Saudi Arabia to Activate the Arab Common Market for Electricity

A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
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Saudi Arabia to Activate the Arab Common Market for Electricity

A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)

The Saudi Cabinet, chaired by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, approved the draft general agreement to establish the Arab common market for electricity, authorizing the Minister of Energy or his deputy to sign it.

The approval is a step towards activating the project, which is close to operating, after completing most of its technical details.

Arab countries look forward to implementing the project to achieve energy integration and remove obstacles and challenges that prevent access to a trade market for electricity.

They aim to achieve many technical, economic, environmental, social, and political benefits.

- The Arab Common Market for Electricity

According to information issued earlier, the project will improve the reliability of electric power systems economically, enhance operating efficiency, and reduce the fixed reserve ratios for emergency response in the electrical networks for each system separately.

It also aims to increase the dynamic stability of the electrical network and reduce the cost of generating a power unit—electricity, due to direct savings in capital investments resulting from postponing the establishment of new production stations.

The deal will also achieve financial revenues for the transit countries where the electrical interconnection lines pass. It will help utilize all available energy sources, especially renewable energies, reduce emissions, and exchange technical, financial, and legal experiences.

- The efficiency of surplus electricity

Economic professor at King Faisal University, Mohammed al-Qahtani, indicated that the project would raise the spending efficiency on electricity surpluses and ensure their financial benefit.

Qahtani told Asharq Al-Awsat that the project would help accelerate the development in Arab countries that suffer from power shortages, adding that it would activate the economic unity between the states, including the inter-trade exchange.

The expert pointed out that some Arab countries that suffer from power outages will benefit from the surpluses in other countries, which will meet their development needs and provide soft loans for electricity.

It will also achieve economic revenues for other countries with electric surpluses, leading to a common market that will benefit all parties.

- The Role of Saudi Arabia

Qahtani stated that Saudi Arabia, due to its pivotal economic and central role in the Middle East, will be one of the most critical countries in linking electrical surpluses between the Gulf countries rich in excesses and the rest of the Arab countries.

He noted that such projects that the Saudi government constantly announces confirm the Kingdom's progress following Vision 2030 towards boosting its role and economic local, regional, and international position.

- The Arab Common Market for Electricity Agreement

It is a document detailing the obligations specified in the Memorandum of Understanding and the General Agreement and covers the commercial aspects of the market.

It determines the roles and responsibilities of each party, defines services and procedures for that, and calculates electricity quantities.

- Consumption

According to recent studies, the growth rates of electric energy use in Arab countries vary according to the nature of use and the availability of energy sources in each country.

Statistics indicate a 36 percent increase in the average per capita electricity consumption in 2017, bringing the average share of the Arab citizen to 3,000 kilowatt-hours.

The Arab demand for electric energy increased 6.2 percent on average between 2000 and 2010, reaching 655.8 TWh in 2010, while the demand for electric power rose 19.4 percent between 2010 and 2014, reaching about 1166.4 terawatts per hour.

Demand is expected to rise to 1,639 terawatts per hour in 2023 and 2029 terawatts per hour until 2028, according to the Arab Union of Electricity (AUE).



Saudi Non-Oil Exports Reach Highest Levels Since 2022

A view of the Jeddah Islamic Port. (Asharq Al-Awsat)
A view of the Jeddah Islamic Port. (Asharq Al-Awsat)
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Saudi Non-Oil Exports Reach Highest Levels Since 2022

A view of the Jeddah Islamic Port. (Asharq Al-Awsat)
A view of the Jeddah Islamic Port. (Asharq Al-Awsat)

Saudi Arabia’s non-oil exports have reached their highest levels since the second quarter of 2022, continuing to grow at a steady pace. By the end of the third quarter of this year, non-oil exports, including re-exports, totaled SAR 80 billion (USD 21 billion), reflecting a 16.8% increase compared to the same period in 2023.

This growth aligns with the goals of Vision 2030, which aims to diversify Saudi Arabia’s economy and reduce reliance on oil revenues. Credit rating agency Moody’s recently upgraded Saudi Arabia’s credit rating to AA3 from A1 with a stable outlook, citing the Kingdom’s ongoing economic diversification and the strength of its non-oil private sector. Moody’s projects the non-oil private sector’s GDP to grow by 4–5% annually in the coming years.

According to data from Saudi Arabia’s General Authority for Statistics, non-oil national exports (excluding re-exports) grew by 7.6% in the third quarter of 2024, reaching SAR 57 billion (USD 15.1 billion). Re-exports saw a remarkable surge of 48.4%, amounting to SAR 23 billion (USD 6.1 billion).

In contrast, total merchandise exports dropped by 7.7% to SAR 276 billion (USD 73.5 billion) due to a 14.9% decline in oil exports. As a result, the share of oil exports in total exports decreased from 77.3% in the third quarter of 2023 to 71.3% this year.

Chemical industry products accounted for 25.5% of non-oil exports, growing by 5.3% compared to the same period last year. Plastics, rubber, and their derivatives followed closely, representing 24.9% of non-oil exports, with an 8.9% increase from the third quarter of 2023.

China remained Saudi Arabia’s top export destination, accounting for 15.2% of total exports in the third quarter of 2024. Japan and South Korea followed, at 9.3% and 9.2%, respectively. Other major destinations included India, the UAE, the US, Poland, Egypt, Bahrain, and Taiwan. Together, these ten countries accounted for 66.4% of Saudi exports.

Experts emphasize that the growth in non-oil exports strengthens Saudi Arabia’s economy and reflects the success of its diversification strategy under Vision 2030.

Shura Council member Fadhel Al-Buainain highlighted the importance of considering the scale of Saudi non-oil exports during the third quarter of 2024. He emphasized two key aspects of Saudi non-oil exports.

First, the 16.8% growth achieved is a significant leap that boosts the Saudi economy’s ability to continue strengthening non-oil exports, which are a focal point of Vision 2030 and its economic diversification goals.

Second, he said the 48.4% increase in the value of re-exported goods represents substantial growth, reflecting the Kingdom’s potential to play a pivotal role in regional re-export activities. This, in turn, can stimulate exports and position Saudi Arabia as a global logistics hub.

He further noted that the increase in export value compared to the second quarter of this year, amounting to SAR 37.2 billion (USD 9.92 billion) or 15.6%, indicates sustained and accelerating export growth.

Al-Buainain believes that Saudi Arabia’s ports on the Red Sea and the Arabian Gulf are well-equipped to play a central role in re-exporting, supported by free economic zones, robust infrastructure, and a well-established transportation and logistics network.

He also stated that the improvement in global demand, particularly in the petrochemical sector, which accounted for the largest share of exports, contributed to this growth.

However, the global economic conditions may face certain challenges that will reflect negatively on global demand, he remarked, stressing the importance of diversifying exports.

Dr. Osama Al-Obaidi, an international commercial law consultant and professor, told Asharq Al-Awsat that the significant increase in non-oil exports in the third quarter of this year compared to the same period in 2023 is linked to the growth in petrochemical exports, particularly plastics, rubber, and their derivatives.

He explained that this rise reflects the effectiveness of Saudi Arabia’s economic diversification efforts and its reduced reliance on oil as a sole income source, in line with Vision 2030.

It also highlights the success of the substantial investments made by the government to develop ports and logistics services, such as King Abdulaziz Port in Dammam and Jeddah Islamic Port.

Moreover, improvements in domestic, regional, and international airports, along with initiatives to promote local industries—particularly chemicals, food products, pharmaceuticals, and other high-demand goods in foreign markets—have also played a pivotal role.