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• 
  ADQ and Modon sign Ras El-Hekma development deals

  7 October 2024

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  Abu Dhabi-based holding company ADQ has appointed Modon Holding as the master developer for its Ras El-Hekma project – a planned new city on Egypt's Mediterranean coast.

  According to the official statement, Modon will act as the master developer for the entire development, which covers more than 170 million square metres (sq m).

  Modon Holding will develop the first phase of the project, which will cover 50 million sq m.

  The remaining 120 million sq m will be developed in partnership with private developers under the supervision of the recently established ADQ subsidiary Ras El-Hekma Urban Development Project Company and Modon Holding.

  The agreement was signed during a ceremony that was attended by President of the UAE, Sheikh Mohamed Bin Zayed Al-Nahyan, and President of Egypt, Abdel Fattah El-Sisi.

  Signed agreements

  Earlier in September, Modon Holding signed several memorandums of understanding (MoUs) with local and international firms to join the development.

  The developer signed a framework agreement with local firm Orascom Construction to serve as the primary contractor for the project's first phase.

  An MoU was also signed with Egyptian firm Elsewedy Electric for the supply of building materials and collaboration on industrial parks, manufacturing, operations and maintenance.

  Another MoU was signed with Abu Dhabi Airports to collaborate on airport strategic planning, design, development and operational support.

  Modon also signed an agreement with Abu Dhabi's Taqa for the development, financing and operation of greenfield utility infrastructure projects, water desalination projects, electricity transmission and distribution projects and wastewater projects at the development.

  An MoU was signed with Spain's Valderrama for the development and operation of golf communities.

  The client also involved e& Egypt to design and implement the overall telecommunications and communications infrastructure at the development

  Modon Holding also signed an agreement with UK-based firm Candy International to explore opportunities in real estate development.

  An MoU was signed with US-based Montage International to develop and manage hotels in Ras El-Hekma.

  Another MoU was signed with French firm Accor and UK-based Ennismore to operate hotels and resorts.

  UAE-based Burjeel Holding will also be involved in developing multi-speciality healthcare facilities within the development.

  Background

  In February, ADQ confirmed that it is the bidder previously referred to by Egyptian authorities as being in negotiations to acquire the development rights for the new city of Ras El-Hekma.

  ADQ acquired rights to develop the project for $24bn and, as part of the deal, is investing a further $11bn in other projects across Egypt in support of economic growth and development. Modon Holding was reported to be a partner in the development.

  Ras El-Hekma is on a spur of land on Egypt’s northern coastline in the Mediterranean Sea, about 240 kilometres west of Alexandria.

  The greenfield development is planned as a combined business and leisure destination, with hotels, leisure facilities, a free zone, a financial district and residential components.

  The master development has been billed as having the potential to attract over $150bn in investment.

  Egypt’s General Authority for Investment & Free Zones (Gafi) confirmed on 8 February that a UAE consortium would be undertaking the master development, which was first proposed in 2020 as a joint plan of UN Habitat and the Egyptian Housing Ministry.

  The deal with ADQ will see the Egyptian government retain a 35% stake in the development. Gafi originally said that state-run entities, including Talaat Moustafa Group, would retain a 20% stake in the project.

  Construction work on the scheme is expected to commence in early 2025.

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  Yasir Iqbal
• 
  Local firm bids low for Shoaiba desalination plant

  4 October 2024

  Jeddah-based Alfatah Water & Power is understood to have submitted the lowest bid for the contract to build the Shoaiba 6 seawater reverse osmosis (SWRO) plant on Saudi Arabia’s western coast.

  Saudi Water Authority (SWA), the kingdom’s main producer of desalinated water, is undertaking the final bid evaluation for the contract, MEED previously reported.

  The plant has a capacity of 545,000 cubic metres a day (cm/d).

  SWA received bids for the contract on 19 May, several days after it received bids for the Yanbu 5 SWRO plant.

  VA Tech Wabag submitted the lower bid for Yanbu 5 and recently confirmed that it has won the $317m contract to build the plant. 

  The Yanbu 5 plant will have the capacity to treat 300,000 cm/d of seawater.

  The 30-year contract that Wabag won covers the design, engineering, supply, construction and commissioning of the desalination plant.

  SWA – formerly Saline Water Conversion Company (SWCC) – has tendered two other projects.

  The Jubail and Ras Al-Khair SWRO projects will each have the capacity to treat 600,000 cm/d of seawater.

