Saudi Electricity Co. invests $373m in 3 projects to boost power grid

Saudi Electricity Co. invests $373m in 3 projects to boost power grid
Ensuring reliability and continuity, the company aims to maximize electric power generation units for network efficiency and subscribers’ benefits. (Shutterstock)
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Updated 08 June 2023
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Saudi Electricity Co. invests $373m in 3 projects to boost power grid

Saudi Electricity Co. invests $373m in 3 projects to boost power grid

RIYADH: Electricity networks across three Saudi governates are set to undergo SR1.4 billion ($373 million) worth of improvements to reduce the areas’ liquid fuel consumption and carbon emissions.

State-owned Saudi Electricity Co. will invest the money across Rafha, Al-Wajh and Najran, reported the Saudi Press Agency. 

Ensuring reliability and continuity, the company aims to maximize electric power generation units for network efficiency and subscribers’ benefits.

The first scheme will link Rafha to the public electricity network in the eastern sector via a 380 kilovolt overhead line spanning 328 km. 

Connecting Al-Qasima to Rafha, the line will have a capacity of 1,650 kilovolt-amps.

Secondly, the Al-Wajh governorate will be connected to the Green Duba power station through an overhead line spanning 210 km. 

 

HIGHLIGHTS

State-owned Saudi Electricity Co. will invest the money across Rafha, Al-Wajh and Najran.

The company aims to maximize electric power generation units for network efficiency and subscribers’ benefits.

This link will strategically connect the northwest network to the western region network.

The SEC added that the third scheme would join the Najran region with the Al Fara’a station in the Asir region with an overhead line reaching 236.5 km.

The third scheme will also secure additional energy as the electrical networks in the southern and Najran regions become more reliable. 

In March, the company announced plans to allocate between SR30 billion and SR35 billion for its 2023 capital expenditure. 

This outlay is at least 10 percent higher than the electric power distribution firm’s 2022 capital expenditure, which stood at SR27.4 billion. 

Even though SEC did not provide a clear breakdown of the allocated amount, it is projected that expenditure in transmission and distribution infrastructure will be a priority considering that this dominated the firm’s capital expenditure over the past three years. 

In addition, SEC shed light on plans to further develop its distribution and transmission lines, and potentially achieve 23 percent automation within its distribution grid.

Established in 2000, SEC has monopolized the generation, transmission and distribution of electric power in the Kingdom through 45 power generation plants in the country. 

The firm’s vision revolves around integrating the environment, economy and social issues into the firm’s corporate cultural and economic values to accomplish the greater objectives of sustainable development.


RSI secures $88m financing from Al Rajhi Bank for acquisition 

RSI secures $88m financing from Al Rajhi Bank for acquisition 
Updated 11 sec ago
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RSI secures $88m financing from Al Rajhi Bank for acquisition 

RSI secures $88m financing from Al Rajhi Bank for acquisition 

RIYADH: Saudi modular building solution provider Red Sea International has sealed a SR330 million ($87.9 million) financing deal with Al Rajhi Bank. The arrangement includes a SR250 million loan to facilitate RSI’s acquisition of a 51 percent stake in the Fundamental Installation for Electric Work Co. Ltd., also known as First Fix. 

The agreement is valid until the completion of the acquisition process, with a repayment tenure of seven years, providing both RSI and Al Rajhi Bank with financial clarity, according to a bourse filing.  

Guarantees for the financing include a pledge of shares in RSI’s sister company and First Fix.  

RSI has also allocated project proceeds to cover the loan’s annual repayment, including interest, and has provided a promissory note under the agreement, backed by one of its sister companies, noted the filing. 

The deal involves related parties Al-Dabbagh Group, Tanmiah Commercial Group, and Petromin Corp. 

In June, RSI announced the acquisition of 51 percent of the share capital of First Fix through cash consideration. 

“RSI will gain a critical stream of electromechanical construction capability which are very crucial to every single client need,” said RSI CEO Khalid Fagih in a statement issued during the stake buyout.  

Established in 2014, First Fix is a Saudi construction firm with over 190 top projects, offering integrated design, engineering, and construction disciplines in mechanical, electrical, and plumbing. 

In another development, Al Rajhi Bank, in August, entered into an agreement with the National Center for Privatization to enhance public-private partnerships.  

The deal aims to create opportunities for local and international investors in privatization initiatives. It also involves market research, financial guidance, local and international marketing consultancy, events management, training programs, and knowledge development. 

