No longer a financial reservoir? Saudi Arabia’s spending confirms clear shift in strategy
Riyadh, Saudi Arabia.
Xavierarnau | E+ | Getty Images
Saudi Arabia is moving full steam ahead with its focus on domestic investment — and with that, higher requirements for foreigners coming to the kingdom to take capital elsewhere.
The kingdom’s $925 billion sovereign wealth fund, the Public Investment Fund, saw its assets jump 29% to 2.87 trillion Saudi riyals ($765.2 billion) in 2023, its annual report published earlier this week revealed — and local investment was a major driver.
The fund’s investments in domestic infrastructure and real estate development grew 15% year-on-year to 233 billion riyals, while its foreign investments increased 14% to 586 billion riyals. At the same time, the Saudi government introduced laws and reforms to facilitate and even mandate investment in the country as it builds out its Vision 2030 plan to diversity its oil-reliant economy.
“The PIF’s report marks a shift from externally driven investments to a focus on domestic opportunities. The days of viewing Saudi Arabia as a mere financial reservoir are ending,” Tarik Solomon, chairman emeritus at the American Chamber of Commerce in Saudi Arabia, told CNBC.
“Today, success with the PIF hinges on partnerships grounded in mutual trust and long-term vision, where stakeholders are expected to contribute meaningfully with capital and not just seek profits.”
One example is the kingdom’s headquarters law, which went into effect on Jan. 1, 2024, and requires foreign companies operating in the Gulf to base their Middle Eastern HQ offices in Riyadh if they want contracts with the Saudi government.
Saudi Arabia’s recently-updated Investment Law seeks to attract more foreign investment as well — and it’s set itself a lofty goal of $100 billion in annual foreign direct investment by 2030.
Currently, that figure has averaged around $12 billion per year since Vision 2030 was announced in 2017, according to data from the kingdom’s investment ministry — still a long way from that goal.
Some observers in the region are skeptical as to whether the $100 billion figure is realistic.
“The new investment law is absolutely critical to facilitating more FDI, but it remains to be seen whether it will lead to the huge increase and quantum of capital required,” a financier based in the Gulf told CNBC, speaking anonymously due to professional restrictions.
Solomon echoed the sentiment, pointing out that higher spending on major projects will require higher breakeven oil prices for the Saudi budget.
“It remains to be seen whether the PIF’s domestic investments will deliver the anticipated returns, especially in a region full of instability and oil-dependent budgets facing prolonged periods of low oil prices,” he said.
Still, the new law will “improve local business conditions to attract investment from abroad,” James Swanston, Middle East and North Africa economist at Capital Economics, wrote in a recent report.
Investors have long complained that murky and often ad-hoc rules deterred greater involvement with the Saudi economy. The new law will make foreign investors’ rights and duties uniform with those of citizens, introduce a simplified registration process to replace license requirements, and ease the judicial process, among other things, according to the Saudi government.
“We’ve argued for a long time that so-called ‘wasta’ (loosely translated as ‘who you know’) has been a major deterrent to foreign companies establishing themselves in Saudi,” Swanston wrote.
Spurring greater foreign buy-in “should also ease the burden that has recently been placed on the Public Investment Fund to offset the weaker foreign investment into the Kingdom,” he added.
No more ‘dumb money’
The turn toward greater scrutiny and domestic priorities is not exactly new — rather, it’s picked up more speed each year.
While many overseas firms have long seen the Gulf as a source of “dumb money,” some local investment managers said — referring to the stereotype of oil-rich sheikhdoms throwing cash at whoever wants it — investment from the region has become much more sophisticated, employing deeper due diligence and being more selective than in past years.
“Before it was much easier to come and say, ‘I’m a fund manager from San Francisco, please give me a couple million’,” Marc Nassim, partner and managing director at Dubai-based investment bank Awad Capital, told CNBC in 2023.
“I think that a very small minority of them will be able to take money from the region — they are much more selective than before.”
If the kingdom’s priority was not clear to foreign investors before, it is now, the Gulf-based financier who declined to be named said.
“PIF has been focused on co-opting investment into Saudi for last several years,” he said. “It took a while for bankers to fully appreciate the scope and scale of the pivot. It’s rightly all about transforming the economy.”
As “extreme” weather events become more commonplace, the demand for reliable and portable energy continues to rise. In response to that growing demand for dependable off-grid power, Volvo has developed the new PU500 Battery Energy Storage System (BESS) designed to take electrical power when it’s needed most.
Designed to be deployable in a number of environments at a moment’s notice, the Volvo Energy PU500 BESS is equipped with approximately 500 kWh of usable battery capacity (up to 540 kWh total). More than enough juice, in other words, to power a remote construction site, disaster response effort, or even a music festival – anything that needs access to reliable electricity beyond a grid connection.
That’s great, but what sets the PU500 apart from other battery storage solutions is its integrated 240 kW DC fast charger.
“With an integrated CCS2 charger, the PU500 is designed to work with all brands of electric equipment, trucks, and passenger cars,” says Niklas Thulin, Head of BESS Product Offer at Volvo Energy. “This ensures that no matter what type of electric vehicle or machinery you rely on, the PU500 can provide the power you need, making it a truly flexible solution for any grid constrained site or location.”
The integrated charger in the PU500 has the impressive ability to charge a heavy equipment asset (be that an electric semi truck or something like a wheel loader) in under two hours. Its on-board capacity allows to fully recharge up to 3 electric HD trucks or 20 electric cars per day, making it an incredibly versatile disaster response asset.