  According to sources familiar with the project, the following companies submitted proposals for the Ras Al-Khair SWRO contract:

  • Abengoa (Spain) / Civil Works Company (local)
  • VA Tech Wabag (India)
  • Saudi Services for Electro Mechanic Works (SSEM, local)
  • Mutlaq Al-Ghowairi Contracting (local)
  • Al-Rashid Trading & Contracting (local)

  SWA is procuring the four SWRO projects using an engineering, procurement and construction model, in contrast to the SWRO facilities being procured on a public-private partnership basis by state water offtaker Saudi Water Partnership Company.

  SWA is the world’s largest producer of desalinated water, with a capacity of at least 6.6 million cm/d. Plants utilising older and more energy-intensive techniques, such as multi-stage flash technology, account for the majority of the current capacity.

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  Jennifer Aguinaldo
• 
  Riyadh looks to boost FDI

  3 October 2024

  Commentary
  Colin Foreman
  Editor

  Read the October 2024 issue of MEED Business Review

  This year and next will be pivotal years for the Saudi economy. After years of heavy investment in projects by the state and its related entities – most notably the Public Investment Fund (PIF) – the economy is now shifting towards one that is more reliant on foreign investment. 

  This is partly due to the kingdom running a budget deficit due to oil production cuts and oil prices, but also because creating business opportunities and attracting foreign direct investment (FDI) was a key part of Vision 2030. 

  There are early signs of success, although the largest deals in terms of dollar value have been concentrated on sectors that Saudi Arabia is already well known for, such as oil and gas and, to a lesser extent, industry. 

  Other sectors have so far needed more convincing. The new ambitious development projects, including the gigaprojects, follow a business model that involves state actors developing the first phases of a project. The private sector then takes over once the concept or business model has been proven. 

  This is a tried-and-tested strategy. The best example in the region in recent decades was in the UAE, with Emaar building the first towers at Dubai Marina before the private sector developed many of the remaining towers.

  Many of Saudi Arabia’s projects are nearing that point today as initial phases start to be completed. Over the next few years, the hope is that the development companies leading Saudi Arabia’s projects will be ready to take a slight step sideways and allow the private sector to step in and shoulder more of the investment. 

  For that to happen, Saudi Arabia must successfully deliver the initial phases of its projects. If projects fail to meet their stated ambitions, they may risk scaring off FDI rather than attracting it.

  ---

  Must-read sections in the October 2024 issue of MEED Business Review include:

  > AGENDA: 
  > Riyadh redoubles efforts to boost inward investment
  > Foreign investment trends align with Vision 2030

  > CURRENT AFFAIRS:
  > Iran benefits from energy disruption in Iraqi Kurdistan
  > Jordan election results in Islamist gains

  INDUSTRY REPORT: MEED's 2024 GCC Power Developer Ranking > Local firms rise in GCC Power Developer Ranking > Brisk pace of IPP awards set to continue

  > IRAQ-CHINA: Chinese companies win 95% of all Iraqi energy projects

  > PROJECT SERVICES: Bringing scale to project delivery

  > HIGH-SPEED RAIL: UAE’s high-speed rail moves ahead

  > INTERVIEW: Ducab undaunted by global market headwinds

  > SAUDI ARABIA MARKET REPORT: 

  > COMMENT: Riyadh modifies its narrative
  > GOVERNMENT: Riyadh is forced to reassess its spending priorities
  > BANKING: Saudi banks continue to lend, lend, lend
  > UPSTREAM: Aramco spending lifts Saudi upstream market
  > DOWNSTREAM: Saudi downstream programmes gain traction
  > UTILITIES: Saudi Arabia’s power sector motors on
  > CONSTRUCTION: Companies confirm Saudi gigaproject slowdown
  > TRANSPORT: Infrastructure schemes support Riyadh’s ambitions

  > MEED COMMENTS: 
  > More scrutiny for highly paid expatriates in Saudi Arabia
  > Economic change is inevitable for major projects
  > UAE bucks the trend of rising construction risk
  > Riyadh AI goals require colossal mindset and capital shift

  > GULF PROJECTS INDEX: Gulf projects index halts its decline

  > AUGUST 2024 CONTRACTS: Value of deals signed drops in August

  > ECONOMIC DATA: Data drives regional projects

  > OPINION: Desperate days drag on

  > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

  To see previous issues of MEED Business Review, please click here

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  Colin Foreman
• 
  Transmission and distribution sector heads for record year

  3 October 2024

  The GCC region’s power transmission and distribution (T&D) sector is set to experience its best year in terms of the value of awarded contracts.

  Based on data from regional projects-tracking service MEED Projects, the total value of awarded contracts for substations, control centres, overhead lines and cables across the six GCC states reached an estimated $13.8bn between January and September 2024.

  This figure already exceeds by 81% the total value of contracts awarded in the preceding full year.

