How Saudi Arabia is reshaping transportation infrastructure amid climate change challenges

A 2022 report by the King Abdullah Petroleum Studies and Research Center, titled ‘Mitigating Transportation Emissions in Saudi Arabia,’ revealed that the transportation sector accounts for 33.33 percent of global energy consumption. (SPA)
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Updated 20 January 2024
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How Saudi Arabia is reshaping transportation infrastructure amid climate change challenges

  • Strategically positioned between Europe and Asia, Saudi Arabia boasts an extensive network of operational facilities

RIYADH: In the face of escalating climate change challenges, Saudi Arabia is spearheading a transformation of its transportation sector with a series of groundbreaking initiatives.

As the Middle East and North Africa region grapples with surging population growth, rapid urbanization, and a burgeoning middle class, the strain on existing infrastructure and transportation networks has reached critical levels.

In response, Saudi Arabia is not only addressing these challenges head-on but also setting a compelling example for the world.




A 2022 report by the King Abdullah Petroleum Studies and Research Center, titled ‘Mitigating Transportation Emissions in Saudi Arabia,’ revealed that the transportation sector accounts for 33.33 percent of global energy consumption. (SPA)

According to the World Bank’s 2020 findings, the region requires annual investments of at least $100 billion for the next five to ten years. These investments are essential to sustain existing infrastructure and address sector bottlenecks.

Saudi Arabia, strategically positioned between Europe and Asia and playing a central role in the global energy market, boasts an extensive network of operational facilities.

A 2022 report by the King Abdullah Petroleum Studies and Research Center, titled “Mitigating Transportation Emissions in Saudi Arabia,” revealed that the transportation sector accounts for 33.33 percent of global energy consumption, ranking second only to the industrial sector.

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$100bn

According to the World Bank’s 2020 findings, the region requires annual investments of at least $100 billion for the next five to ten years. These investments are essential to sustain existing infrastructure and address sector bottlenecks.

Despite this, ongoing price controls and efficiency improvements aim to reduce the Kingdom’s annual transport emissions growth rate from 7 percent historically to 3 percent by 2030.

By 2030, carbon dioxide emissions from transportation are projected to reach 184 million tons.

Saudi Arabia is actively pursuing three major policy interventions, as outlined in a 2022 report by the Saudi Ports Authority, also known as Mawani, titled “Enabling Growth and Innovation Across the Saudi Maritime Sector.”




Abdulla Elyas, Co-founder of Careem

The first initiative focuses on transitioning new car sales to electric vehicles, with a goal of having these make up 30 percent of all automobiles in Riyadh by 2030.

The second policy centers on electrifying public transport vehicles, while the third employs incentive programs to steer consumers toward sustainable alternatives to private cars.

Saudi Arabia is building larger and more sustainable transport networks that will help reduce congestion and emissions.

Abdulla Elyas, Co-founder of Careem

Over the years, Saudi Arabia has taken major steps toward diminishing emissions and rationalizing energy demand.

Since 2015, the Kingdom has implemented domestic energy price reform as well as fiscal reform under the Fiscal Balance Program, the Mawani report revealed.

This works on making energy consumption more sustainable while boosting government revenues by raising energy prices, evident by the gradual surge in fuel prices in the country.

ENOWA, a subsidiary company of NEOM responsible for managing the giga-project’s sustainable energy and water systems, offers one demonstration of how Saudi Arabia is choosing to partner with nature in an attempt to boost its environmental practices.

“By harnessing the abundant sun and wind resources within NEOM, coupled with innovative storage solutions and smart grid technologies, ENOWA aims to scale energy generation in NEOM and spearhead the global supply of competitively priced power, reconfiguring the energy landscape prioritizing sustainability and affordability.” ENOWA CEO Peter Terium told Arab News.

ENOWA plays a fundamental role in infrastructure development in the Kingdom.




Peter Terium، ENOWA CEO

The company aspires to shape a sustainable and efficient energy landscape that significantly impacts all sectors of the economy including transportation, construction, and industrial manufacturing as well as water and waste treatment.

Meanwhile, the planned city of NEOM serves as a prime example of the Kingdom’s commitment to transforming transportation, mobility, and infrastructure to address climate change concerns.

