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).



US Consumers to Bargain Hunt in Annual ‘Black Friday’ Spree

 A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
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US Consumers to Bargain Hunt in Annual ‘Black Friday’ Spree

 A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)

US shoppers are coming out in force this holiday season, but the festiveness is being tempered by inflationary pressures that have abated but not completely faded.

After the sticker shock during the latter stages of the pandemic, a familiar frustration has settled in towards consumer prices that remain broadly elevated even if they have stopped rising rapidly.

Americans are "ready to open their wallets this holiday season," said the Conference Board ahead of Black Friday -- the day after Thanksgiving, which this year, falls on November 28 -- that traditionally sees US stores kick off the Christmas shopping season with steep discounts.

"US consumers plan to spend more than last year, but inflation reduces how far their dollars can go."

In this environment, nobody expects to pay the full price for items.

"Holiday shoppers are likely to increase their budgets this year versus last year but remain selective and are looking for discounts," said a note from Morgan Stanley.

The investment bank's survey found that 35 percent planned to spend more this holiday season. But nearly two-thirds would skip a purchase if an item is not adequately discounted, meaning a price cut of more than 20 percent.

"It's gonna be a good year, but I don't think that growth is going to be spectacular because consumers are still under pressure," predicted Neil Saunders of GlobalData.

Inflation remains above the Federal Reserve's two percent long-term target, rising in October to 2.6 percent on an annual basis from 2.4 percent in September. But that's significantly below the peak level of 9.1 percent in June 2022.

Other recent economic data has been solid. Unemployment remains low at 4.1 percent, while a preliminary GDP reading for the third quarter came in at 2.8 percent.

But Joe Biden's presidency coincided with about a 20 percent rise in consumer prices as Covid-19 pandemic lockdowns gave way to supply chain bottlenecks.

That inflation played a central role in the 2024 US presidential election, with Republican Donald Trump defeating Biden's appointed Democratic successor, Vice President Kamala Harris.

"There is still a perception among consumers that things are quite difficult," Saunders said. "So people are being quite cautious and careful in their spending."

- Tariff hit? -

How Trump's looming presidency will affect inflation remains to be seen. Industry groups have warned that tariffs favored by the Republican could reignite pricing pressures.

The National Retail Federation projected that a Trump tariff proposal floated during the campaign would dent US consumer budgets by as much as $78 billion annually.

But while tough potential trade actions are already preoccupying Washington trade groups, tariffs are not on consumer radars for the 2024 season, according to Saunders.

One challenge this year will be the shortness of the season.

Black Friday falls at the latest possible date on November 29, shortening the stretch between Turkey Day and Christmas on December 25.

But the impact of that dynamic on 2024 sales should not be overstated. Retailers in recent years have pulled the holiday shopping season ahead, with some vendors launching online "Black Friday" promotions as early as October.

Among the companies that have already begun discounts: the big-box chains Walmart and Target, electronics giant Best Buy and home-improvement retailer Home Depot.

Amazon officially launched "Black Friday Week" on Thursday.

NRF has projected holiday spending growth of between 2.5 and 3.5 percent in the 2024 season compared with the year-ago period, to as much as $989 billion over the two-month period.

Economists with the trade group have pointed to an easing of gasoline prices as a supportive factor.

Online sales are projected to grow as much as nine percent this season, extending a long-term trend. Black Friday itself has become a big occasion for online shopping, along with "Cyber Monday" three days later.

"Over time, we've moved from a period where it was just Black Friday, and maybe a little of the weekend, to it being a period of discounting that starts very early," said Saunders. "It's seasonal discounts."

There has been a diminishment of "doorbuster" sales that are known to draw hordes of waiting crowds, sometimes resulting in injury or worse.

Instead, increasing numbers of consumers are spreading out their purchases or opting to click through Black Friday promotions at home.