al-Awadi, CEO of Tech Invest, and Salman Jaffery, chief investment officer at Saudi Aramco Entrepreneurship Ventures, both shared their expertise, with the latter saying it is more beneficial for corporations to start a venture capital (VC) arm than invest from their current mergers and acquisitions arm (M&A).
Managing partner at Class 5 Global, Zach Finkelstein, who moderated the session on the second day of the event, said the San Francisco-based venture fund invested in a number of companies in the Middle East.
“The Middle East is particularly interesting to us, and in the past, our partners have invested in such regional companies as Careem. We’re excited to explore the development of the corporate VC space and how it can impact places like Saudi Arabia,” he added.
When asked why a corporation should start a VC arm instead of investing from an M&A team, and why have a separate corporate Venture Capital arm in the first place, Jaffery answered that “it brings faster results.”
“I think the easiest answer to that is just speed and agility,” he said. “Getting that response quickly to the market. VC deals can take weeks or months whereas an M&A transaction can take up to a year or longer, and also similarly, if you’re trying to then come out of it, it’s harder to come out of a joint venture agreement or an M&A as opposed to a VC.”
Al-Awadi explained his opinion a traditional VC perspective, and said: “We like the fact that corporations can invest from both their M&A arms and their VC arms if they have them.”
He highlighted that VC arms can invest in a greater variety of companies. “You have the intelligence, you know the market and if you’re looking at specific technology where we don’t have a lot of expertise we trust that you (other venture capitalists) know the market and you can evaluate that technology better to see if it has the capability and potential for growth or not.
“Eventually, you do have an M&A arm that will provide an exit for us, for an incentive for this company to work hard to grasp the intention after having been invested in by the VC arm of this big corporate to maybe look into making a partial agreement or complete acquisition, which really adds an incentive for the company to grow and attracts other investors and also attracts talent to join the company and help it grow even more.”
He said both the VC and M&A arm are important for company growth. “We tend to look at corporate investors through both arms as complementary to what we do when we have both of them around.”
The Kingdom has obtained a high reputation among investors internationally through the years, especially after the economic and social reforms of Saudi Vision 2030.
Step Saudi is home to the Kingdom’s best entrepreneurs, investors, creatives and digital enthusiasts. The last edition of Step Saudi featured four content tracks, more than 100 startups and over 1,500 attendees.