RIYADH: Global credit agency Fitch Ratings has kept Saudi Arabia’s Public Investment Fund’s long-term foreign- and local-currency issuer default ratings at “A+” with a stable outlook.
This reaffirmation comes as the fund continues to play a key role in driving the Kingdom’s economic diversification efforts.
As per Fitch, an “A+” rating is a marker of very high quality, signifying the PIF’s robust ability to repay its debts.
The US-based entity noted that the PIF maintains strong financial autonomy in carrying out its investment.
The fund is playing a significant role in boosting Saudi Arabia’s non-oil gross domestic product by engaging in investments across diversified sectors in both local and international markets.
Fitch added that PIF’s ownership and control remains very strong, as the fund is exempted from a bankruptcy regime, and a Royal Decree could revert the assets and liabilities of the fund to the state.
As the key economic catalyst of Saudi Arabia, Fitch said it does not expect any changes to PIF’s status, ownership and control over the medium term.
Emphasizing the Kingdom’s support to the PIF, the report highlighted that the transfer of 8 percent of the Saudi government’s shares in Aramco to the fund is expected to strengthen its dividend base, thereby increasing government support.
Additionally, the credit rating agency expects the Saudi Arabian government to forgo the PIF’s dividend distribution for 2023. This decision aligns with the government’s objective to deploy more funds into the PIF and its subsidiaries, executing its policy mandate under Vision 2030.
As part of that ambitious goal, the Kingdom seeks to diversify its economy away from oil, and the PIF stands out as a dynamic economic powerhouse driving this transformation.
According to Fitch, the PIF has no direct substitutes in the Kingdom, serving as the sole sovereign wealth fund of Saudi Arabia.
The report added that the fund has created positive socio-political implications in Saudi Arabia by creating 1.8 million jobs across 13 strategic sectors such as telecommunications, information technology and financial services. Other sectors encompassed food and agriculture, as well as transport and logistics.
“Fitch therefore deems a PIF default would endanger the Government of Saudi Arabia’s strategy to promote the non-oil sector and to grow the nation’s wealth under Vision 2030 and lead to very significant political repercussions, particularly given the state’s high accountability in PIF’s activities,” noted Fitch.
The agency anticipates PIF’s gradual evolution as a reference issuer for Saudi Arabia, as the fund continues to tap international capital markets. This is particularly being done through trust certificate issuance programs, all while receiving capital funding from the government during its growth phase.
PIF’s trust issuance program, issued through the trustee SUCI Second Investment Co. has also been affirmed at “A+” by Fitch.
In August, PIF unveiled its annual report for 2022, disclosing that it currently holds assets worth SR2.23 trillion ($595 billion). The fund has already established 70 companies, and 25 of them, including Saudi Coffee Co. and Halal Products Development Co., were founded in 2022.
COP28: Second day of leaders’ summit at UN climate talks
Updated 6 min 27 sec ago
DUBAI: Leaders of developing nations jumped into Saturday’s second-day of a UN climate summit to press rich industrial countries to share their knowhow to fight global warming and ease the financial burdens they face — while trumpeting their own natural resources that swallow heat-trapping carbon in the air.
The annual United Nations Conference of the Parties, known as COP28, in the UAE featured about 150 presidents, prime ministers, royals and other leaders who are presenting their plans to cut heat-trapping emissions and mostly seek unity with other nations to avert climate catastrophe that seemed to draw closer than ever in 2023.
“We need to do much more to curb climate change. However, we are doing the opposite. Half of the CO2 emissions emitted in the last two centuries have been emitted in the past three decades, and they continue to grow,” according to Andrej Plenkovic, the Prime Minister of Croatia.
“Today, digital is enabling our green reform. Estonia’s parliament has adopted a new renewable electricity target of 100 percent by 2030. More than tripling our level of renewable production,” according to Kaja Kallas, the Prime Minister of Estonia.
“We’ve seen this year, one third of the days of the year exceed 1.5°C, this is a death sentence. And the reality is, unless we change course, we are going to see far more lives lost and far more damage done,” Mia Amor Mottley, Prime Minister of Barbados, said in her speech.
Evariste Ndayishimiye, President of Burundi, in his country statement, said “Burundi has committed via the Nationally Determined Contributions to protect the environment, to strengthen resilience towards climate change, and to boost food security. This is infused in our national policies and our vision for Burundi. An emerging country by 2040, and a developed country by 2060.”
“Though I applaud the current status of loss and damage (fund) and the inflow of funding supports, it is our hope that the challenge on the accessibility to the fund is limited or is eliminated,” said Kausea Natano, Prime Minister of Tuvalu, in his statement.
