Saudi Fund for Development signs agreements to fund 2 hydropower projects in Azad Kashmir

This general view taken on October 14, 2020 shows houses built on the Pakistani side of Kashmir, seen from Tithwal village at the Line of Control (LOC). (AFP/File)
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Updated 02 April 2024
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Saudi Fund for Development signs agreements to fund 2 hydropower projects in Azad Kashmir

ISLAMABAD: The Saudi Fund for Development has signed agreements to finance two hydropower projects in Azad Jammu and Kashmir, Pakistani state media reported on Sunday.

An SFD delegation, led by CEO Sultan bin Abdulrahman Al-Marshad, visited Azad Kashmir and signed the agreements to fund the Shounter and Jagran-4 hydropower projects.

The two projects will add 70 megawatts to the national grid in hydropower generation.

“The Shounter hydro project will generate 48 megawatts of electricity at a cost of $66 million, while the Jagran-4 hydro project will be completed at a cost of $41 million and will generate 22 MW of electricity,” the state-run Radio Pakistan broadcaster reported.

Pakistan’s Special Investment Facilitation Council, which was established in June to attract foreign direct investment, played a key role in the execution of these agreements, according to the report.

The SFD, a Saudi government agency, provides development assistance and financial aid to developing countries through loans and grants. In the past, the Fund has deposited money in Pakistan’s central bank to bolster foreign exchange reserves and funded various development projects in infrastructure, education, and health care.

Pakistani and SFD officials have recently held discussions to collaborate on a number of projects in the fields of energy, health, education and infrastructure, a top Pakistan official said last week.

“We already had a framework agreement with SFD. We have discussed a pipeline of numerous projects for future cooperation, in which they have shown keen interest,” Dr. Kazim Niaz, Pakistan’s economic affairs division secretary, told Arab News.

“These projects are in the energy, health, education and infrastructure sectors.”

Niaz did not provide more details on the projects, which he said would be shared after Saudi feedback on a list of initiatives shared by Islamabad for investment and cooperation.


GCC banks hold interest rates steady for 7th consecutive period following US Fed’s move

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GCC banks hold interest rates steady for 7th consecutive period following US Fed’s move

RIYADH: Gulf Cooperation Council central banks have held interest rates steady for the seventh consecutive period, aligning with the US Federal Reserve’s benchmark rate of 5.25 to 5.50 percent.

Since most regional currencies are pegged to the US dollar, monetary policies in the Gulf follow decisions made in Washington, leading policymakers to keep the rate unchanged since July.  

The freeze comes as the US rate-setting panel outlined its view of an economy that is expected to remain virtually unchanged across its major dimensions for years.

This decision implies that the Saudi Central Bank, also known as SAMA, will maintain its repo rates at the current level of 6 percent. Moreover, the UAE central bank will keep the 5.40 percent level, Kuwait will stay at 3.88 percent, while Qatar, Oman, and Bahrain, will all freeze at 6 percent.

Repo rates, which represent a form of short-term borrowing primarily involving government securities, underscore the close economic ties and financial dynamics between the GCC countries and the global economic landscape, particularly the US.  

“With rates staying at high levels, Saudi Arabia mortgage rates and corporate loan borrowers are unlikely to see any relief soon. However, the strong KSA economy means bank’s asset quality will remain strong,” Chief Information Officer at Century Financial Vijay Valecha told Arab News.

“High interest rates are unlikely to hamper the economic growth due to strong performance of its non-oil economy and the funding for the mega projects by sovereign authority. Additionally, from the KSA’s perspective, the USD is likely to stay strong and this should keep the imports cheap since the Riyal is pegged to the greenback,” Valecha further added.

The CIO went on to note that with the current oil price of $80 a barrel and the anticipated interest rate cuts, Saudi Arabia, stands to benefit.

“This translates to increased government revenue for Saudi Arabia, bolsters overall economic activity, and ultimately that’s the biggest macro-economic variable from the government’s perspective,” he said.