ENOWA aims to scale energy generation in NEOM and spearhead the global supply of competitively priced power, reconfiguring the energy landscape prioritizing sustainability and affordability.

Peter Terium, ENOWA CEO

NEOM Mobility is revolutionizing the way individuals connect and travel by transforming the planned city into a sustainable, shared, and seamless experience via air, land, and sea.

Another activity that is gaining popularity in the Kingdom with regards to transportation while taking into consideration climate change is ride-hailing.

The two companies active in this area in Saudi Arabia are Careem and Uber, with the former launching in 2013 before expanding to reach 26 cities across the Kingdom.

“Saudi Arabia is building larger and more sustainable transport networks that will help reduce congestion and emissions,” co-founder of Careem Abdulla Elyas told Arab News.

Careem is helping to connect these networks through ride-hailing and micro mobility, Elyas explained.

He added: “Today, Saudi residents and visitors use Careem for a reliable, convenient, and stress-free everyday commute in and around their cities.”

When talking about future plans that are hinged on being eco-friendly and green, Elyas revealed the company’s Careem Bike launch.

“Launching Careem Bike in Madinah in partnership with ALMQR Development Co. is the next chapter of our journey to enhance mobility,” Elyas disclosed.

“We’re proud to support Saudi’s agenda for sustainability and the Vision 2030 goal of elevating quality of life in the Kingdom,” he added.

According to the co-founder, the docked bike stations in Madinah can be accessed with just a click of a button and are well connected to public transport and key landmarks.

“The Madinah Municipality has built 70 km of bicycle paths along main roads and inside residential neighborhoods,” he stressed.

Elyas further noted: “Careem Bike is a great option for first-mile and last mile connectivity - for example traveling from a train or bus station to one’s home or offices.”

Bikes can also be used for longer trips, and this is the benefit of having a large network of stations across a city, he clarified.

"Cycling is a great source of exercise and leisure for families and friends. We can already see how much people in Saudi enjoy spending time cycling and we’re excited to help encourage even healthier, more active lifestyles through our new network in Madinah,” Elyas highlighted.

“The service is inclusive and accessible for all. Customers can purchase a pass for their preferred use – daily, weekly, monthly, or yearly. Each pass offers unlimited 45-minute access,” he underlined.

Saudi Arabia’s sustainable transport plans are a vital part of the Kingdom’s drive to reduce global carbon emissions by 4 percent, said a government official speaking at the Global Sustainable Transport Forum held in Beijing from Sept. 25-26 2023.

At the time, the Saudi Transport and Logistics Services Minister, Saleh bin Nasser Al-Jasser, stressed that sustainability is a fundamental element of the Kingdom’s Vision 2030.  

Al-Jasser underscored during his speech that the Kingdom’s strong commitment to sustainability has been smoothly incorporated into the National Strategy for Transport and Logistics.     

The plan includes reducing carbon emissions per person by 2 percent in a year, increasing sustainable mobility, electrifying transport and implementing them across the logistics value chain.

It also includes developing the necessary infrastructure to meet future demand, with the primary goal of minimizing traffic fatalities, the minister added at the time.

Under the ambitious Saudi Vision 2030 reforms, in conjunction with the National Transformation Program and the National Industrial Development and Logistics Program, the government is poised to inject $133.3 billion into the development of vital infrastructure, including ports, airports, and railways, all the way through to 2030.

This substantial financial commitment underscores Saudi Arabia’s dedication to reducing carbon emissions, with a strong focus on environmental responsibility as it brings these transformative projects to fruition.

 


Closing Bell: Saudi main index edges down to close at 12,198

Updated 19 May 2024
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Closing Bell: Saudi main index edges down to close at 12,198

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday losing 0.06 points to close at 12,198.38.  

The total trading turnover of the benchmark index was SR4.42 billion ($1.18 billion) as 60 stocks advanced, while 160 retreated.  

On the other hand, Nomu, the parallel market, rose 577.98 points, or 2.18 percent, to close at 27,062.01. This comes as 28 stocks advanced while as many as 33 retreated.

Meanwhile, the MSCI Tadawul Index slipped 1.45 points, or 0.09 percent, to close at 1,528.60.

The best-performing stock of the day was Lazurde Co. for Jewelry. The company’s share price surged 10.00 percent to SR16.06. 

