Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

Saudi Arabia’s PIF expands green investments to $19bn across 91 projects
Short Url
Updated 14 October 2024
Follow

Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

Saudi Arabia’s PIF expands green investments to $19bn across 91 projects
  • Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects
  • Remaining $18.9 billion were allocated to 73 under construction projects spanning the same categories

RIYADH: Saudi Arabia’s Public Investment Fund has expanded its green project investment plan to over $19.4 billion, covering 91 eligible projects in areas such as renewable energy and clean transportation.

In its second ‘Allocation and Impact Report,’ PIF provided an update on the allocation and impact of its green bonds as of June 30.

The new paper revealed that “PIF has currently identified a capital expenditure portfolio of over $19.4 billion of eligible green projects, of which $8.5 billion has been earmarked to be allocated under PIF’s two green bonds,” referring to those issued in 2022 and 2023 — totaling a combined $8.5 billion.

According to the report, there are 18 operational projects categorized under renewable energy, energy efficiency, green buildings, clean transportation, as well as sustainable water management, pollution prevention, and sustainable management of living natural resources and land use.

The Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects.

The remaining $18.9 billion was allocated to 73 under construction projects spanning the same categories, with green buildings also taking the largest share at $6.3 billion for three projects.

Prominent green projects

PIF’s green bond proceeds are being funneled into a wide range of projects to reshape Saudi Arabia’s future. One of the most prominent undertakings is Red Sea Global, a tourism development owned by PIF. 

According to the report, PIF has allocated $1.7 billion of green financing for The Red Sea and AMAALA, as of 30 June 2024. 

PIF’s investment qualifies under the ‘Green Buildings’ category in the Green Finance Framework, which means that new or existing commercial or residential buildings must get a third-party certified green building standard to be eligible for funding.

The Framework published in 2022 is used as the basis to issue green bonds, sukuk, loans and other debt instruments, known as green financing instruments.

PIF said in the report that RSG is committed to regenerative tourism destinations that preserve and enhance the natural environment. 

Spanning 32,000 square km, RSG’s portfolio includes The Red Sea and AMAALA projects, which will offer up to 11,000 keys across 80 hotels, as well as residential and hospitality assets built with sustainability at their core.

As for the impact of this project, the report added that to date, “there are nine green buildings that are already operational, including four hotels, four residential clusters and one management office.”

On average, these buildings achieve 20 percent energy savings compared to conventional buildings, totaling 18,000 MWh per year. As these assets are independent of the national grid and are 100 percent solar powered, they avoid 36,000 tCO2e annually. 

“When all the assets are completed across both destinations, total avoided emissions will exceed 600,000 tCO2e per year,” the report said.

Under the “Sustainable Water Management” category, the report added the NEOM Water Distribution project. PIF’s contribution to this project included fully funding NEOM’s water transmission and distribution pipelines and allocating over $1 billion to support nine water transmission projects across the region. 

“This key category emphasizes that investments and expenditures in projects and infrastructure must enhance water-use efficiency,” the wealth fund said.

To date, a 12-bay tanker filling station supplying 18,000 cubic meters per day of potable water and a 30-kilometer section of distribution pipeline is already operational, the report revealed.

It said that an additional three filling stations and over 500 kilometers of water transmission pipeline are currently under construction, adding: “Once completed, these assets will improve resilience and support de-risking of water scarcity in Saudi Arabia.”

Measurable impact and ESG leadership

Projects funded by PIF’s green bonds are set to generate enough renewable energy to power 160,000 homes annually and save 7.7 million MWh through energy-efficient technologies, including the installation of over 211,000 energy-efficient bulbs and 6,000 HVAC systems.

In the area of water sustainability, PIF’s investments in desalination and wastewater treatment are projected to treat 49.4 million cubic meters of wastewater and desalinate 1.2 million cubic meters of seawater each year.

Green building projects funded by the bonds are expected to save 711,000 MWh annually, supporting Saudi Arabia’s efforts to cut energy consumption and carbon emissions.

PIF’s green finance strategy is also setting global benchmarks. As a founding member of the One Planet Sovereign Wealth Funds initiative, PIF is integrating climate change into its investment strategies.

Ranked seventh globally and first in the Middle East in the Global Sovereign Wealth Fund’s Governance, Sustainability, and Resilience Scoreboard, PIF’s efforts highlight its global environmental, social and governance leadership.

To ensure transparency and accountability, PIF has established an ESG and Sustainability Steering Group. 

