Green-certified utility projects on the rise in Saudi Arabia

An excellent case study of the PPP is the Taif Independent Sewage Treatment Plant, which was developed by Cobra & Tawzea and had a treatment capacity of 100,000 m³ per day. File
An excellent case study of the PPP is the Taif Independent Sewage Treatment Plant, which was developed by Cobra & Tawzea and had a treatment capacity of 100,000 m³ per day. File
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Updated 02 February 2023

Green-certified utility projects on the rise in Saudi Arabia

 Green-certified utility projects on the rise in Saudi Arabia
  • Saudi Arabia’s National Water Strategy is reshaping the private sector with a focus on ESG principles

RIYADH: When a consortium of water infrastructure companies closed green loans worth $480 million for three independent sewage treatment plants in Saudi Arabia last March, it was a harbinger of the verdant opportunity that awaited the Kingdom’s sustainable projects.

It was a watershed moment for the consortium of Saudi companies Tawzea, Tamasuk, and Spanish firm Acciona when they secured the amount for three ISTPs — Madinah 3, Buraidah 2, and Tabuk 2 — in just six months of expressing their interest.

What made the project a prime beneficiary of green financing was its commitment to the sustainability goals envisaged by the Saudi Vision 2030 and the endeavors of Saudi Water Partnership Co., the state-run company which facilitates the commercialization of water and electricity in the Kingdom.

Saudi Arabia is making headlines by taking measures to ensure a smooth transition to green energy and fight climate change. The Kingdom will host the 44th International Association for Energy Economics International Conference from Feb. 4-9 to discuss the path for a sustainable future.

“The construction and operation of the ISTPs will aid in optimizing the use of water resources in Saudi Arabia by providing treated and renewable water to be used for agricultural purposes, therefore reducing the consumption of freshwater,” said María Ortiz de Mendivil, primary analyst, S&P Global Ratings, in a second-party opinion note certifying the projects as green.

Once completed, Madinah 3 will serve up to 1.5 million inhabitants of existing and future residential areas near the city of Madinah. It will have an initial treatment capacity of 200,000 m³ per day, which can be expanded to 375,000 m³ per day.

Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m³ per day. Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m³ per day.

The treated water will replace freshwater resources for farming, saving this scarce resource and contributing directly to the nation’s water security. Daily water savings are expected to amount to 190,000 m³ per day at Madinah 3, 142,500 at Buraidah 2, and 85,500 at Tabuk 2.

HIGHLIGHTS

Madinah 3 will have an initial treatment capacity of 200,000 m³ per day, which can be expanded to 375,000 m³ per day.

Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m³ per day.

Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m³ per day.

“We have a zero-sludge-dispatch policy, meaning that all the sludge that we produce in these wastewater treatment plants is either used by farmers to replace other fertilizers or sent to cement factories for the production of cement,” said Julio De La Rosa, the Middle East business development director of Acciona Agua, while speaking at an International Desalination Association’s forum held two months ago.

Additionally, the photovoltaic solar panels installed at each plant will generate renewable power that will partially cover their daily energy consumption.

The green-certified project drew the attention of the bigwigs of the finance world, such as Abu Dhabi Islamic Bank, Mitsubishi UFJ Financial Group, Alimna Bank, Riyad Bank, and Siemens Bank, which parked their investments at first blush.

Green loans for a greener planet

So, what exactly is a green loan? According to the World Bank, a green loan is a form of financing that enables borrowers to use the proceeds to exclusively fund projects that make a substantial contribution to an environmental objective.

It is similar to a bond. The only difference is that a loan is typically smaller than a bond and executed in private operations. Also, green loans and green bonds follow different but consistent principles: The Green Loan Principles and the Green Bond Principles of the International Capital Market Association.

This green financing assumes significance as investors worldwide are earmarking their funds into sustainable investment projects that neutralize greenhouse gases and run on renewable energy, making them attractive propositions in an environmentally conscious world.

Saudi Arabia, particularly, has been facing severe challenges due to the unsustainable use of water resources, and it has limited reserves of nonrenewable groundwater, which are depleting rapidly. In addition, high water demand in the agriculture sector has also exacerbated the water scarcity situation.