“Tackling the issue of climate change is one of the key priorities in all sustainable development programs and strategies in the Republic of Angola. It is a critical concern and one that deserves special attention,” Joao Manuel Goncalves Lourenco, President of Angola, said.
“We are committed to changing our national energy matrix prioritizing clean energy production sources and we’re doing this through the construction of hydroelectric plants and solar panels parks, which means that more than 65 percent of the current 6,400 MW of energy produced in the country now come from ecological sources.”
“Developing countries have prepared a broad path for developed countries who rely on our resources and yet trample all over us and do not allow us to tread the path with them,” David Choquehuanca Cespedes, Vice President of Bolivia, said in his statement.
“There can be no climate justice climatic without understanding genuine life sciences. There can be no climate justice without recognizing that human intelligence is what is important not artificial intelligence.”
Over 110 countries set to join COP28 deal to triple renewable energy
A pledge to triple the world’s installed renewable energy by 2030 is poised to win support from more than 110 countries at the COP28 climate summit on Saturday, with some pushing to make the deal global by the end of the UN conference.
The European Union, United States and COP28 host the UAE have been rallying support for the pledge as a means to the sharp drop in planet-warming emissions needed this decade to avoid unleashing more severe climate change.
Whether governments and companies will rally the huge investments needed to hit the goal is an open question. While deployment of renewables like solar and wind has been surging globally for years, rising costs, labor constraints and supply chain issues have forced project delays and cancellations in recent months.
Getting the deal into the final UN climate summit decision would also require consensus among the nearly 200 countries present. While China and India have signaled support for tripling global renewable energy by 2030, neither has confirmed it will back the overall pledge – which pairs the ramp-up in clean power with a reduction in fossil fuel use. – Reuters
“It is still possible for us to reduce emissions this decade and for us to reach a level that would allow us to achieve the 1.5°C goal, however, science tells us that we need to step up the pace,” according to Olaf Scholz, the Chancellor of Germany.
“I would like to present the following three proposals for you today. First, let us make the expansion of renewables our number one priority in energy policy globally. Let us agree on two binding targets here in Dubai, tripling the expansion of renewables and doubling energy efficiency, both by 2030.”
“As long as we still have to rely on gas, we have to ensure that we produce and transport it in as climate friendly as possible.”
“My second point concerns our international cooperation. We need forms in which to develop common solutions for the challenges of transformation.”
“My third proposal concerns solidarity and responsibility. Already in the year 2022, Germany has surpassed its objective of making available €6 billion ($6.5 billion) per annum for international climate finance.”
“I’m also confident that we will also achieve our goal of making available $100 billion per annum for international climate action together with other industrialized countries.”
“We recognize that transitioning to a low carbon sustainable economy is not only an environmental imperative but also an economic opportunity; therefore, we are still committed to promoting the use of green and clean energy, sustainable agriculture, and eco-friendly technologies,” Mohammed B. S Jallow, Vice President of Gambia, said in his speech.
“This transition will not only reduce our carbon footprint but also create jobs stimulate innovation and improve the quality of our life of our citizens.”
“The government of Botswana has made a decision to increase renewable energy penetration from two percent to 30 percent by 2030,” according to Mokgweetsi Eric Masisi, President of Botswana.
“As a developing country, Botswana prioritizes adaptation as it reduces the vulnerability of communities to climate related hazards and in so doing protecting livelihoods and ecosystems as well as enabling them to be more resilient.”
“As part of the eight Amazonian countries united in the Amazon corporation treaty organization, we are also committed to fight deforestation of the Amazon region. My country and people are forced to adapt to extreme dry and wet weather events which cause losses and damages,” Chandrikapersad Santokhi, President of Suriname, said in his national statement.
“At the same time, we must respond to the legitimate demands of our population for economic development and diversification as we do through a balanced approach consisting of developing the natural resources through environment-friendly strategy by sustainable forest management and active protection of biodiversity and also by continued transition to green energy and other green innovations and technologies.”
“Africa which bears least responsibility in terms of emissions, responsible for just four percent of global emissions, but unfortunately, Africa is a primary victim of the direct impacts of climate change,” according to Faustin-Archange Touadera, President of the Central African Republic.
“Central African Republic has been classed among the five countries which are most threatened by the effects of climate change.”
“When it comes to determining who should pay for the climate bill, the answer is, bearing in mind the gap between developed countries which are the primary polluters and poor countries, it would be logical for the former to finance the mitigation process.”