US decision-makers noted that rates will remain unchanged until the economy signals a need for adjustment, either through a significant decline in price pressures or a rise in the unemployment rate.  

“These dynamics can continue as long as they continue. We’ve got a good strong labor market. We think we’ve been making progress toward the price stability goal. We’re asking ... is our policy stance about, right? And we think yes, it’s about right,” Fed Chair Jerome Powell said, according to Reuters.   

The result is that the Fed has accepted a gradual decline in inflation toward its 2 percent target. The central bank’s preferred inflation measure, the personal consumption expenditures price index, is expected to remain largely unchanged from its current level by the end of this year, with rate cuts limited to a single quarter-percentage-point reduction.  


Modernizing energy systems requires workers with strong digital skills: IEA

Updated 54 min 46 sec ago
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Modernizing energy systems requires workers with strong digital skills: IEA

RIYADH: The pace of deploying digital technologies in the energy sector will depend heavily on the ability to build a workforce with the right skills, according to an analysis. 

In its latest report, the International Energy Agency said that technologies are set to play a key role in the transition to more secure and sustainable energy systems. 

IEA noted that the deployment of advanced technologies could help ensure energy efficiency, reliability, and greater connectivity, along with reducing emissions. 

“New digital tools – such as those that can help match power supply with demand; predict and detect faults in networks; or give greater control to consumers – will enable the faster integration of renewables, improve grid stability and unlock greater energy savings,” said the energy agency. 

It added: “However, the pace of digitalization will depend heavily on the energy sector’s ability to build a workforce with the right skills.” 

Energy sector should concentrate more on digital roles

IEA said the number of digital roles across the energy sector has increased globally. However, there is growing evidence that it remains broadly insufficient, inhibiting greater investment in digitalization. 

The report cited an EY survey and noted that 89 percent of the participants from the energy sector identified skills gaps as the main challenge to accelerating the adoption of digital technologies. 

“With most jobs set to require digital skills in the coming years, energy utilities will increasingly be competing for a limited pool of qualified workers to bridge the sector’s skills gap. This will require stronger and more cohesive digital hiring strategies and training efforts,” said IEA. 

According to the report, countries can be divided into four groups based on interest in hiring workers with digital profiles. 

The first group includes nations such as Singapore, Portugal and the Slovak Republic, where employers are actively hiring workers with digital talents across all sectors, including for roles at power utilities. 

The second group features countries like Australia and New Zealand, where hiring for tech roles by power utilities is even stronger – outpacing digital hiring across all sectors. 

Nations like the US, the UK, and Canada fall into the third group. In these countries, the share of job vacancies that require digital skills posted by power utilities is higher than for the economy as a whole, but overall, digital recruitment remains low. 

In contrast, the fourth group sees low demand for digital roles overall and in the power sector. It includes the majority of EU member states, along with certain Latin American and North African nations. 

“Europe has consistently had a low share of digital jobs, especially between 2022 and 2023, indicating that countries in the region may not be fully leveraging their investments in digital equipment,” said IEA. 

According to the report, power utilities have been slower to create significant numbers of digital jobs than other sectors, such as finance, insurance, and public administration. 

“In recent years, digital job postings approached 16 percent of total listings by finance and insurance companies, whereas the share for power utilities stagnated around 11 percent, with a decline below 9 percent between 2017 and 2021,” the energy think tank noted.  

A shift in demand for skills

According to IEA, expertise in structured query language of SQL  – a programming language used for managing and manipulating data – was among the most sought-after digital skills in the energy sector in 2012.

At that time, the demand for a workforce with expertise in scripting languages or knowledge of cloud solutions was rarely required. 

However, since mid-2021, demand has grown rapidly for workers with skills in data analysis, scripting languages and cloud solutions, in addition to SQL database talents and cybersecurity expertise. 

The report added that demand for employees proficient in machine learning, artificial intelligence, or the Internet of Things is still at very low levels, even though these are extremely powerful tools for power system management. 

