Saudi Arabia launches $178m loan deferral plan for business

The Saudi Ministry of Finance has launched more than 15 programs to promote economic recovery in the wake of the pandemic. (Shutterstock)
Short Url
Updated 14 July 2020

Saudi Arabia launches $178m loan deferral plan for business

  • The Saudi Ministry of Finance’s corporate sustainability program will ease loan requirements to support projects for 192 companies employing over 20,000 Saudis across different industries

JEDDAH: Saudi Arabia has launched a SR670 million ($178 million) initiative to help businesses in the Kingdom defer loan installments due this year amid economic uncertainty caused by the COVID-19 pandemic.

The Saudi Ministry of Finance’s corporate sustainability program will ease loan requirements to support projects for 192 companies employing over 20,000 Saudis across different industries. The ministry launched the program to support the private sector and reduce the financial and economic impact of the pandemic.

Mohammed Alomran, a financial analyst and president of Gulf Center for Financial Consultancy, said the initiative will have long-term benefits.

“This initiative comes within a package of stimulus plans to boost private sector growth and maintain the Saudi workforce as these entities encounter the COVID-19 crisis,” he said.

The ministry has launched more than 15 programs to promote economic recovery in the wake of the pandemic. Alomran expects even more to be launched in response to the challenges facing the private sector. The initiative may worry some companies concerned about accumulating debt, Alomran told Arab News. But despite this, he believes it is a win-win situation for business.

“The cash flow in these entities will be in a strong position in 2021 for repayment as scheduled,” he said.

“As far as accessibility to new debt, I do not think this will be considered now as it will depend on the financial position of each entity next year,” he added. The economic damage caused by COVID-19 has had a devastating effect. Businesses forced to close under government lockdown orders are just beginning to get back on their feet.

Alomran said: “Given the nonstop flow of initiatives geared to stimulate the Saudi private sector, I think the ball now is in the court of the private sector to repay the local economy and society with increased spending and hiring of new Saudi youth.”


China’s niche LNG buyers plan billion-dollar investments, double imports amid reforms

Updated 7 min 17 sec ago

China’s niche LNG buyers plan billion-dollar investments, double imports amid reforms

SINGAPORE: A group of niche Chinese gas firms is set to make waves in the global market with plans to invest tens of billions of dollars and double imports in the next decade as Beijing opens up its vast energy pipeline network to more competition.

The companies, mostly city gas distributors backed by local authorities, are ramping up purchases of liquefied natural gas (LNG) as newly formed national pipeline operator PipeChina begins leasing third parties access to its distribution lines, terminals and storage facilities from this month.

The acceleration in demand in what is already the world’s fastest-growing market for the super-chilled fuel is a boon for producers such Royal Dutch Shell, Total and traders like Glencore faced with oversupply and depressed prices.

Just last month, UK’s Centrica signed a 15-year binding deal to supply Shanghai city gas firm Shenergy Group 0.5 million tons per year of LNG starting in 2024.

“They’re very, very interested in imports — we’re talking to a lot of them already,” said Kristine Leo, China country manager for Australia’s Woodside Energy, which signed a preliminary supply deal with private gas distributor ENN Group last year.

China could buy a record 65-67 million tons of LNG this year and is expected to leapfrog Japan to become the world’s top buyer in 2022. Imports could surge 80 percent from 2019 to 2030, according to Lu Xiao, senior analyst at consultancy IHS Markit.

State-owned Guangdong Energy Group, Zhejiang Energy Group, Zhenhua Oil and private firms like ENN were quick to take advantage of the market reforms and low spot prices for LNG, said Chen Zhu, managing director of Beijing-based consultancy SIA Energy.

Their imports will reach some 11 million tons this year, up 40 percent versus 2019, more than 17 percent of China’s total purchases, said Chen.

For years such companies have worked to expand a domestic consumer base among so-called “last mile” gas users like tens of millions of households, shopping malls and factories, but they had to rely on state majors for supplies.

With greater access to distribution networks, they are now incentivized to build their own import terminals that could account for 40 percent of the country’s LNG receiving capacity by 2030, versus 15 percent now, Chen said.

Frank Li, assistant to president of China Gas Holdings, a private piped gas distributor, said his company has been in talks with PipeChina for infr structure access as it prepares to import LNG next year.

In Southern China’s industrial hub Guangdong, companies like Guangzhou Gas, Shenzhen Gas and Guangdong Energy hold small stakes in LNG facilities operated by China National Offshore Oil Company. They imported their first cargoes from these terminals last year.

Guangzhou Gas is set to import 13 LNG shipments this year, up from five last year, after “tough negotiations” with CNOOC won it access to terminals, said Vice President Liu Jingbo.

“The reform is bringing us diversified supplies, helping us cut cost,” Liu said.

Some companies also plan to beef up trading expertise by opening offices overseas, such as in Singapore, executives said.

“Naturally, companies will be thinking of growing into a meaningful player globally,” said a trading executive with Guangdong Energy, adding that his firm looks to Tokyo Gas , Japan’s top gas distributor and trader, as a model.

The rise of niche players will erode some market share held by state giants CNOOC, PetroChina and Sinopec, prompting them to scale back gas infrastructure investment and focus on global trading, while extending into retail gas distribution at home, officials said.