“For four years now, the country is suffering from floods, droughts, excessive heat high temperatures, and irregular rain patterns. These climate change related factors have negatively affected the livelihood of our people the people are internally displaced,” Salva Kiir Mayardit, President of South Sudan said in his national statement speech.
“That is causing subnational conflicts between the displaced and host communities. So, peace and security are clearly affected as a result of climate change.”
“We have come to this COP28 with the hope that we, the world leaders, will commit ourselves to the implementation of the provisions of the Paris Agreement.”
“Climate change financing to the less developed countries is very important so that these countries can implement their climate adaptation and mitigation projects,” he added.
“We are all now aware that climate change has an enormous impact on the fundamentals required for our survival on earth. It imposes developmental constraints and burdens on are already stretched resources and we, in Ghana are witnessing this phenomenon for ourselves at first hand,” said Nana Addo Dankwa Akufo-Addo, President of Ghana.
“A few weeks ago parts of my country Ghana were confronted with the severe humanitarian crisis triggered by the spillage of water from our country’s largest hydroelectric dam due to unusually high rainfall patterns.”
“We encourage our international partners to support the V20 loss and damage fund, the global shield against climate risk, and ultimately the UNFCCC loss and damage fund to ensure the availability of robust social safety nets for the developing world during such climate crisis.”
“Africa is one of the regions with the highest rates of carbon capture and oxygen release in the world; yet, paradoxically we are the region which draws the least benefits,” according to Obiang Nguema Mbasogo, President of Equatorial Guinea.
“In light of that it’s not enough, in our view, for developed countries to simply wring their hands and make empty promises. Rather, they need to fulfill their commitments and obligations under the Paris agreement that we achieved at COP21 and ensure the rollout and implementation of tangible concrete action to mitigate the adverse impact of climate change.”
“We issue an urgent call for renewed commitment at COP28 to provide Africa with adequate transparent and just financing going forward as well as ensuring the requisite transfer of technology.”
Mbasogo faulted developed nations for failing to deliver on their pledges to meet their commitments on financing for climate action and meet their own targets to curb their industries’ emissions.
“Africa is one of the regions in the world that sequesters the most carbon and emits oxygen,” he said.
“I urge the WHO to declare a public health emergency of international concern, the highest level of emergency that can be declared by WHO,” Jose Ramos Horta, President of Timor-Leste, said in his speech.
The Israel-Hamas conflict also loomed large in the proceedings with several leaders voicing sympathy for the Palestinians in Gaza as the week-long ceasefire ended, and vigorous efforts to extend the truce collapsed.
Israel bombarded eastern areas of Khan Younis in southern Gaza right after the truce ended.
“This year’s conference of the parties must recognize even more than ever that we cannot talk about climate change in isolation from the humanitarian tragedies unfolding around us,” King Abdullah II of Jordan said in his speech.
“As we speak, the Palestinian people are facing an immediate threat to their lives and wellbeing. In Gaza over 1.7 million Palestinians have been displaced from their homes. Tens of thousands have been injured or killed in a region already on the front line of the climate change.”
Today, the UAE announced the landmark US$30 billion ALTÉRRA climate focused investment vehicle, the largest ever, with the aim of mobilizing US$250 billion of institutional and private capital into climate action by 2030.
The high-level session was also a day of financial commitments, with host country UAE announcing the establishment of ALTÉRRA, the largest private climate vehicle, and a $30 billion commitment to the vehicle with the aim of mobilizing $250 billion of private-sector investment by 2030.
Cooperation with Saudi Arabia central to Japan’s green ambitions
‘We are very dependent on other countries,’ Foreign Ministry press secretary says
Kobayashi-Terada Maki speaking as COP28 opens in Dubai
Updated 02 December 2023
DUBAI: Japan must maintain close partnerships with countries like Saudi Arabia and the UAE if it is to achieve its goal to be a carbon-neutral economy by 2050, its Foreign Ministry press secretary said.
Kobayashi-Terada Maki made the comments in an interview with Arab News Japan as COP28 opened in Dubai.
“We are very dependent on other countries in terms of energy, and even though we are going to increase energy efficiency, we certainly need means of energy production,” she said.
Japanese companies and entities would be signing cooperation deals throughout the climate summit in the UAE, she said.
Japan is one of the only G7 countries that is close to achieving its environmental goals. Kobayashi-Terada said the country was on track to reach its target of reducing greenhouse gas emissions by 46 percent by 2030, compared with 2013 levels, and was working toward its goal of achieving net zero by 2050.
“We are on the right trajectory for really achieving our objectives right now. So that’s what we are very much proud of and we are very confident.”
The Japanese government has put in place a green transformation program, under which it aims raise 150 trillion yen ($1.02 trillion) in private-public investment to help achieve its goals.