The body meets quarterly to monitor fund allocation, track project impacts, and ensure all green bond investments align with PIF’s Green Finance Framework. This governance structure underscores PIF’s commitment to sustainability and strong ESG practices.
 
A global first for green bonds

In October 2022, PIF issued its first-ever $3 billion multi-tranche green bond, described as “the first green bond by a Sovereign Wealth Fund.” This was followed by a larger $5.5 billion offering in February 2023, both of which were well-received by global investors.

By June 2023, PIF had allocated $5.2 billion of the $8.5 billion raised to environmentally-focused projects. It had identified a green project portfolio worth $11.7 billion, with $8.5 billion designated for bonds.

Already, $1.3 billion has been used for initiatives like renewable energy, energy efficiency, and sustainable water management. 

Of the $706.2 million from the October issuance, $458.6 million went to green buildings, $138.2 million to energy efficiency, and $45.2 million to water management. Similarly, $629.2 million from the February issuance was allocated to renewable energy, energy efficiency, and clean transportation.

Unallocated funds are managed under PIF’s liquidity policy, ensuring all investments align with its ESG principles. Notably, the October issuance included a 100-year tranche, signaling PIF’s long-term commitment to sustainability.

The success of these bonds is evident in the February issuance being six times oversubscribed, with orders exceeding $33 billion, showing strong global investor confidence in PIF’s leadership in green financing.

Vision 2030 and PIF’s role in economic diversification

PIF’s green bond strategy is deeply intertwined with Saudi Arabia’s Vision 2030 — a transformative blueprint aimed at diversifying the country’s economy away from oil dependency and establishing new economic sectors that are future-facing and sustainable. 

PIF is tasked with leading the charge, playing a key role in supporting the nation’s commitment to achieving net-zero carbon emissions by 2060. 

The fund has set its target to reach net-zero emissions by 2050, positioning itself as an integral player in the global fight against climate change.

The organization’s mandate under Vision 2030 includes expanding non-oil gross domestic product, generating jobs, and enhancing local content, as well as nurturing a thriving private sector. 

PIF is attracting sustainable investments into Saudi Arabia’s eco-conscious economy by issuing green bonds and funding critical projects in renewable energy, energy efficiency, water management, and pollution control, among others. 

The initiatives are expected to contribute significantly to the Kingdom’s economic growth while ensuring environmental sustainability.


FMCG and tech drive UAE spending to $3.7bn in Q3 2024

FMCG and tech drive UAE spending to $3.7bn in Q3 2024
Updated 7 sec ago
Follow

FMCG and tech drive UAE spending to $3.7bn in Q3 2024

FMCG and tech drive UAE spending to $3.7bn in Q3 2024

RIYADH: UAE consumer spending saw robust growth in the third quarter of 2024, with total expenditures reaching $3.7 billion across fast-moving consumer goods, technology, and durable products, new data showed. 

This represents a 4.8 percent year-on-year increase, reflecting the market’s resilience and evolving consumer habits, according to the latest NielsenIQ Retail Spend Barometer, powered by GfK intelligence. The index provides quarterly insights into UAE spending across FMCG and technical consumer goods. 

The FMCG sector spearheaded growth, achieving $2.1 billion in sales during the third quarter, a 6.4 percent rise compared to the same period in 2023. Meanwhile, the technology and durable goods sector contributed $1.5 billion, marking a 2.5 percent year-on-year increase.   

Strong back-to-school sales  

The quarter’s performance was bolstered by back-to-school promotions, the expansion of convenience retail, and the ongoing rise of digital shopping platforms. QuickCommerce services and online grocery delivery gained traction, especially among younger, tech-savvy consumers. 

David Cantatore, retail lead NIQ Middle East, said: “In the third quarter 2024, we’ve witnessed sustained growth in UAE’s retail landscape, with strong consumer spending driven by targeted promotions and increased demand in both FMCG and tech sectors.” 

He added: “The growth of new communities is fueling convenience retail, while online grocery shopping is reshaping the landscape, especially among younger and busy professionals. This digital evolution demonstrates the market’s appetite to adapt and thrive in response to changing consumer preferences.”   

FMCG outpaces tech   

The FMCG sector demonstrated a strong recovery, with year-on-year growth rising from 3.2 percent in the third quarter of 2023 to 6.4 percent a year later. This resurgence followed a notable slowdown earlier in the year, when growth declined from 9.4 percent in the first quarter of 2023 to 3.5 percent in the corresponding period of 2024. 

