Saudi Arabia's Acwa Power has signed preliminary agreements to export renewable energy and green hydrogen to Europe under the India-Middle East-Europe Economic Corridor (IMEC) project.
A multi-party deal was signed by Acwa Power with Italy's Edison, France's TotalEnergies Renewables, Zhero Europe from Netherlands and Germany's EnBW, Saudi Arabia's Ministry of Energy said on Sunday.
"This deal establishes a collaborative framework to assess the market demand and feasibility of developing large-scale renewable energy projects dedicated for export in Saudi Arabia and the creation of a corridor to deliver generated electricity to Europe," it said.
Acwa Power also signed individual pacts with companies involved in the development of electricity corridors, including technical consultant Cesi (Italy) and HVDC technology and cable providers Prysmian (Italy), GE Vernova, Siemens Energy (Germany) and Hitachi (France).
"These agreements aim to develop advanced energy transmission corridors that enhance supply reliability and the efficiency of cross-border energy infrastructure," the ministry said.
A joint development agreement was also signed with EnBW to collaborate on the first phase of the Yanbu Green Hydrogen Hub, which is planned to be ready for commercial operations by 2030.
The hub seeks to be a fully integrated base with its own captive electricity generation from renewable sources, desalination plants to support its hydrogen electrolysis and ammonia conversion facilities, and an export terminal.
The project leverages Saudi Arabia’s potential to develop renewable energy at competitive rates and supply global industrial demand, the ministry said.
The latest pacts, which were signed in Riyadh, are part of the IMEC, which was announced during the G20 summit in 2023. The project consists of an eastern route connecting India to the Gulf and a northern pathway connecting the Gulf to Europe.
The cross-border, ship-to-rail transit corridors are expected to reduce shipping costs across the network and support trade in goods and services to, from and between the UAE, Saudi Arabia, India and Europe.
The combined exports from these regions are projected to account for 44 per cent of global trade by 2030.
Acwa Power, backed by Saudi Arabia's sovereign wealth fund, the Public Investment Fund, is one of the largest renewable energy developers in the Middle East. It currently has operations in 14 countries across the Middle East, Africa, and Central and South-east Asia.
It is an investor in and operator of 101 power generation and water desalination projects in operation, construction and advanced development with an overall portfolio size of about $107.5 billion as of February.
Last week, Saudi Arabia signed agreements worth more than 31 billion riyals ($8.3 billion) for seven renewable energy projects with an Acwa Power-led consortium to boost the kingdom’s green energy capacity.
In February, Acwa Power also signed a preliminary agreement with the German company Securing Energy for Europe (Sefe) to produce and supply green hydrogen to Europe.
Under the pact, Acwa Power and Sefe will establish a hydrogen bridge between Saudi Arabia and Germany, with an initial target of supplying 200,000 tonnes of green hydrogen annually by 2030.
Acwa Power will act as the lead developer, investor, and operator of green hydrogen and green ammonia production assets. Sefe will be a co-investor and the primary off-taker to market the green hydrogen to its German and European customers, the companies said at the time.
The Saudi company is also a partner in the $5 billion Neom Green Hydrogen project, the world’s largest, which is expected to be completed next year. The other venture partners are Neom and the US-based Air Products, which has secured an off-take agreement for all the green ammonia produced at the site.
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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Your rights as an employee
The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.
The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.
If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.
Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.
The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.
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