According to figures published by the Minister of Environment, Water and Agriculture, between 1985 and 2020, the water level in the Kingdom almost dropped by 90 meters. That led to the National Water Strategy, inspired by the Vision 2030 blueprint, which identified levers and enablers to fix the problem.

“The National Water Strategy reshaped the private sector, which has started to think about how to be efficient and contribute to the water strategy, gain benefits as per their sustainability roadmap and accommodate the environment, social and governance in their strategies,” said Mohammed Al Halawani, CEO of Tawzea.

This public-private partnership has spawned many efficient independent water and power projects and desalination plants that are fast becoming textbook case studies for sustainable projects worldwide.

An excellent case study of the PPP is the Taif Independent Sewage Treatment Plant, which was developed by Cobra & Tawzea and had a treatment capacity of 1,00,000 m³ per day.

It is the first ISTP that reached commercial operation in Saudi Arabia from the private sector under the build-operate-transfer model.

The plant has less than 0.35 kilowatt-hour per m³ electricity consumption. About 30 percent of the electricity was recovered by biogas cogeneration. Even the residual output was 90 percent dry solids and beneficial class-A sludge.

“Over 210,000 sq. m of trees will be introduced as part of the project with the support of the Saudi Green Initiative, which is equivalent to approximately sequestering 136 tons of carbon dioxide per year,” said Al Halawani.

Sustainable to the core

Another example is the Shuaibah 3 Water Desalination Co., a special-purpose vehicle created to finance and develop the Shuaibah 3 Independent Water Project.

The company was launched by Saudi utility developer ACWA Power and Water & Electricity Holding Co., also known as Badeel, both owned in part or whole by the Public Investment Fund.

The project aims to replace a thermal desalination plant, the Shuaibah 3 IWPP, powered by fossil fuels. The use of reverse osmosis technology makes the proposed plant more energy efficient than the previous thermal desalination plant that will come offline.

The conventional thermal desalination process, multi-stage flash distillation, and multiple-effect distillation produced nearly 20 kg of carbon dioxide equivalent per m³. However, the carbon footprint for the RO process could be anywhere from 0.4 to 6.7 kg of carbon dioxide equivalent per m³.

According to ACWA Power, this technology shift could accrue savings of about 45 million tons of carbon dioxide yearly.

That’s not all. Green financing is greenlighting a host of projects worldwide, and for the first time, more money was raised in the debt markets in 2022 for climate-friendly projects than fossil-fuel companies.

According to a Bloomberg report, roughly $580 billion was arranged in 2022 for renewable energy and other environmentally responsible ventures, while the oil, gas, and coal industries turned to lenders and underwriters for closer to $530 billion. 

While it may not indicate that green financing is finally having an upper hand on oil lenders, the well-trodden bazaars of fossil fuel funding have become eerily cold after the global pushback on loss and damage during the UN Climate Change Conference in Egypt last year.

Saudi Arabia, on its part, lives by the age-old adage: You never miss the water till the well runs dry. While going to press, Saudi power juggernaut ACWA Power announced that it added 2.4 million m³ day of water desalination capacity across four reverse osmosis megaprojects in 2022, the largest in a calendar year in the company’s history.

This achievement brings the company’s total water capacity under management to 6.4 million m³ across 16 projects in four countries, producing water at less than $0.50 per m³, which is up to three-quarters lower than the tariff of $2 per m³ just a few years ago.

Ergo, the message is loud and clear: The future of infrastructure financing is green, or there’s no future at all.


Global investment in clean energy to reach over $1.7tn in 2023: IEA

Global investment in clean energy to reach over $1.7tn in 2023: IEA
Updated 13 sec ago

Global investment in clean energy to reach over $1.7tn in 2023: IEA

Global investment in clean energy to reach over $1.7tn in 2023: IEA

RIYADH: As efforts to mitigate the effects of climate change gather pace around the world, investment in clean energy is also witnessing a surge and is expected to reach more than $1.7 trillion in 2023, according to the International Energy Agency.