  It also exceeds by 31% the total value of awarded contracts in 2021, which registered a record-high of $10.5bn in the 10 years starting in 2014.

  Project activity within the T&D sector is expected to remain buoyant over the next few years, with roughly $35.9bn-worth of planned and unawarded contracts.

  Of these, some $8.5bn are in the bid evaluation stage as of early October, with a further $6.5bn under tendering.

  Some $12bn of projects are in the front-end engineering and design (feed) phase.

  Energy diversification 

  Ambitious national energy diversification and net-zero targets across the region, which traditionally relied almost entirely on thermal power plants, will spur significant investments in T&D infrastructure in the future.

  According to experts, the ongoing expansion of electricity generation capacity across the region, particularly from renewable energy sources, requires a more robust, integrated and stable electricity grid.

  This is in addition to the projected increase in electricity demand as most states expand their downstream and petrochemical sectors, develop new communities and megaprojects in remote regions, and build more data centres to support smart cities, and internet-of-things (IoT) and artificial intelligence (AI) applications.

  The region’s largest economy, Saudi Arabia, for instance, aims for renewable energy to account for 50% of its electricity generation capacity by 2030.

  Operational renewable installed capacity in the kingdom jumped from roughly 300MW in 2020 to 3,500MW this year, with a further 16,000MW currently under construction or about to start construction, and gigawatts more under tender.

  Crucially, the kingdom’s energy minister confirmed earlier this year that the kingdom has plans to procure up to 20,000MW of renewable capacity every year, subject to demand.

  Saudi Arabia is also ramping up its procurement programme for new gas-fired power plants, in line with a plan to decommission fleets running on liquid fuel and at the same time secure baseload as more renewable energy enters the grid.

  There is also a marked increase in terms of T&D packages or contracts interconnecting the kingdom’s various regions from central Riyadh to the eastern, northern and southern provinces.

  It comes as no surprise that the kingdom accounted for 72% of the $13.8bn-worth of T&D contracts awarded in the GCC region in the first three quarters of 2024.

  Oman, which awarded T&D contracts with the same value as the UAE between January and September this year, has also been working to integrate its smaller electricity grids with the sultanate’s main electricity grid to boost electricity supply in its smaller, remote regions.

  Unlike the noticeable peaks and throughs in T&D capital expense in other GCC states, the UAE’s spending has remained pretty consistent since 2014, averaging roughly $1.4bn annually. The exemption was in 2021 when a team comprising South Korea’s Kepco, Japan’s Kyushu Electric Power Company (Kyuden) International and France’s EDF won the contract to develop Abu Dhabi’s first high-voltage, direct current (HVDC) subsea transmission system.

  It is worth mentioning that the completion of the four units of Abu Dhabi’s 5,600MW Barakah nuclear power plant this year and the expected completion of Dubai’s first hydropower plant in Hatta mean the UAE will have the most diverse energy sources for electricity generation among its peers.   

  Power links

  The goal to expand electricity trade within the GCC member states and with other countries such as Egypt, Jordan and Iraq is another key driver for T&D investments.

  Work is under way to increase the capacity of the GCC regional grid and enable its member-states to procure backup or emergency capacity when the need arises. Kuwait availed of this in May when it purchased 500MW from the GCC grid in anticipation of its inability to meet peak demand in the summer months.   

  An HVDC network linking Saudi Arabia and Egypt is under construction, which will allow bidirectional electricity trade as well as access to the wider European and African markets.

  A second GCC link with Oman and a first link with Jordan are also planned. Another HVDC transmission project linking Neom in the northern tip of the Red Sea to Yanbu, stretching 605 kilometres, is under way.

  It turns out that the need to invest in T&D infrastructure to support electricity generation capacity buildout, following years of underinvestment, is a global phenomenon.

  Juan Diego Zuluaga, Suncolombia CEO, told the ongoing World Green Energy Summit in Dubai that there is a major mismatch between the buildout of transmission lines and electricity generation capacity.

  Experts like Zuluaga think that failing to invest in T&D can potentially lead to issues such as curtailment or wastage in renewable power, particularly in the absence of suitable energy storage systems or efficient interconnections or electricity links.

  Utility companies are under pressure not only to expand their transmission capacities and coverage but to make these infrastructure and facilities more efficient, too.

  New technologies, most of them driven by IoT or AI, for instance, can be used to improve demand and supply management and forecasting, leading to improved grid performance.

  “In this region, in particular, consumers expect 24x7 electricity supply. In fact, it is a given,” notes a senior executive with a European technology company. “The hope is for that to continue in the future.”

