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ACWA Power Increases Its Shareholding to 74% in RAWEC

ACWA Power Increases Its Shareholding to 74% in RAWEC
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ACWA Power Increases Its Shareholding to 74% in RAWEC

ACWA Power Increases Its Shareholding to 74% in RAWEC

Saudi Arabia’s ACWA Power announced the completion of the acquisition of certain shares and debt instruments of Japan’s Marubeni Corporation in Rabigh Arabian Water & Electricity Company as well as certain shares owned by Marubeni in RAWEC’s Operations & Maintenance Company known as Rabigh Power Company.

With that, ACWA Power increased its shareholding to 74 percent in RAWEC after buying all of Marubeni’s stake.

RAWEC is the captive utility provider to Rabigh Refining and Petrochemical Company (“Petro Rabigh Corporation”), a joint venture formed in 2005 between Japan’s Sumitomo Chemical and Saudi Aramco which owns, operates, and manages the Rabigh petrochemical complex. The complex comprises of integrated oil refining and petrochemical operations that produce a variety of refined petroleum and petrochemical products at Rabigh in the Kingdom.

RAWEC owns and operates a conventional thermal power plant and desalination facility with a total installed capacity of 840 MW Power, 6,110 t/h Steam and 12,000 t/h Water, situated approximately 160 km north of Jeddah.

According to ACWA Power’s statement, RAWEC supplies the utilities to Petro Rabigh under a long term take. RAWEC plant comprises of two phases which were commissioned in 2008 and 2016 that run as an integrated operation and is also synchronized to the Saudi Electricity Company (SEC) electricity grid providing a non-stop and highly reliable utility supply to Petro Rabigh Corporation.

RPC is a company responsible for the operations and maintenance of the RAWEC plant as per a long term agreement signed with RAWEC.

The purchase of the target securities was carried out pursuant to certain pre-emptive and other rights that ACWA Power had with respect to the shares held by other shareholders in RAWEC and RPC.

Accordingly, ACWA Power exercised its rights in May 2018 and the physical securities transfer was consummated on March 13, 2019, after securing various consents and completing other regulatory processes.

President & CEO of ACWA Power Paddy Padmanathan commented on the acquisition saying the purchase of additional shares in RAWEC and RPC to increase the existing majority ownership demonstrates the company’s confidence in this utility complex and its desire to further strengthen the partnership with its key client Petro Rabigh Corporation.

CIO of ACWA Power Rajit Nanda noted that by acquiring Marubeni’s Shares in RAWEC and RPC “we intend to build upon our recent successes in the power generation and water desalination sector in the kingdom and the rest of the world and consolidate our position as a major power and water utilities provider to creditworthy energy-intensive industrial customers like Petro Rabigh Corporation.”

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Investors Weigh Market Risks as Israeli-Iranian Tensions Rise

Traders monitoring the movement of stocks on Wall Street (Reuters)
Traders monitoring the movement of stocks on Wall Street (Reuters)
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Investors Weigh Market Risks as Israeli-Iranian Tensions Rise

Traders monitoring the movement of stocks on Wall Street (Reuters)
Traders monitoring the movement of stocks on Wall Street (Reuters)

As the conflict between Israel and Iran escalates, investors are analyzing several potential market scenarios, especially if the United States deepens its involvement. A key concern is a sharp increase in energy prices, which could amplify economic consequences across global markets.

Rising oil prices could fuel inflation, weaken consumer confidence, and diminish the likelihood of interest rate cuts in the near term. This may prompt initial stock market sell-offs and a flight to the US dollar as a safe-haven asset.

While US crude oil prices have surged by around 10% over the past week, the S&P 500 index has remained relatively stable, following a brief decline after the initial Israeli strikes.

Analysts suggest that if Iranian oil supplies are disrupted, market reactions could intensify significantly. A serious supply disruption would likely ripple through global petroleum markets and push oil prices higher, leading to broader economic consequences.

Oxford Economics has outlined three possible scenarios: a de-escalation of conflict, a full suspension of Iranian oil production, and the closure of the Strait of Hormuz. Each scenario carries escalating risks to global oil prices. In the most severe case, prices could soar to $130 per barrel, pushing US inflation to nearly 6% by year-end. In such a scenario, consumer spending would likely contract due to declining real income, and any possibility of interest rate cuts this year would likely vanish under rising inflationary pressure.

So far, the most direct impact has been felt in oil markets, where Brent crude futures have jumped as much as 18% since June 10, reaching nearly $79 a barrel, the highest level in five months. Volatility expectations in the oil market now exceed those of major asset classes like equities and bonds.

Although equities have largely brushed off the geopolitical turmoil, analysts believe this could change if energy prices continue to climb. Rising oil prices could weigh on corporate earnings and consumer demand, indirectly pressuring stock markets.

While US stocks have held steady for now, further American involvement in the conflict could spark market anxiety. Historical patterns suggest any sell-off might be short-lived. For instance, during the 2003 Iraq invasion, stocks initially dropped but recovered in subsequent months.

As for the US dollar, its performance amid escalating tensions could vary. It may strengthen initially due to safe-haven demand, although past conflicts have sometimes led to long-term weakness, especially during prolonged military engagements.