In its latest report, IEA said the global energy sector is likely to record investment worth around $2.8 trillion this year of which 60.7 percent will go toward clean technologies.

As security and affordability issues brought on by the global energy crisis gain strength, spending on clean energy technologies will outpace spending on fossil fuels, the report predicted.

Green energy includes renewables, electric vehicles, nuclear power, low-emissions fuels, efficiency improvements, and heat pumps.

According to the report, the leftover global energy investments — slightly over $1 trillion — will go toward coal, gas, and oil.

“Clean energy is moving fast — faster than many people realize. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” said IEA Executive Director Fatih Birol.

He added: “For every dollar invested in fossil fuels, about $1.7 are now going into clean energy. Five years ago, this ratio was one-to-one.”

The report also predicted that in 2023, spending on solar power is due to hit more than $1 billion a day or $382 billion for the year, while investment in oil production will stand at $371 billion.

From 2021 to 2023, annual investments in clean energy are projected to rise by 24 percent, driven by renewables and electric cars, compared to a 15 percent increase in investments in fossil fuels during the same time frame.

The report noted that over 90 percent of this increase emanates from developed nations and China. This poses a severe threat of creating new energy divides if renewable energy transitions do not accelerate elsewhere.

The IEA attributed the stimulated investments in clean energy in recent years to rapid economic expansion and erratic fossil fuel prices that fueled worries about energy security, particularly in the wake of the Ukraine crisis.

Other factors impacting the jump in investments in clean energy include significant policy support through initiatives in Europe, Japan, China, and other regions as well as the US Inflation Reduction Act.   


Saudi Fund for Development inks loan deals worth $16m with Saint Vincent and the Grenadines

Saudi Fund for Development inks loan deals worth $16m with Saint Vincent and the Grenadines
Updated 36 min 54 sec ago

Saudi Fund for Development inks loan deals worth $16m with Saint Vincent and the Grenadines

Saudi Fund for Development inks loan deals worth $16m with Saint Vincent and the Grenadines

RIYADH: A new primary care center and a cultural facility are set to be established in the Caribbean island nation of Saint Vincent and the Grenadines thanks to two development loan agreements worth $16 million. 

Signed by the Saudi Fund for Development, the two new agreements are part of the Kingdom’s framework to support the advancement in developing countries and small island developing states worldwide.

The first agreement will oversee the construction of a primary care center in South Rivers for $6 million, the Saudi Press Agency reported. 

The primary care center aims to improve the quality and resilience of the healthcare sector in the island nation while ensuring that locals have access to the necessary health services. 

It will also help in reducing chronic diseases as well as reducing mortality rates in the region.

The project is expected to create direct and indirect job opportunities and train medical staff. 

Meanwhile, the second agreement worth $10 million was allocated to construct a cultural center and a market for craft and agricultural products in Belle Vue.

The project will promote the country’s craft, handicraft, cultural and creative industries. 

It will also significantly promote tourism, social and cultural growth, and public health.

Together, the two projects will contribute to achieving the UN Sustainable Development Goals, specifically good health, well-being, decent work and economic growth.

“We look forward, through the signing of these two agreements, to opening horizons for development cooperation with the Kingdom of Saudi Arabia and strengthening close relations between the two countries,” Prime Minister of Saint Vincent and the Grenadines Ralph Gonsalves said.

SDF Chairman Ahmed Aqeel Al-Khateeb and Camillo Gonsalves, the minister of finance, economic planning and information technology of the island nation, signed the agreements.

Founded in 1974, the SFD has implemented over 700 projects and development programs in 85 countries worldwide. 


Nama Ventures and RAZ Group fund UAE-based logistics startup Cargoz

Nama Ventures and RAZ Group fund UAE-based logistics startup Cargoz
Updated 56 min 11 sec ago

Nama Ventures and RAZ Group fund UAE-based logistics startup Cargoz

Nama Ventures and RAZ Group fund UAE-based logistics startup Cargoz

CAIRO: Saudi venture capital firms are bolstering the regional startup funding landscape, with Nama Ventures and RAZ Group leading the investment round to support the expansion of the UAE-based logistics startup Cargoz in the Kingdom. 