“We are also using carbon pricing to subsidize companies that are heavy emitters to support energy efficiency,” Kobayashi-Terada said.
“By 2028, we will charge according to the amount of CO2 emissions for companies who are importing fossil fuels. By 2033, we are also pricing emissions so that the heavy emitters will pay for insurance. We will gradually increase this price so that companies can have incentives to reduce emissions.”
Later this month, Japan’s Ministry of Economy, Trade and Industry will host the Asia Zero Emission Community, which aims to encourage greater cooperation between Asian countries on reducing emissions.
“We will work together with Asian countries to utilize cutting-edge technology and also provide assistance to develop their capacity,” Kobayashi-Terada said.
Speaking at COP28, Japan’s Prime Minister Kishida Fumio said his government would increase its lending to the World Bank and the African Development Bank.
“We are going to be the first contributors and we will contribute $10 million,” the press secretary said.
New Lord Mayor of London hails maturity of Gulf economies
Michael Mainelli, heading to COP28 in UAE, says appointment of new UK foreign secretary will ‘help deepen connections with Saudi Arabia’
Mainelli tells Arab News he is ‘extremely impressed at the commitment to net zero’ in both Gulf states
Updated 02 December 2023
LONDON: Maturation of Gulf states’ economies presents further opportunities to deepen the relationship between the region and the UK, the new Lord Mayor of the City of London told Arab News before departing for COP28 in the UAE.
Just a few weeks into the role and Michael Mainelli was on hand, like his predecessor, to witness yet another British Cabinet reshuffle.
But with the return to frontline politics of former Prime Minister David Cameron, Mainelli is optimistic that this will further strengthen ties with Saudi Arabia, one of several Gulf states to have announced participation in a £30 billion ($37.9 billion) investment pledge into the UK.
“When it comes to that investment it’s enormously welcome, but what I think is great is it shows how Saudi and other Gulf states have really matured their economies,” Mainelli said.
“They’ve gotten a better understanding of what they want to achieve with their sovereign wealth funds beyond just investments and returns, and that includes knowledge transfer. That’s really exciting as it offers two-way transference between us and them,” he added.
“With Cameron’s appointment (as foreign secretary), you get undoubted foreign policy expertise, including in the Gulf, which I think will prove a good move and help deepen connections with Saudi Arabia.”
Pushing the idea of London as a “hub of connectivity” appears central in Mainelli’s year-long tenure, which he said he is serving under the theme “Connect to Prosper.”
Asked where the Gulf figures in this, he replied: “The Lord Mayor typically spends 100 days traveling each year. Of this, three weeks will be in North America, three in Asia, after which a smattering of other countries.
“And then, interestingly, the Lord Mayor will typically spend two weeks of travel around the Gulf each year. This shows you just how important it is as a destination, being right up there with Asia and North America.”
COP28 in Dubai has been designed with a strict focus on carbon, which plays into Mainelli’s “personal ambition.”
While he would be “going in with an open mind,” he said he would also use the event to revive interest in the notion of voluntary carbon markets, which first emerged during COP3 in Kyoto in 1997.
“I believe there’s a lot more work to be done when it comes to carbon markets … but we do need to get these to work,” he added.
“The initial idea was to have emission trading permits and businesses paid to remove carbon from the atmosphere — typically this would involve planting trees or seagrass — with the idea being we reduce our environmental impact by taking it out of the atmosphere.
“But it became subject to a lot of issues, ranging from the difficulty of measuring to ensuring the carbon was sequestered properly, and frankly also issues of fraud and corruption.”
Despite the initial difficulties, Mainelli remains convinced that it is a feasible and practical solution to reducing carbon levels in the atmosphere.
“It’s just the market hasn’t been fully formed and the basis upon which prices are set not properly calculated,” he said.
Of particular concern is what he described as the “final bit,” adding: “Let’s say I pay you to for a ton of carbon offset a year over a 25-year period, which you agree to facilitate through the planting of a forest.
“Now let’s say having planted that forest, a hurricane hits and uproots the trees, or there’s an avalanche, perhaps there’s a parasite, and the trees are destroyed, maybe the soil doesn’t allow them to grow, or maybe at the end of the 25 years you simply chop the forest down.
“Were any of these to happen, then nothing really has been achieved. All that has happened is you’ve deferred 25 years of emissions.”
For Mainelli, the solution to the issue and restitution of carbon markets as a tool in the route to net zero resides in the “appropriate use of insurance,” which he said would put a financial impetus behind the idea and “drive clearer, harder standards.”