Other top performers included Middle East Specialized Cables Co. as well as Aldrees Petroleum and Transport Services Co.

The worst performer was Zahrat Al Waha for Trading Co., whose share price dropped by 10 percent to SR45.45.

Makkah Construction and Development Co. as well as Jazan Development and Investment Co also performed poorly.

On the announcements front, Kingdom Holding Co. announced its interim financial results for the period ending March 31. 

According to a Tadawul statement, the company’s net profit hit SR196 million in the first quarter of 2024, reflecting a 14.6 percent surge when compared to the similar quarter last year. 

The increase is mainly due to a rise in the sale of investment property, a surge in the share of results from equity-accounted investees, and a decrease in financial charges. 

It is also linked to an increase in finance income as well as a drop in withholding and income tax.

Moreover, Dar Alarkan Real Estate Development Co. announced its interim financial results for the first three months of 2024. 

A bourse filing revealed that the firm’s net profit reached SR153.5 million by the period ending March 31, up 30.57 percent from the corresponding period in 2023. This surge is primarily attributed to higher property sales. 

Furthermore, Middle East Paper Co. announced its interim financial results for the year’s first quarter. 

According to a Tadawul statement, the company recorded a net loss of SR18 million in the first three months of 2024, compared to a net loss of SR7 million in the same period of the previous year.

This is mainly owed to reduced gross profit, a jump in general and administrative dues, and increased finance and zakat expenses. 

Red Sea International Co. also announced its interim financial results for the period ending on March 31. 

A bourse filing revealed that the firm’s net profit stood at SR13.3 million at the end of the first quarter of 2024, compared to a net loss of SR19.5 million recorded in the same quarter a year ago. 

This is mainly the result of the strategic business transformation, which included acquiring 51 percent of First Fix and effectively executing and delivering projects.

Meanwhile, Saudi Manpower Solutions Co., announced the completion of the institutional book-building process and the determination of the final offer price for its initial public offering on the main market of the Saudi Exchange.

According to a company statement, the final offer price has been set at SR7.5 per share, with a market capitalization of SR3 billion at listing. The price range for the offering was set at SR7 to SR7.5.   

The institutional book-building process generated an order book of around SR115 billion and was 128 times oversubscribed, indicating strong investor demand.   


Baheej unveils waterfront development project in Yanbu 

Updated 19 May 2024
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Baheej unveils waterfront development project in Yanbu 

RIYADH: Saudi Arabia’s tourism sector continues to expand, with Baheej Tourism Development Co. unveiling a new waterfront development project in Yanbu. 

This joint venture between ASFAR, a Saudi tourism investment company owned by the Public Investment Fund, and the Tamimi-AWN Alliance, aims to develop the waterfront area of the Royal Commission at Yanbu. 

The initial project will cover 32,000 sq. m. and feature three leisure assets: a beach, a tourist activation center, and a hotel. It is set for complete unveiling in 2027. 

A fourth component is scheduled to be announced at a later date. 

According to a release, each aspect of the project aims to provide memorable and sustainable tourism experiences. 

Visitors will soon have the opportunity to explore Yanbu, a city with a rich history dating back to the 16th century, renowned for its architectural heritage and sandy beaches. 

Baheej envisions Yanbu as an iconic location that showcases Saudi Arabia’s culture, history, and natural beauty, providing a unique destination to tourists. 

Nora Al-Tamimi, CEO of Baheej, outlines the project’s development in three phases, emphasizing community engagement, sustainability, and minimal environmental impact.  

Al-Tamimi said: “We believe that destinations are not just built but discovered, and Baheej’s commitment lies in uncovering Saudi Arabia’s hidden gems. Our strategic collaborations are aimed at curating unparalleled experiences that showcase Saudi Arabia’s rich culture, history, and natural wonders.”  

She added: “Yanbu City’s contemporary infrastructure, captivating environment, and attractive coastal landscapes make it an exceptional gateway to the Red Sea Riviera. We anticipate the complete unveiling of our destination and its components by the end of 2027.”   

By analyzing risks and investment opportunities, the project aims to position Yanbu as a locally and internationally sought-after tourist destination, explained Al-Tamimi. 

Baheej’s role will involve integrating local culture and promoting protection of the planet, enhancing Yanbu’s appeal and supporting regional development. 