In contrast, the tech and durable goods sector faced a significant slowdown, as growth dropped from 7.7 percent in the third quarter of 2023 to 2.5 percent in 2024. However, back-to-school promotions and new product launches, such as the Samsung Galaxy S24, helped sustain consumer interest.  

Retail evolution  

The rise of new residential communities across the UAE has driven the expansion of convenience retail, encouraging more frequent but smaller shopping trips. This trend aligns with an increasing preference for sustainable and healthier products, supported by the rapid adoption of digital grocery platforms. 

“The positive growth we’re seeing across both sectors reflects the UAE’s dynamic retail environment and strong consumer confidence,” Cantatore said. 

He added: “As we continue to witness the evolution of shopping behaviors and the rise of digital solutions, the retail sector remains well-positioned for sustained growth and innovation.” 

Digital trade in the UAE is expected to grow at an annual rate of 12.3 percent between 2023 and 2028, fueled by the increasing adoption of “buy now, pay later” models and advanced fintech systems. 

A joint report released in May by the Ministry of Economy and the Abu Dhabi Chamber of Commerce highlighted that over 40 percent of UAE consumers rely on innovative payment solutions, underscoring the nation’s rapid shift toward digital commerce. 


Oil Updates – prices slip on US gasoline stocks buildup

Oil Updates – prices slip on US gasoline stocks buildup
Updated 36 min 52 sec ago
Follow

Oil Updates – prices slip on US gasoline stocks buildup

Oil Updates – prices slip on US gasoline stocks buildup

SINGAPORE: Oil prices drifted lower on Thursday after a surprise jump in US gasoline inventories, with investors focusing on this weekend's OPEC+ meeting to discuss oil output policy, according to Reuters. 

However, the OPEC+ oil alliance later announced that the 57th Joint Ministerial Monitoring Committee meeting and the 38th OPEC and non-OPEC Ministerial Meeting have been rescheduled to Dec. 5. The group cited the Gulf Cooperation Council Summit, set to take place in Kuwait on Dec. 1, as the reason for the postponement. 

Brent crude futures fell by 20 cents, or 0.27 percent, to $72.63 per barrel by 10:17 a.m. Saudi time, while US West Texas Intermediate crude futures were down 21 cents, or 0.29 percent, at $68.52 a barrel. 

Trading is expected to be light due to the US Thanksgiving holidays starting on Thursday.

Oil is likely to retain its near-term bearish momentum as the risks of supply disruption fade in the Middle East and US gasoline inventories stood higher than expected, said Yeap Jun Rong, a market strategist at IG. 

US gasoline stocks rose 3.3 million barrels in the week ending on Nov. 22, the US Energy Information Administration said on Wednesday, countering expectations for a small draw in fuel stocks ahead of record holiday travel. 

Slowing fuel demand growth in top consumers China and the US has weighed heavily on oil prices this year, although supply cuts from OPEC+ have limited the losses. 

OPEC+, which pumps about half the world’s oil, will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members have been discussing a further delay to a planned oil output hike due to have started in January. 

A further deferment, as expected by many in the market, has mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank. 

“The only question is whether it's a one-month pushback, or three-month, or even longer,” he said. 

“That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don't come.” 

OPEC+ had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025. 

Brent and WTI have lost more than 3 percent each so far this week, under pressure from Israel’s agreement to a ceasefire deal with Lebanon’s Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the Middle East region. 

Market participants are uncertain how long the break in fighting will hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said. 

Oil prices are undervalued due to a market deficit, the heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days.

They also pointed to a potential risk to Iranian supply from sanctions that might be adopted under US President-elect Donald Trump. 


Saudi Arabia boosts R&D spending to $6bn in 2023 amid Vision 2030 push 

Saudi Arabia boosts R&D spending to $6bn in 2023 amid Vision 2030 push 
Updated 28 November 2024
Follow

Saudi Arabia boosts R&D spending to $6bn in 2023 amid Vision 2030 push 

Saudi Arabia boosts R&D spending to $6bn in 2023 amid Vision 2030 push 

RIYADH: Saudi Arabia ramped up its research and development spending to SR22.61 billion ($6.02 billion) in 2023, marking a 17.4 percent increase from the previous year, according to official data. 

The General Authority for Statistics reported a rise in R&D personnel, with the workforce reaching 49,337 by the end of 2023, up 12.2 percent year on year. Researchers accounted for 36,832 of this figure, representing a 22.1 percent annual growth. 

