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Financing Completed for Dumat Al-Jandal Wind Power Plant in Saudi Arabia

Financing Completed for Dumat Al-Jandal Wind Power Plant in Saudi Arabia
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Financing Completed for Dumat Al-Jandal Wind Power Plant in Saudi Arabia

Financing Completed for Dumat Al-Jandal Wind Power Plant in Saudi Arabia

The consortium consisting of EDF Renewables and Abu Dhabi Future Energy Company, Masdar, has completed the financing of the Dumat al-Jandal utility-scale wind project in Saudi Arabia, backed by Saudi and international banks.

The Renewable Energy Project Development Office, REPDO, of the Saudi Ministry of Energy, Industry and Mineral Resources awarded the $500 million Dumat al Jandal wind farm in January following a call for tenders in August 2017.

The winning consortium has submitted the most cost-competitive bid of $21.3 per megawatt-hour, Mwh.

With an installed capacity of 400 megawatts, the Dumat al-Jandal project will be Saudi Arabia’s first wind farm and the largest in the Middle East.

Led by EDF Renewables and Masdar, a subsidiary of Mubadala Investment Company, the project construction will begin shortly and commercial operations are due to start in the Q1 2022.

Vestas, a wind turbine company, is the contracted wind-turbine technology provider and responsible for the engineering, procurement and construction contract.

TSK, a Spanish industrial group, will be responsible for the balance of plant while CG Holdings will provide the substations and high-voltage solutions.

“We are delighted to take part in the country’s first wind project, which is set to be the most powerful wind farm in the Middle East,” said Bruno Bensasson, EDF Group Senior Executive President responsible for Renewable Energies, and Chairman and CEO of EDF Renewables.

“This new project demonstrates our ambitions in the country and represents another step forward under the EDF Group’s Cap 2030 strategy, which aims to double its renewable energy capacity by 2030 – both in France and worldwide – to 50GW,” he added.

“The award of Saudi Arabia’s first and the Middle East’s largest wind farm during Abu Dhabi Sustainability Week in January was a momentous occasion for our company and our partners,” stated CEO of Masdar Mohamed Jameel al-Ramahi.

“It also illustrated the depth of Saudi Arabia’s commitment to realize its bold strategy to substantially increase the contribution of renewables in its total energy mix to 27.3GW by 2024, from the wind as well as solar energy,” Ramahi explained.

He pointed out that the oversubscribed financing of the Dumat al-Jandal project further illustrates the confidence of local and international lenders and the investment community in the Kingdom’s economy and its potential as a hub for highly cost-effective renewable energy development.

The wind farm will supply electricity according to a 20-year power purchase agreement with the Saudi Power Procurement Company, a subsidiary of Saudi Electricity Company, the Saudi power generation, and distribution company.

CEO of the Saudi Power Procurement Company Osama Khawandanah, for his part, said that Dumat al-Jandal project has set the benchmark and shows the potential for onshore wind energy in the Kingdom.
“It is a new reference point and source of confidence as we continue to diversify our power generation system.”

The wind farm will be located 560 miles (896km) north of Riyadh, in the al-Jouf region.

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Saudi Arabia Raises $12 Billion in International Bonds Amid Strong Demand

Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
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Saudi Arabia Raises $12 Billion in International Bonds Amid Strong Demand

Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).

Saudi Arabia has raised $12 billion from global debt markets in its first international bond issuance of the year, attracting bids worth nearly $37 billion. This demonstrates strong investor appetite for Saudi debt instruments.

The issuance comes just two days after the approval of the 2025 annual borrowing plan by Minister of Finance Mohammed Al-Jadaan. The plan estimates financing needs for the fiscal year at SAR 139 billion ($37 billion). The funds will be used to cover the projected SAR 101 billion ($26.8 billion) budget deficit for 2025, as well as repay SAR 38 billion ($10 billion) in principal debt obligations due this year.

The National Debt Management Center (NDMC) announced on Tuesday that the issuance includes three tranches: $5 billion in three-year bonds, $3 billion in six-year bonds, and $4 billion in ten-year bonds. Total demand for the bonds reached $37 billion, exceeding the issuance size by three times and reflecting robust investor interest.

The NDMC emphasized that this issuance aligns with its strategy to broaden the investor base and efficiently meet Saudi Arabia’s financing needs in global debt markets.

According to IFR, a fixed-income news service, the initial price guidance for the three-year bonds was set at 120 basis points above US Treasury yields. The six-year and ten-year bonds were priced at 130 and 140 basis points above the same benchmark, respectively.

Strong demand allowed Saudi Arabia to lower yields on the shorter-term bonds, further demonstrating investor confidence. Economists noted that the pricing above US Treasuries is attractive in the current market, showcasing trust in Saudi Arabia’s economic stability and financial strategies.

International confidence

Economic experts view this successful bond issuance as a testament to international confidence in Saudi Arabia’s robust economy and financial reforms. Dr. Mohammed Al-Qahtani, an economics professor at King Faisal University, said the move underscores Saudi Arabia’s commitment to diversifying financing tools both domestically and internationally. He added that the funds would support Vision 2030 projects, reduce pressure on domestic resources, and attract strong international investor interest.

The issuance strengthens Saudi Arabia’s ability to meet financial needs, expand its investor base, and establish a global financing network, he said, noting that it also facilitates entry into new markets, enabling the Kingdom to accelerate infrastructure projects and capital expenditures.

Dr. Ihsan Buhulaiga, founder of Joatha Business Development Consultants, described the 2025 budget as expansionary, aimed at meeting the financing needs of economic diversification programs. He stressed that the budget deficit is an “optional” one, reflecting a deliberate choice to prioritize Vision 2030 initiatives over immediate fiscal balance.

Buhulaiga explained that the Kingdom’s approach balances two options: limiting spending to available revenues, which would avoid deficits but delay Vision 2030 initiatives, or borrowing strategically to fund Vision 2030 goals. He said that the annual budget is just a component of the larger vision, which requires sustained funding until 2030.

He continued that Saudi Arabia’s fiscal space and creditworthiness allow it to borrow internationally at competitive rates, explaining that this flexibility ensures financial sustainability without compromising stability, even during challenges like the COVID-19 pandemic.

Saudi Arabia’s debt portfolio remains balanced, with two-thirds of its debt domestic and one-third external. As of Q3 2024, public debt stood at approximately SAR 1.2 trillion, below the 30% GDP ceiling. According to the Ministry of Finance, the budget deficit is expected to persist through 2027 but remain below 3% of GDP.

Buhulaiga highlighted the importance of capital expenditure, which reached SAR 186 billion in 2023 and is projected to rise to SAR 198 billion in 2024, a 6.5% increase.

He emphasized the government’s pivotal role in economic diversification, supported by investments from the Public Investment Fund (PIF), the National Development Fund, and its subsidiaries, including the Infrastructure Fund.

The PIF recently announced a $7 billion Murabaha credit facility, facilitated by Citigroup, Goldman Sachs International, and JPMorgan. Meanwhile, the NDMC arranged a $2.5 billion revolving credit facility earlier in January, compliant with Islamic principles, to address budgetary needs.

In November, Moody’s upgraded Saudi Arabia’s credit rating to Aa3, aligning with Fitch’s A+ rating, both with a stable outlook. S&P Global assigns the Kingdom an AA-1 rating with a positive outlook, reflecting a high ability to meet financial obligations with low credit risk.

The IMF estimates Saudi Arabia’s public debt-to-GDP ratio at 26.2% in 2024, describing it as low and sustainable. This is projected to rise to 35% by 2029 as foreign borrowing continues to play a key role in financing deficits.