The vitality of bridging the skills gap

In its report, the energy agency cautioned that failing to bridge the current skills gaps could create bottlenecks in efforts to build more secure and sustainable energy systems. 

Underscoring the necessity of adopting a skills-focused digital strategy in the energy sector, IEA suggested some steps to improve and expand current initiatives. 

According to the think tank, energy utilities can develop mechanisms to track skills and systematize measurements of digital literacy to ensure they have the talent to manage changing power systems. 

“In parallel, having a clear understanding of the skills needed can improve the effectiveness of the policy actions for supporting the shift toward a more sustainable economy,” said IEA. 

The report also highlighted that the energy sector should increase the attractiveness of digital roles by creating an environment of innovation and growth, offering appealing career paths and opportunities for professionals seeking dynamic positions.

The energy agency further pointed out that workforces in the digital sector should be empowered through internal training programs. 

“Utilities can implement training and upskilling programs to equip current employees with essential digital skills, fostering a culture of continuous learning, a sense of ownership and allowing for adaptation to technological advancements,” said IEA. 

It added: “By designing training programs to be more inclusive – for example, making them targeted to increase gender parity – governments and industry can respond to labor demand while capitalizing on opportunities to build a more diverse workforce of the future.” 

IEA concluded by saying that energy utilities can engage with governments and other stakeholders to develop training initiatives and curricula tailored to address current and future market demand for digital skills, creating a solid pipeline of well-trained talent.


Saudi Arabia GDP growth higher than G20 average: OECD

Updated 13 June 2024
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Saudi Arabia GDP growth higher than G20 average: OECD

RIYADH: Saudi Arabia’s economy witnessed growth of 1.4 percent in the first quarter of 2024 – higher than that seen across the G20 as a whole, according to new data.

The Organisation for Economic Co-operation and Development has released its latest gross domestic product report for the G20 countries, noting that the Kingdom bounced back from a contraction of 0.6 percent in the previous three-month period. 

GDP in the G20 area grew by 0.9 percent quarter-on-quarter in the first quarter of 2024, slightly up from 0.7 percent in the previous quarter. 

The economic performance of the G20 area was primarily driven by China and India, with Turkiye, Korea, and Indonesia also recording higher GDP growth than the G20 average. 

Turkiye led with an increase of 2.4 percent, followed by India at 1.9 percent, China at 1.6 percent, Korea at 1.3 percent, and Indonesia at 1.2 percent. 

The report highlighted that while Saudi Arabia experienced a significant recovery, other G20 countries faced varying economic conditions. 

The US saw a slowdown, with GDP growth dropping to 0.3 percent in the first three months of the year from 0.8 percent in the previous quarter. 

Japan’s economy contracted by 0.5 percent, and South Africa saw a contraction of 0.1 percent. 

Conversely, Brazil, the UK, and Germany showed signs of recovery in the first quarter of 2024 after contractions over the previous three month period, with growth reaching 0.8 percent, 0.6 percent, and 0.2 percent, respectively. 

Canada, Mexico, and the EU grew by 0.4 percent, 0.3 percent, and 0.3 percent, respectively, in the three months to the end of March, after zero growth in the final quarter of 2023. 

Year-on-year, GDP in the G20 area grew by 3.3 percent in the first three months of the year, maintaining the same growth rate as the previous quarter. 

Among G20 economies, India recorded the highest year-on-year growth rate at 8.4 percent in the first quarter of 2024, followed by Turkiye at 7.4 percent. 

However, Saudi Arabia recorded the most significant year-on-year decline at a drop of 1.5 percent. 

According to a separate report by the General Authority for Statistics released earlier in June, the Kingdom’s non-oil activities also rose by 0.9 percent in the first three months of this year compared to the previous quarter.  

Additionally, non-oil activities increased by 3.4 percent year-on-year in the first quarter of 2024.  

GASTAT further noted that Saudi Arabia’s GDP amounted to SR1.01 trillion ($270 billion) in the first quarter.  