The deal was signed by Hani Al-Saigh, vice president for strategic marketing and knowledge management at the NCP, and Hossam Al-Basrawi, general manager of corporate banking at Al Rajhi Bank. 


Saudi Arabia issues 136 industrial licenses in August 2023

Saudi Arabia issues 136 industrial licenses in August 2023
Updated 01 October 2023
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Saudi Arabia issues 136 industrial licenses in August 2023

Saudi Arabia issues 136 industrial licenses in August 2023

RIYADH: Saudi Arabia’s economic activity gained momentum with the Ministry of Industry and Mineral Resources issuing 136 industrial licenses in August compared to 102 in July.

According to the Saudi Press Agency, the food product manufacturing sector received 29 permits, followed by the non-metallic mineral industry with 21.

Moreover, the rubber and plastics industry obtained 15 permits, and 12 licenses were issued in the paper production sector.

The SPA report added that the ministry issued 795 industrial licenses between January and August. The number of factories during this period reached 11,110, taking the total investments made by these firms to SR1.489 trillion ($400 billion).

The SPA report further noted that investment volume in August for new licenses stood at SR1.6 billion.

Small enterprises accounted for 83.09 percent of the total licenses issued in August, followed by medium enterprises with 16.18 percent and micro-enterprises with 0.74 percent.

The report added that national factories held the most significant chunk of the total licenses at 76.47 percent, followed by foreign establishments and joint-investment firms with 16.18 percent and 7.35 percent, respectively.

On the other hand, 87 factories started production in August, with an investment of SR1.5 billion. Of these plants, 79.31 percent were national factories, 12.64 were foreign establishments and 8.64 percent were joint investment firms.

Meanwhile, the ministry issued 36,293 certificates of origin in August, up from 34,926 in July.

The initiative is seen as a part of the ministry’s efforts to boost exports across various sectors.

A certificate of origin is a pivotal document in international trade, validating that the exported goods are on a nationality basis.


Banks in GCC benefiting from strong operating conditions: Fitch Ratings  

Banks in GCC benefiting from strong operating conditions: Fitch Ratings  
Updated 01 October 2023
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Banks in GCC benefiting from strong operating conditions: Fitch Ratings  

Banks in GCC benefiting from strong operating conditions: Fitch Ratings  

RIYADH: Banks in the Gulf Cooperation Council are currently reaping the benefits of robust operating conditions, driven by factors such as high oil prices, contained inflation, and rising interest rates, according to Fitch Ratings.  

In its latest report, the US-based credit rating agency pointed out variations in bank performance across the GCC markets, with financial institutions in the UAE demonstrating signs of improvement compared to their counterparts. 

“We expect this improvement to be overall sustained, which, along with other solid financial metrics being maintained, could lead to positive rating actions on some UAE banks’ Viability Ratings,” said Fitch Ratings.  

The report highlights that banks in Saudi Arabia, Qatar, and the UAE are well-positioned to benefit from rising interest rates, primarily due to the swift repricing of loan books and substantial funding from low-cost current and savings accounts. 

UAE banks, in particular, have seen significant gains from rising rates, with average net interest margins increasing by 100 base points in the first half of 2023 compared to 2020.  

NIMs in the UAE are anticipated to stabilize in the second half of 2023 before experiencing a slight dip in 2024, the report added. 

Conversely, Qatari banks have experienced only modest NIM improvements due to weak credit demand and ongoing public sector repayment of overdraft facilities. 

Strong operating conditions have contributed to robust asset quality metrics in the UAE and Saudi Arabia during the first half of 2023.  

“UAE mortgage portfolios could be pressured given their high proportion of variable-rate loans, but the rise in property prices should keep losses-given-default close to nil,” added Fitch.   

Saudi banks are projected to outpace the GCC average in financing growth for both 2023 and 2024, driven by increased corporate credit demand and persistent high interest rates. 

With oil prices expected to average $80 per barrel in 2023 and $75 per barrel in 2024, the region’s banks can anticipate continued support for their operating conditions, as per the report. 


Saudi endowment investment funds exceed $133m in net assets 

Saudi endowment investment funds exceed $133m in net assets 
Updated 37 min 59 sec ago
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Saudi endowment investment funds exceed $133m in net assets 

Saudi endowment investment funds exceed $133m in net assets 

RIYADH: Saudi Arabia’s endowment investment funds have experienced significant growth, with the number of licensed funds increasing by 13 in 2023, reaching a total of 24, as reported by the General Authority of Awqaf.    

