Saudi Arabia's private utility Acwa Power has signed a hydrogen purchase agreement with Uzbek state-owned chemical company Uzkemyoasat.
Acwa Power, which is developing a green hydrogen plant and a green ammonia pilot project in the Central Asian country, also signed a power purchase agreement with Uzbekistan's national power grid.
The hydrogen offtake capacity is 3,000 tonnes a year, while the renewable capacity ranges from 52 megawatts to 100 megawatts, the company said on Thursday in a statement to the Tadawul stock exchange, where its shares are traded.
The contract value of both projects is $100 million and they are expected to have a financial effect once commercial operations start in June 2024 and June 2025, Acwa Power said, without providing further details.
Acwa Power has been an active investor in Uzbekistan's energy industry as it continues to expand its global portfolio.
In March, the comoany signed an agreement to develop two solar plants in Uzbekistan with a total generation capacity of 1.4 gigawatts.
Last year, it signed agreements worth $12 billion to develop three new energy projects in Uzbekistan, including developing the largest single onshore wind project in the world in the Karakalpakstan region, with a total capacity of 1.5 gigawatts.
An additional $10 billion investment co-operation agreement was also signed to jointly develop gas-to-power, renewable energy and green hydrogen projects in Uzbekistan.
Uzbekistan is working to improve its energy and power generation sectors, harnessing its natural resources and seeking investments from overseas.
In 2019, the Central Asian nation embarked on a multiphase transition from a state-owned and subsidised energy sector to a competitive gas, oil and electricity market with significant private sector participation.
The move is expected to provide huge economic benefits, according to the International Energy Agency.
Uzbekistan has also unveiled plans to raise the share of renewable energy in total electricity supply to 25 per cent by 2030, from 10 per cent in 2020.
Acwa Power, which is developing a $5 billion green hydrogen-based ammonia production plant in Saudi Arabia’s smart city Neom, plans to "replicate" the project elsewhere, Andrea Lovato, global head of hydrogen at Acwa Power, told The National in February.
The green hydrogen project at Neom will use four gigawatts of renewable power from solar, wind and storage to produce 650 tonnes a day of hydrogen from electrolysis, using technology supplied by German company Thyssenkrupp, the companies said at the time.
The project, expected to come on stream in 2025, will produce about 1.2 million tonnes of green ammonia a year.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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