Electrek’s Take
As we often say over at The Heavy Equipment Podcast, “just because you’re working for the power company doesn’t mean you have power,” and there are hundreds of scenarios where the extra power provided by something like the new PU500 would be useful. Its ability to be palletized and easily moved or swapped out of a larger BESS array, too, just add to its flexibility.
SOURCE | IMAGES: Volvo.
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In a bold bid to combat the crippling air pollution crisis in its capital, Delhi, Indian lawmakers have begun high-level discussions about a plan to phase out gas and diesel combustion vehicles by 2035 – a move that could cause a seismic shift in the global EV space and provide a cleaner, greener future for India’s capital.
Long considered one of the world’s most polluted capital cities, Indian capital Delhi is taking drastic steps to cut back pollution with a gas and diesel engine ban coming soon – but they want results faster than that. As such, Delhi is starting with a city-wide ban on refueling vehicles more than 15 years old, and it went into effect earlier this week. (!)
“We are installing gadgets at petrol pumps which will identify vehicles older than 15 years, and no fuel will be provided to them,” said Delhi Environment Minister Manjinder Singh Sirsa … but they’re not stopping there. “Additionally, we will intensify scrutiny of heavy vehicles entering Delhi to ensure they meet prescribed environmental standards before being allowed entry.”
Making it prohibitively difficult for Dehli’s residents to own and operate older, presumably more polluting vehicles is one way to reduce harmful emissions and air pollution, but Sirsa’s team isn’t just targeting newer vehicles. They’re also planning to deploy more than 900 electric transit buses, part of a larger plan to replace 5,000 of the city’s 7,500 total bus with lower- or zero-emission options this year alone.
The Economic Times is reporting that discussions are underway to pass laws requiring that all future bus purchases will be required to be electric or “clean fuel” (read: CNG or hydrogen) by the end of this year, with a gas/diesel ban on “three-wheelers and light goods vehicles,” (commercial tuk-tuks and delivery mopeds) potentially coming 2026 to 2027 and a similar ban privately owned and operated cars and bikes coming “between 2030 and 2035.”
Electrek’s Take
After a Chinese government study linked air pollution caused by automotive exhausts and coal-fired power plants to more than 1.1 million deaths per year in 2013, the nation’s government took serious action, shuttering older coal plants and imposing strict emissions standards. The country also incentivized EV adoption through license-plate lotteries favoring electric cars and a nationwide EV mandate set to kick in by 2030.
The results were astounding, and the technological innovations that have come from an entire nation of talented engineers all “pulling in the same direction” have put the West to shame, with Western auto executives repeatedly sounding the alarm and lobbying for tariffs and other protectionist policies on both sides of the Atlantic.
To see India make move towards a gas and diesel ban like this, and on such an aggressive timeline, can only mean that they’ve been paying attention … and America is about to fall even further behind.
SOURCE: India Times; featured image by Sumita Roy Dutta.
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Last week, Parker Hannifin launched what they’re calling the industry’s first certified Mobile Electrification Technology Center to train mobile equipment technicians make the transition from conventional diesel engines to modern electric motors.
The electrification of mobile equipment is opening new doors for construction and engineering companies working in indoor, environmentally sensitive, or noise-regulated urban environments – but it also poses a new set of challenges that, while they mirror some of the challenges internal combustion faced a century ago, aren’t yet fully solved. These go beyond just getting energy to the equipment assets’ batteries, and include the integration of hydraulic implements, electronic controls, and the myriad of upfit accessories that have been developed over the last five decades to operate on 12V power.
At the same time, manufacturers and dealers have to ensure the safety of their technicians, which includes providing comprehensive training on the intricacies of high-voltage electric vehicle repair and maintenance – and that’s where Parker’s new mobile equipment training program comes in, helping to accelerate the shift to EVs.
“We are excited to partner with these outstanding distributors at a higher level. Their commitment to designing innovative mobile electrification systems aligns perfectly with our vision to empower machine manufacturers in reducing their environmental footprint while enhancing operational efficiency,” explains Mark Schoessler, VP of sales for Parker’s Motion Systems Group. “Their expertise in designing mobile electrification systems and their capability to deliver integrated solutions will help to maximize the impact of Parker’s expanding METC network.”
The manufacturing equipment experts at Nott Company were among the first to go through the Parker Hannifin training program, certifying their technicians on Parker’s electric motors, drives, coolers, controllers and control systems.
“We are proud to be recognized for our unwavering dedication to advancing mobile electrification technologies and delivering cutting-edge solutions,” says Nott CEO, Markus Rauchhaus. “This milestone would not have been possible without our incredible partners, customers and the team at Nott Company.”
In addition to Nott, two other North American distributors (Depatie Fluid Power in Portage, Michigan, and Hydradyne in Fort Worth, Texas) have completed the Parker certification.
Electrek’s Take
With the rise of electric equipment assets like Bobcat’s T7X compact track loader and E10e electric excavator that eliminate traditional hydraulics and rely on high-voltage battery systems, specialized electrical systems training is becoming increasingly important. Seasoned, steady hands with decades of diesel and hydraulic systems experience are obsolete, and they’ll need to learn new skills to stay relevant.
Certification programs like Parker’s are working to bridge that skills gap, equipping technicians with the skills to maximize performance while mitigating risks associated with high-voltage systems. Here’s hoping more of these start popping up sooner than later.
SOURCE | IMAGES: Parker Hannifin.
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