This approach aims to transform Yanbu’s hospitality sector, blending community heritage with environmental stewardship. 

Established in 2023, Baheej aims to create accessible tourism experiences that meet international standards while remaining contextual and sustainable. 

These initiatives are part of a broader strategy to transform Saudi towns into thriving, eco-friendly destinations. 

Baheej also plans to announce additional projects in other cities by the end of 2024.


Saudi banks’ money supply surges 8% in March to reach $753bn 

Updated 19 May 2024
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Saudi banks’ money supply surges 8% in March to reach $753bn 

RIYADH: Saudi banks’ money supply rose 8 percent in March, as compared to the same month last year, to reach SR2.82 trillion ($753 billion), official data showed.

According to the data released by the Saudi Central Bank, also known as SAMA, the increase was mainly fueled by a roughly 21 percent surge in banks’ term and savings accounts, reaching SR843.25 billion. These deposits represented the second-largest portion, comprising 30 percent of the total money supply, following demand deposits, which constituted 50 percent at SR1.41 trillion.

On the other hand, quasi-money holdings made up 21 percent of the total, experiencing a 1 percent decrease during this period. Meanwhile, currency outside banks accounted for an 8 percent share, showing a 10 percent growth.

Multiple factors influenced the upsurge in term deposits. Firstly, the elevated interest rate environment within the Kingdom, shaped by the US Federal Reserve’s anti-inflationary monetary policy, has spurred individuals and entities to seek higher returns through these accounts.

Moreover, the increase in accounts held by government-related entities played a significant role. As per Fitch Ratings, these entities opted to channel their surplus liquidity into term deposits with commercial banks, thereby boosting the growth trajectory of such accounts.

It is noteworthy that during 2022, SAMA raised key policy rates seven times, followed by an additional four increases in 2023. The central bank’s repo rate was last raised by 25 basis points to 6 percent in its July 2023 meeting, marking its highest level since 2001. Since then, rates have remained unchanged. 

Meanwhile, US inflation surged to a six-month high in March, prompting investors to delay their expectations for Federal Reserve rate cuts.

Deposits represent a costly funding source for banks, with heightened competition in the financial market significantly driving up their average cost.

Despite this, the surge in interest rates also strengthened Saudi banks’ profits on the asset side. Higher borrowing rates led to increased income, offsetting the challenges posed by the expensive funding environment.

On the asset side, Saudi bank loans grew by 11 percent during this period to reach SR2.67 trillion; therefore, lending growth among Saudi banks outpaced deposits.

In their April report, S&P Global suggested that Saudi financial institutions would explore alternative funding strategies to manage the rapid increase in lending, driven by rising demand for new mortgages.

The credit-rating agency noted that the funding profiles of financial institutions in the Kingdom will undergo changes, mainly due to a government-supported initiative aimed at boosting homeownership.

According to their analysis, mortgage financing accounted for 23.5 percent of Saudi banks’ total credit allocation by the end of 2023, compared to 12.8 percent in 2019.

They highlighted that the ongoing financing needs of the Vision 2030 economic initiative, coupled with relatively sluggish deposit growth, are likely to prompt banks to seek alternative budget sources, including external funding.

S&P Global anticipated this trend to persist, especially as corporate lending assumes a more significant role in growth in the coming years.

The report indicated that Saudi banks are expected to adopt alternative funding strategies to support this expansion. It also noted that the stability of Saudi deposits mitigates the risk posed by maturity mismatch.

Furthermore, the agency projected an increase in Saudi banks’ foreign liabilities, rising from approximately $19.2 billion by the end of 2023, to meet the funding demands of robust lending growth, particularly amidst slower deposit expansion.

The report emphasized that Saudi banks have already tapped into international capital markets, and S&P Global anticipates this trend to continue over the next three to five years.


Saudi aviation sector contributes $21bn to GDP: GACA

Updated 19 May 2024
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Saudi aviation sector contributes $21bn to GDP: GACA

RIYADH: Saudi Arabia is experiencing steady growth in its aviation sector, contributing $21 billion to the Kingdom’s gross domestic product in 2023 and solidifying its position as a global tourism hub.

The General Authority for Civil Aviation stated that the aviation industry is creating positive impacts in other key areas of Saudi Arabia’s economy, with the sector responsible for a further $32.2 billion in tourism receipts, according to a press statement. 