“Crude oil and natural gas activities achieved the highest contribution to GDP by 23.4 percent, followed by government activities at 15.8 percent, and then wholesale and retail trade, restaurants, and hotels activities with a contribution of 10.4 percent,” said GASTAT in the report.  

Strengthening the non-oil private sector is crucial for Saudi Arabia, as the Kingdom is steadily diversifying its economy to reduce its decades-long dependence on oil.  

The report further noted that government activities in Saudi Arabia rose by 2 percent year-on-year in the first quarter while declining by 1.1 percent on a quarter-on-quarter basis.  

GASTAT added that the Kingdom’s oil activities increased by 1.7 percent in the first quarter compared to the previous quarter.  

However, oil activities dipped by 11.2 percent year-on-year as Saudi Arabia reduced its crude production in line with the decision of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.  

To maintain market stability, Saudi Arabia reduced its oil output by 500,000 barrels per day in April 2023, and this cut has now been extended until December 2024.  

In April, the International Monetary Fund projected that Saudi Arabia’s economy would grow by 2.6 percent in 2024 and 6 percent in 2025.  

In the same month, the World Bank also raised the growth prospects of the Kingdom’s economy to 5.9 percent in 2025, up from an earlier projection of 4.2 percent. 

Furthermore, Saudi Arabia’s gross fixed capital formation surged to SR317.5 billion in the first quarter of 2024, marking a significant 7.9 percent increase compared to the same period last year. 

According to a separate report by the Saudi Ministry of Investment released earlier this month, gross fixed capital formation expansion was driven by growth in both the government and non-government sectors.  

GFCF, which represents the net increase in physical assets within an economy, plays a crucial role in gross domestic product as it reflects capital accumulation supporting future production capabilities and economic growth. 

Of the total GFCF, the government sector contributed 7 percent, experiencing a robust growth rate of 18 percent. Meanwhile, the non-government sector, constituting 93 percent, also saw a substantial rise of 7.2 percent. 

Saudi Arabia’s proactive efforts to attract foreign direct investment and bolster bilateral relations have significantly strengthened the Kingdom’s economic trajectory.  

FDI serves as a pivotal catalyst for GFCF development, facilitating funding for investment projects and resource and knowledge transfer across borders, thereby fostering economic expansion and maturation. 

Key initiatives such as the National Investment Strategy, the Regional Headquarters Program, and zero-income tax incentives for foreign entities play a vital role in advancing Vision 2030, which aims to diversify and expand the economy. 

During this quarter, the Ministry of Investment issued 3,157 investment licenses, marking a 93 percent surge compared to the same period last year, excluding licenses issued under the anti-concealment law. 

In its economic and investment monitor released in late May, the ministry revealed that the construction and manufacturing sector dominated with 47 percent of total permits, followed by vocational and educational activities, information and communication technology and accommodation and food services as well as wholesale and retail trade. 

The real estate sector witnessed the most significant year-on-year growth, with a staggering 253.3 percent increase in investment licenses. 

Furthermore, 127 international firms secured permits to relocate their regional headquarters to Saudi Arabia in the first quarter of 2024, reflecting a remarkable 477 percent year-on-year upsurge. 

Leading corporations such as Google, Microsoft and Amazon as well as Northern Trust, Bechtel, IHG Hotels & Resorts, and Deloitte have established operations in the Kingdom under this program. 

The report also highlights that Saudi Arabia processed 445 applications for investor visit visas during the first quarter of this year, enabling overseas businesspersons to explore opportunities in the country. 


Oil Updates – crude slips on US growth worries, ample crude supply

Updated 13 June 2024
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Oil Updates – crude slips on US growth worries, ample crude supply

HOUSTON/SINGAPORE: Oil prices fell in early trade on Thursday, as investors digested that the US Federal Reserve had likely pushed back an interest rate cut possibly to December, while ample US crude and fuel stocks also weighed on the market, according to Reuters.