The Kingdom is prioritizing R&D across sectors like energy, technology, and sustainability as part of its Vision 2030 strategy to diversify its oil-dependent economy. 

“The percentage distribution of employees in the field of R&D at the level of different sectors indicates that the number of employees in higher education reached 37,540 employees, representing 76.1 percent, followed by the private sector, with 8,810 employees, at 17.9 percent, then the government sector, with 2,987 employees. at 6.1 percent,” GASTAT noted. 

The authority also revealed that Saudi Arabia had 32,209 researchers in higher education by the end of 2023. The private and government sectors employed 2,790 and 1,883 researchers, respectively. 

In terms of funding, the government sector accounted for the largest share of R&D spending at SR12.12 billion in 2023, representing 53.6 percent of the total. The private sector contributed SR9.31 billion, while the higher education sector received SR1.17 billion. 

When it comes to expenditure, the private sector led with SR8.70 billion spent on R&D, followed by the government sector at SR8.66 billion and the higher education sector at SR5.24 billion. 

In August, energy giant Saudi Aramco announced a $100 million commitment to fund research and development at King Abdullah University of Science and Technology over the next decade. 

The partnership aims to accelerate innovation in Saudi Arabia and develop commercially viable solutions that support the global energy transition and sustainability goals, according to a press statement.  

The agreement will focus on areas including energy transition, sustainability, materials science, upstream technologies, and digital solutions. 


Saudi Arabia’s Industrial Development Fund injects $3.19bn into the sector, minister confirms

Saudi Arabia’s Industrial Development Fund injects $3.19bn into the sector, minister confirms
Updated 27 November 2024
Follow

Saudi Arabia’s Industrial Development Fund injects $3.19bn into the sector, minister confirms

Saudi Arabia’s Industrial Development Fund injects $3.19bn into the sector, minister confirms

RIYADH: The Industrial Development Fund provided SR12 billion ($3.19 billion) in financing to the Kingdom in 2024, boosting its global competitiveness, according to leading minister.

Speaking during a panel discussion at the Budget Forum 2024, Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef highlighted the vital role of financing in driving industrial development.

“The Industrial Development Fund alone financed projects worth SR12 billion for 2024, but the total value of these projects exceeds SR60 billion,” Alkhorayef said.

He continued: “We have key indicators for the industrial sector: First, there are the licenses, which have seen significant growth. By the end of this year, more than 1,100 opportunities have been issued, and 900 factories have entered production. This is a very important key indicator.”

The minister went on to say: “The second key indicator is financing. Financing is a crucial driver for the industrial sector. The third key indicator is infrastructure. It is unimaginable to have a thriving industrial sector without properly developed industrial lands, primarily provided by the government.”

These key indicators are of great importance because they ensure the continued flow of investments into the sector, he added.

Alkhorayef also pointed to the Kingdom’s focus on promoting exports and supporting new sectors.

“Exports grew from SR458 billion in 2023 to SR528 billion this year, a 15 percent increase. This growth is largely driven by non-traditional sectors, showcasing the diversification of our economy beyond petrochemicals,” he said.

The minister highlighted the broader integration of industries, particularly between the industrial and mining sectors.

He praised Saudi Arabia’s streamlined approach to mining licenses, reducing wait times from eight to 10 years in advanced economies to just six months in the Kingdom, with plans to further reduce this to 90 days.

Alkhorayef emphasized the long-term vision of transforming Saudi Arabia into a hub for mining services and technology companies.

“Our investment in geological surveys has increased the estimated value of the Kingdom’s mineral wealth from $1.3 trillion to $2.5 trillion. This achievement positions the Kingdom as a future leader in mining and industrial innovation,” he added.

The industrial and logistics sectors have experienced significant momentum, with the government’s efforts driving a surge in private and foreign investment.

By aligning with Vision 2030, these initiatives aim to create a thriving, diversified economy that maximizes the nation’s geographic and resource advantages.

Transport sector achieves record growth and job creation

The Minister of Transport and Logistics Services Saleh Al-Jasser underscored the transport industry’s role as a key enabler of economic activity. He revealed that the sector achieved a 17 percent growth rate in just two years.

“International indicators also confirm this progress, such as the Logistics Performance Index, which saw an improvement of 17 ranks, as well as indicators for air connectivity, maritime connectivity, and road service quality,” Al-Jasser said.

He added: “Among other significant indicators is the reduction in fatalities and severe accidents on roads, achieved through an integrated national effort with other government entities. There is no doubt that progress has also been made across different modes of transport.”