In a newly released report, the authority revealed that this expansion has pushed the net assets of endowment investment funds in the Kingdom beyond the SR500 million ($133 million) milestone for the current year.    

This aligns with the government’s strategic objectives to advance the financial sector and streamline the licensing processes for various products.     

Furthermore, this growth is expected to encourage individuals and entities to further expand their involvement in various areas of endowment investment across the Kingdom.  

Endowment funds feature precise mechanisms that enable them to contribute to sustainable development and implement best practices by participating in various projects that cater to society’s needs. 

Moreover, by presenting work programs that prioritize achieving the highest return, endowed amounts will effectively address social and developmental needs. 

Among the most prominent fund managers, Al Rajhi oversees 10 funds, including the Holy Quran Memorization Associations Fund, the Orphan Associations Fund, the Eastern Region Associations Fund, the Autism Associations Fund, and the Health Associations Fund. Alinma Investment also manages 10 funds, including the Wareef Endowment Fund and Bir Ariyadh Endowment Fund. 

In December, the authority signed an agreement with the Council of Non-governmental Organizations to launch five investment endowment funds worth SR186 million during the first quarter of 2023, as reported by the Saudi Press Agency.  

These funds aim to achieve financial sustainability for non-governmental organizations and enhance their developmental role. 

At that time, the SPA reported that Awqaf and the Capital Market Authority were in discussions about the operation of endowment funds and the challenges they face, including limited diversification of investments, often focused solely on the real estate sector, which increases risks. 

Established as a public authority, Awqaf seeks to enhance the role of endowments in economic and social development, as well as social solidarity. 


Saudi Arabia to grant premium residency for regional HQ executives 

Saudi Arabia to grant premium residency for regional HQ executives 
Updated 01 October 2023
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Saudi Arabia to grant premium residency for regional HQ executives 

Saudi Arabia to grant premium residency for regional HQ executives 

RIYADH: As part of Saudi Arabia’s ongoing efforts to enhance its business environment, the Ministry of Investment has developed a mechanism to grant premium residency to executives based at regional headquarters. The initiative is being undertaken in collaboration with the country’s Premium Residency Center, according to an official release.    

In its pre-budget statement for 2024, the Ministry of Finance highlighted the collaborative work between the Ministry of Investment and various government entities to remove obstacles for investors.     

This includes cooperation with the Ministry of Municipal and Rural Affairs and Housing to establish an exception mechanism and permissions for companies looking to set up their headquarters within one of their branches in the Kingdom.    

Furthermore, the Ministry of Finance revealed that the Investment Ministry is working closely with the Ministry of Human Resources and Social Development to implement incentives for employees at regional headquarters.

These incentives include granting visas based on the company’s requirements, enabling spouses under the family residency to work, and extending the age limit for dependents allowed to stay with regional headquarters employees to 25 years.   

Saudi Arabia continues to make strides in improving its business climate, attracting investments and fostering a more accommodating environment for foreign companies.   

The statement also mentioned that both the Ministry of Investment and the Ministry of Commerce have agreed to activate a special process for issuing commercial records for companies with regional headquarters. 

The ministry further noted that the National Investment Strategy and the ongoing efforts of various government entities have led to several achievements. These include issuing licenses for more than 162 regional centers by the end of the third quarter of 2023.  

Additionally, it launched the ‘Meza’ platform, which facilitates investors’ access to business service providers from the private sector in areas such as business establishment services, financial and tax consulting services, logistics services, and headquarters transfer services. 

The platform also includes the process of obtaining licenses and subsequent government approvals for the commercial registry, as well as assisting companies in finding suitable office spaces, housing, and schools for employees' families. 

The statement highlighted that in continuation of efforts to enhance Saudi Arabia’s position as a leading global investment center, four special economic zones were launched in April 2023. The aim is to develop and diversify the Saudi economy and improve the investment environment. 

“This will enhance the Kingdom’s position as a leading global investment destination. It will also open new prospects for development, relying on each region’s competitive advantages to support vital and promising sectors, including logistics, industrial, technical, and other priority sectors of the Kingdom,” the statement said.   

In the first half of 2023, Saudi Arabia’s special economic zones attracted more than SR47 billion ($12.5 billion) in investments in vital sectors, including the maritime industry, mining, industry, logistics, and modern technologies.