   

   

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  Jennifer Aguinaldo
• 
  FDI trends align with Vision 2030

  3 October 2024

  

   

  This package also includes: Riyadh redoubles efforts to boost inward investment

  ---

  Foreign direct investment (FDI) trends are typically volatile and impacted by economic and political factors.

  According to a report on FDI by GlobalData, there was a decline in both project numbers and capital investment in 2023 after a strong year in 2022. 

  While the overall numbers were down, the report highlighted global trends that include a strong investor focus on the Middle East and elsewhere in Asia, outside of China, with Saudi Arabia and the UAE identified specifically as markets that offer strong potential. 

  According to a GlobalData poll, the Middle East ranked as the fourth most attractive region for FDI in 2024 by investor sentiment.

  Middle East deals 

  In terms of deals, the Middle East experienced annual growth in both project activity and inbound capital investment from FDI in 2023. Companies announced 1,848 projects worth an estimated $88.3bn. Geopolitics, strategic partnerships, digitalisation, emissions reductions and artificial intelligence are the key themes causing investors to expand in the region. 

  The UAE was the largest destination country in the region with $23bn of deals across 1,277 projects, which also made it the third-largest FDI market in the world in 2023 based on project activity. 

  Saudi Arabia was the second-largest destination country in the region based on project activity. According to GlobalData, the kingdom attracted inward investment of $17.3bn from 305 FDI projects, which represents a growth of 23% in inward FDI investment in 2022-23. 

  Core sectors

  A detailed analysis of the Saudi FDI data shows that some sectors have been more successful than others. The numbers show that the core sectors of Vision 2030 have been best placed when it comes to attracting FDI.

  The most successful sector in terms of value is metals and minerals. There have been $9.5bn of metals and minerals projects announced in the kingdom, which is significantly more than the second-largest sector, renewables and alternative power, which has attracted $5.4bn of deals. 

  Metals and minerals are an increasingly important sector for Saudi Arabia. The kingdom says its natural resources are worth $2.5tn – an increase of more than 90% compared with 2016 estimates.

  To help monetise these reserves, Riyadh enacted a new mining investment law in 2021, and since then the Ministry of Industry & Mineral Resources (MIMR) has awarded more than 2,000 mining permits to local and foreign firms under its accelerated exploration initiative.

  Renewables and alternative power is also an important sector for FDI, with foreign players investing in power generation projects that are delivered on a public-private partnership basis. 

  Not all projects are announced with a value. Based on the number of FDI projects rather than the aggregate of their announced value, the best-performing sector is tourism, with 271 projects, followed closely by business and professional services, with 270 projects. 

  Tourism is another key pillar of Vision 2030. It has been identified as a focal point for Saudi Arabia’s economic transformation because it opens up the kingdom to foreign visitors, while at the same time creating jobs and investment opportunities.

  When analysed based on business function, manufacturing is the leading sector based on deal value, while construction is the largest sector when measured by the number of projects. Both of these sectors are playing a key role in delivering the objectives of Vision 2030. 

  Manufacturing investments are helping develop jobs and investment opportunities in Saudi Arabia, while also keeping Saudi spending within the kingdom and securing supply chains. This is highlighted clearly by the kingdom’s various moves into the automotive manufacturing space, which aims to establish Saudi Arabia as a key supplier of vehicles for both the local and international markets. 

  Construction underpins many of the other sectors being developed in Saudi Arabia as much of the new economic activity that is planned needs new facilities. Whether it be hotels for tourism, factories for manufacturing or office buildings for professional services, there is a wide range of construction projects planned and underway in the kingdom. 

  FDI landmarks

  Notable breakthroughs in FDI in Saudi Arabia this year highlight these trends shown by the data. The first major deal involves manufacturing and was reported in January when Turkish steelmaker Tosyali Holding revealed plans to invest up to $5bn in a new steel plant in the kingdom.

  Another manufacturing deal came when The Saudi Arabian Industrial Investments Company (Dussur) divested its 55% ownership in General Electric Saudi Advanced Turbines (Gesat) to GE Vernova, giving the US-headquartered firm full ownership of the manufacturer.

  For construction, the National Housing Company (NHC) has signed several major deals with foreign investors. In April, NHC and Urbas Middle East Real Estate Company, a subsidiary of Spain’s Urbas Group, signed an agreement to develop over 589 residential units in NHC’s Al-Fursan suburb of Riyadh.

  In March, NHC signed another deal with Egyptian real estate developer Talaat Moustafa Group (TMG) to develop over 27,000 residential units at NHC’s Banan City project, which is also in the Al-Fursan suburb of Riyadh. 

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  Colin Foreman