The minister also highlighted that Saudi Arabia’s aviation sector is undergoing significant improvements, with a 50 percent increase in the number of international and domestic destinations connected to the Kingdom compared to pre-pandemic levels.

This reflects the sector’s rapid growth and its role in enhancing connectivity and economic activity.

A key goal of Vision 2030 is to create jobs and provide dignified employment opportunities for citizens.

“Saudi Arabia’s transport sector is at the core of our economic diversification efforts, providing critical infrastructure for all other industries,” Al-Jasser said.

He continued: “Investments exceeding SR447 billion have been made in the sector since the launch of the strategy. This includes more than 300 new aircraft ordered by national airlines, the highest in the Kingdom’s history, alongside significant expansions in logistics zones, maritime infrastructure, and other key areas.”

Al-Jasser highlighted the sector’s role in creating jobs, with 122,000 new employment opportunities generated by the third quarter of this year compared to the same period in 2023.

Additionally, women’s participation in transport has risen to 29 percent, a notable increase in a traditionally male-dominated field.

“The focus on developing local content has been equally impactful,” he emphasized. “The transport system has increased local content from 39 percent to 50 percent, putting us on track to achieve our Vision 2030 target of 60 percent.”

During the same session, the Minister of Communications and Information Technology Abdullah Al-Swaha highlighted Saudi Arabia’s rapid progress in the technology sector, attributing this success to investments in artificial intelligence-native companies and digital transformation.

“Today, companies like Mozn and Amplify are leading the charge in AI and innovative solutions. The Kingdom is positioning itself as a global powerhouse for tech-driven growth,” Al-Swaha said.

He continued: “The next phase will focus on technology manufacturing and exports. With the support of His Royal Highness the Crown Prince, we will further strengthen our National Program for Technology Development to ensure Saudi Arabia’s technological sovereignty and prosperity.”

Al-Swaha emphasized the Kingdom’s commitment to leveraging resources and infrastructure to build a globally competitive tech economy.

“This is a clear message to all tech professionals: we are ready to lead,” he concluded.


Saudi Arabia to introduce VAT refunds for tourists starting in 2025

Saudi Arabia to introduce VAT refunds for tourists starting in 2025
Updated 27 November 2024
Follow

Saudi Arabia to introduce VAT refunds for tourists starting in 2025

Saudi Arabia to introduce VAT refunds for tourists starting in 2025

JEDDAH: In a move aimed at boosting tourism, Saudi Arabia will begin offering refunds on value-added tax for eligible purchases made by tourists starting in 2025, the government announced.

The Zakat, Tax, and Customs Authority proposed changes to the VAT Implementing Regulations in August, which were open for public consultation via the Istitlaa platform until Sept. 17. The proposed amendments cover the definition of eligible goods, the refund process, and the role of authorized service providers in handling claims.

This initiative is part of Saudi Arabia’s efforts to enhance its global appeal as a tourist destination under the ambitious Vision 2030 plan. The National Tourism Strategy aims to attract 150 million visitors by the end of the decade and increase tourism’s contribution to the Kingdom’s gross domestic product from 6 percent to 10 percent.

In its 2025 budget statement, the Ministry of Finance noted: “The introduction of VAT refunds for tourists in Saudi Arabia is designed to improve the traveler experience while ensuring tax compliance.”

According to the proposed changes, tourists will be able to claim VAT refunds on goods purchased in Saudi Arabia for personal use, provided the items are taken out of the country. Certain goods, including vehicles, tobacco products, and food, will be excluded from the refund scheme.

Refunds will be processed through authorized service providers, who will verify eligibility, manage claims, and maintain the necessary records. These providers may charge a commission for their services, while ZATCA will retain the authority to review and reject claims if necessary.

The proposal defines a tourist as someone who is not a permanent resident of Saudi Arabia or any other Gulf Cooperation Council state that applies VAT. Transport crew members and other specific categories will be excluded. Tourists from GCC countries will be treated as non-GCC visitors until a unified VAT refund system is established across the region.

ZATCA’s governor will oversee the implementation of the refund system, including setting the conditions for eligible goods, processing refund requests, and authorizing service providers.

The VAT refund initiative is part of broader efforts to position Saudi Arabia as a leading global tourism destination. By refining tax policies and enhancing the shopping experience for international visitors, the Kingdom aims to attract higher spending and stimulate growth in the tourism sector.

This move also reflects Saudi Arabia’s focus on economic diversification and robust tax governance, reinforcing its competitiveness as a global hub for both tourism and investment.