Of particular pertinence, he noted, would be the fact that insurers would not insure carbon capture sites without having conducted “sufficient due diligence.”
Insurers “would crawl all over whoever was planning to set up one of these carbon capture sites, and they’d want to know what trees were being used, where seeds were sourced,” he said.
“They’d survey the ground, they’d ask why it was located at the base of a mountain. They’d do all this, and not only would they insure the site, they’d be building knowledge.”
This, said Mainelli, would be pivotal as that increased understanding would serve to improve the means and methods of carbon capture deployed in these carbon markets, leading to standardization.
It is “fairly evident” that the Gulf is determined to find workable solutions to address the climate crisis, he added.
“I spent a week earlier this year in Abu Dhabi, and also spent a week last year in Saudi, really trying to understand the situation on the ground there, and I was extremely impressed at the commitment to net zero in both nations and in other areas,” he said.
Pointing to the 25 substantial hydrogen projects in place in the UAE and the 40 Saudi Arabia has in the pipeline, Mainelli said there is an opening for closer ties with the City of London.
While development of hydrogen production would always be of interest, he said there is also reason to considering the creation of a sufficient transport mechanism for getting this hydrogen out into the world. This, he added, offers “great potential for collaboration.”
Japan’s Saudi crude oil imports slightly up for October
The amount was slightly up on September figures of around 29 million barrels
Tokyo’s ban on importing oil from Iran and Russia continued in October
Updated 01 December 2023
Arab News Japan
TOKYO: Japan’s imports of Saudi crude oil for October reached 30.37 million barrels (42.4 percent of its total), according to Japanese government data.
The amount was slightly up on September figures of around 29 million barrels (37.1 percent).
During October, the Japanese Ministry of Economy, Trade, and Industry’s Agency for Natural Resources and Energy said approximately 92 percent (65.95 million barrels) of the country’s total oil imports came from Saudi Arabia, the UAE, Kuwait, Qatar, and Bahrain.
Tokyo’s ban on importing oil from Iran and Russia continued in October with the remainder of its requirement coming from the US (3.5 percent), Central and South America (2.2 percent), Southeast Asia (1.3 percent), Oceania (1 percent), and Indonesia (0.2 percent).
The figures represent the quantities of oil that arrived at refineries, tanks, and warehouses in Japanese ports during September. Japan uses oil to generate around one-third of its energy needs.
Japan on track to meet emissions targets, Kishida tells COP28
But world must do more to achieve climate change goals
‘Each country will aim to achieve net zero according to its circumstances,’ PM says
Updated 01 December 2023
Arab News Japan
DUBAI: Japanese Prime Minister Kishida Fumio said more action was needed if the world was to achieve its climate change goal of keeping temperatures within 1.5 degrees Celsius of pre-industrial levels.
Speaking at the COP28 climate summit in the UAE, Kishida said Japan was on track to reach its target of reducing greenhouse gas emissions by 46 percent by 2030, compared with 2013 levels, and would continue to work toward its goal of net zero by 2050.
The country had already reduced its greenhouse gases by about 20 percent, he said.
As confirmed at the G7 Hiroshima Summit for economic growth and energy, and based on the GX (green transformation) Promotion Act, Japan has adopted a growth-oriented carbon policy.
Kishida said that Japan would next year become the first country in the world to adopt internationally certified transition bonds. At the same time, it would accelerate efforts to realize its green transformation and contribute to global decarbonization.
Under the framework of the Asian Zero Emission Community, Japan was committed to making renewable energy its main power source, he said.
Japan is currently the world’s third-largest producer of solar power and continues to diversify its clean energy supply chain.
“Each country will aim to achieve net zero according to its circumstances,” Kishida said.
“Coal-fired power plants that have not taken measures to reduce emissions should be addressed along the way. Japan has developed reduction measures for domestic coal without emission.”
He said Japan would end the construction of thermal power plants and was committed to providing $70 billion of public and private sector funding.
The country would also increase lending to the World Bank and Asian Development Bank to the tune of $9 billion and additional contributions would be made to the African Development Bank, he said.
Separately, Kishida and Israeli President Isaac Herzog took part in a summit on the sidelines of COP28.
Kishida said he welcomed the agreement with Hamas to release hostages and allow more humanitarian aid into the Gaza Strip, and asked for Israel’s cooperation to help make that happen.
He also stressed the importance of acting in accordance with international law and UN Security Council resolutions, and said Japan supported the two-state solution to allow Israel and Palestine to peacefully coexist.
Hertzog expressed his appreciation for Japan’s condemnation of terrorism and explained Israel’s position regarding the Gaza Strip, including its military actions there.