Brent crude futures lost 37 cents, or 0.5 percent, to $82.23 a barrel, as of 9:55 a.m. Saudi time, and US West Texas Intermediate crude futures fell 34 cents, or 0.4 percent, to $78.16. Both benchmarks had gained about 0.8 percent in the previous session.

The Fed held rates steady on Wednesday and pushed out the start of policy easing to perhaps as late as December.

Higher borrowing costs tend to dampen economic growth, and can by extension, limit oil demand.

Fed Chair Jerome Powell said in a press conference after the US central bank’s two-day policy meeting ended that inflation had fallen without a major blow to the economy, adding that there was no reason to think that can’t go on.

On the supply side, US crude stockpiles rose more than expected last week, driven largely by a jump in imports, while fuel inventories also increased more than anticipated, data from the Energy Information Administration showed on Wednesday.

Also weighing on prices was a bearish report by the International Energy Agency, which warned of excess supply in the near future.

“This is in stark contrast to the bullish report from OPEC+ earlier this week. The oil group maintained its forecasts for strengthening demand,” analysts at ANZ Research said.

Traders are also watching ongoing talks for a ceasefire in Gaza, which, if resolved, would reduce fears of potential supply disruptions from the oil producing region.

In the latest attack on shipping, Iran-allied Houthi militants on Wednesday took responsibility for small watercraft and missile attacks that left a Greek-owned coal carrier in need of rescue near Yemen’s Red Sea port of Hodeidah.

The militant group has attacked international shipping in the Red Sea region since November in solidarity with the Palestinians in the war between Israel and Hamas.

Late on Wednesday, Palestinian militant group Hamas issued a statement stressing its “positivity” in the ceasefire negotiations.

US Secretary of State Antony Blinken said Hamas had proposed numerous changes to a US-backed proposal for a ceasefire, adding that mediators were determined to close the gaps. 


Global businesses urged to acknowledge role in human development

Updated 12 June 2024
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Global businesses urged to acknowledge role in human development

RIYADH: Businesses worldwide must acknowledge their role in shaping human development, paralleling the responsibility of governments, said a top Saudi official.

During a panel discussion titled “Board of Changemakers: Invest in Dignity” at the Future Investment Initiative Priority Summit in Rio de Janeiro, Saudi Arabia’s Ambassador to the US Princess Reema bint Bandar emphasized the absence of a sense of collective impact on a global scale.

This observation coincides with ongoing geopolitical tensions such as the conflict in Gaza and the Russia-Ukraine tensions.

“If the business world fails to recognize its responsibility in shaping human development, akin to the responsibility of governments, we are all lost,” Princess Reema stated.

She stressed the importance of broadening the understanding of the beneficiaries of business activities, underscoring that social impact is as crucial as financial return.

“And I think we forget that we need to broaden our understanding of who is impacted by the work that we do, who is impacted by our gain, who is impacted by our profit,” she added.

Princess Reema highlighted that social stability and growth are prerequisites for sustainable business success.

“If we’re talking about investing in dignity, we have to invest in stability, we have to invest in growth, we have to invest an opportunity,” the Saudi envoy noted.

In another panel titled “Will Ascending Economic Powers Reshape the Future of Investment?” Saudi Tourism Minister Ahmed Al-Khateeb discussed the Kingdom’s shift from an oil-centric focus to diversifying into sectors like tourism and mining, as outlined in Vision 2030.

Al-Khateeb outlined three essential pillars for this transformation: a clear vision for the future, leadership and commitment, and a long-term perspective.

“First, it requires a very clear vision for the future, and we have an amazing leader, the crown prince, who established this vision and second it requires a leadership and willingness and we are all, you know, fully committed to make this happen,” the minister said.

“And the third pillar is a long-term view, we must have a long-term view about the future. We must not just look at the short term rather than look at the long term.”

The summit, themed “Invest in Dignity,” aims to explore how investments in renewable energy, artificial intelligence, entrepreneurship, and social impact can prioritize human dignity in policymaking. Discussions also focus on safeguarding the dignity of all citizens as a fundamental goal for economic decision-makers.