GACA added that the aviation industry alone has enabled 241,000 jobs in the Kingdom and has contributed to supporting 717,000 jobs in tourism-related areas. 

The authority revealed that the nation outperformed global aviation sector growth rates in 2023, achieving 123 percent of international pre-pandemic seat capacity compared with a worldwide and regional average recovery rate of 90 percent and 95 percent, respectively. 

GACA will present these findings in an analysis titled “2024 State of Aviation Report” at the Future Aviation Forum on May 20. 

Saudi Arabia’s Minister of Transport and Logistics Services and Chairman of GACA, Saleh Al-Jasser, said: “The Saudi aviation sector is providing unprecedented opportunities for global aviation, achieving major leaps in global rankings in support of Vision 2030 and in line with the National Strategy for Transport and Logistics services.” 

Saudi Arabia’s National Transport and Logistics Strategy seeks to increase the industry’s contribution to the Kingdom’s GDP to 10 percent from the current 6 percent by 2030. 

“The inaugural State of Aviation report highlights the contribution that the aviation sector makes to the Saudi society and economy, with the great support from the Custodian of the Two Holy Mosques and His Highness the Crown Prince,” added Al-Jasser.  

Abdulaziz Al-Duailej, president of GACA, said that the Kingdom is building a more resilient, connected, high-performing aviation sector across various verticals, including airlines, airports, cargo and logistics, and human capability and training systems. 

“GACA has developed this report to fulfill its role as a strategic aviation regulator, measuring and recording the progress of the sector in line with the targets of the Saudi Aviation Strategy. The report also informs GACA’s ongoing regulatory work and the impacts of new regulations in creating greater competition, value, and choice in Saudi Aviation,” said Al-Duailej.  

During the Future Aviation Forum, Saudi Arabia is expected to unveil a roadmap detailing how the Kingdom will grow its aviation sector tenfold into a $2 billion industry by 2030. 

This year’s gathering will bring together more than 5,000 sector experts and leaders from more than 100 countries to discuss ways to shape the future of international air travel and freight management.


The Arab Energy Fund and Dussur sign $200m MoU to boost greenfield energy projects

Updated 19 May 2024
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The Arab Energy Fund and Dussur sign $200m MoU to boost greenfield energy projects

RIYADH: Greenfield energy projects are set to receive a boost, as The Arab Energy Fund has signed a $200 million funding agreement with the Saudi Arabian Industrial Investments Co. 

A memorandum of understanding was executed between the energy-focused financial institution TAEF and the Saudi-based industrial investment and development company, also known as Dussur.  

This deal aims to fast-track and facilitate prospective financing opportunities for TAEF through bridge financing in selected greenfield projects promoted by Dussur. 

Nicolas Thevenot, chief banking officer at TAEF, said: “We are thrilled to sign this MoU with Dussur and enter an era of collaboration to support the advancement of the flourishing energy sector in Saudi Arabia.”  

He added: “Our strategic partnership with Dussur is also aligned with our planned investment of up to $1 billion to advancing the energy transition with a focus on decarbonization and related technologies over the next five years.” 

The MoU contributes to the Kingdom’s efforts to advance industrialization and economic diversification by defining a broad framework agreement between TAEF and Dussur. 

“Dussur is pleased to have signed this MoU with TAEF, which could unveil multiple collaborative opportunities to maximize Dussur’s impact on the Saudi economy,” said Omar Al-Qarawi, director of finance and accounting at Dussur. 

He added: “Through this MoU, Dussur and TAEF aim to further their joint efforts to leverage strategic and sustainable industrial investments.”  

In February, the Public Investment Fund-backed Dussur launched an oilfield services and industrial chemicals factory in Jubail in collaboration with Bakers Hughes, a Texas-based oilfield services provider. 

The Saudi Petrolite Chemicals facility is expected to increase the Kingdom’s supply base of raw materials such as solvents and glycols. 

It is intended to accelerate the development of the skills and capabilities of Saudi human resources in manufacturing, thus contributing to the increase in localization rates and the rapid delivery of chemical solutions. 

The opening ceremony was attended by Saudi Energy Minister Prince Abdulaziz bin Salman, Investment Minister Khalid Al-Falih, and Minister of Industry and Mineral Resources Bandar Alkhorayef.