Cargoz, often called the Airbnb for commercial warehousing, has secured an undisclosed amount in bridge funding from Nama Ventures, RAZ Group and a select few angel investors from the UAE and the Kingdom who are players in the logistics industry. 

The company, founded in 2022 by Premlal Pullisserry and Lijo Antony, offers a platform that connects small and medium enterprises with warehouse companies for short-term contracts. 

According to the press release, the company plans to utilize the funds to spur growth in the UAE and prepare for a soft launch in Riyadh by the third quarter of this year. 

Cargoz has reported significant growth over the last eight to nine months, indicating that it addresses a substantial market issue. 

“We underestimated the pain of finding on-demand storage for SMEs and how broken and stressful that experience was,” Cargoz stated in the press release. 

Nama Ventures, known for its 29 investments, including notable startups like Muqbis, Punt Partners and Faceki, expressed great enthusiasm about backing Cargoz. 

“Nothing makes us more excited at Nama Ventures than seeing founders as complementary as Premlal and Lijo. Premlal breaths logistics; his depth of the space and his understanding of the pains in the space are unparalleled. Lijo, on the other hand, is a coder’s coder; he is very well versed in tech space and knows how to build tech products,” said Mohammed Alzubi, founder and managing partner of Nama Ventures. 

In August 2022, Nama Ventures also led Cargoz’s pre-seed funding round with an undisclosed amount used to foster growth in the UAE. 


China’s 1st homemade passenger plane completes maiden commercial flight

China’s 1st homemade passenger plane completes maiden commercial flight
Updated 28 May 2023

China’s 1st homemade passenger plane completes maiden commercial flight

China’s 1st homemade passenger plane completes maiden commercial flight

BEIJING: China’s first domestically made passenger jet flew its maiden commercial flight on Sunday as China looks to compete with industry giants such as Boeing and Airbus in the global aircraft market.

The C919 plane, built by the Commercial Aviation Corporation of China, carried about 130 passengers on the flight, according to the state-owned newspaper China Daily. The jet took off Sunday morning from Shanghai Hongqiao Airport and landed in Beijing less than two hours later.

The flight was operated by state-owned China Eastern Airlines, and the side of the plane was emblazoned with the words: “The World’s First C919.”

The inaugural flight comes as COMAC looks to break into the single-aisle jet market in a direct challenge to Airbus and Boeing. Airbus’s A320 and Boeing’s B737 jets are the most popular aircraft for domestic and regional flights.

While COMAC designed many of the C919’s parts, some of its key components, including its engine, are still sourced from the West.

According to state media reports, the company plans to build 150 C919 planes yearly for the next five years.

The C919, which has been in development for 16 years, has a maximum range of about 3,500 miles and is designed to carry between 158 and 168 passengers.

Over 1,200 C919 jetliners have been ordered, COMAC says, with China Eastern Airlines under contract to buy five of them.


Biden, McCarthy reach tentative deal to raise debt ceiling

Biden, McCarthy reach tentative deal to raise debt ceiling
Updated 28 May 2023

Biden, McCarthy reach tentative deal to raise debt ceiling

Biden, McCarthy reach tentative deal to raise debt ceiling

WASHINGTON: President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and avert a potentially disastrous US default.

Support from both parties will be needed to win congressional approval next week before a June 5 deadline.

The Democratic president and Republican speaker reached the agreement after the two spoke earlier Saturday evening by phone, said McCarthy.

“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

The agreement would limit food stamp eligibility for able-bodied adults up to age 54, but Biden was able to secure waivers for veterans and the homeless.

The two sides had also reached for an ambitious overhaul of federal permitting to ease the development of energy projects and transmission lines. Instead, the agreement puts in place changes in the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews in hopes of streamlining the process.

The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time to raise the federal debt ceiling.

Both sides have suggested one of the main holdups was the Republican effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime goal that Democrats have strenuously opposed.

Biden has said the work requirements for Medicaid would be a nonstarter. He seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program despite objections from rank-and-file Democrats.

Americans and the world were uneasily watching the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation’s leadership.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”

The president, spending part of the weekend at Camp David, continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers.