Jizan Economic City attracts $6.7bn
Riyadh, November 3, 2008
Saudi Arabia's Jizan Economic City, part of ambitious government development plans, has attracted 25 billion riyals ($6.7 billion) of investment so far, state media said.
Construction of the city in Saudi Arabia's south will begin this month as the world's largest oil exporter tries to spread its wealth and promote development.
"The size of investment attracted by the city, and in which Chinese firms are participating, is 25 billion riyals and the city is expected to play a key part in the future of investment relations with China," the Saudi Press Agency said citing the state investment authority Sagia.
Its developers, Malaysia's MMC Corp and the Saudi Binladin Group, agreed last year to build an aluminium smelter with Aluminium Corp of China at a cost of $3 billion. The smelter will be built between 2009 and 2013, SPA said.
The government has tried to reassure Saudis over the past two weeks that modernisation schemes are on track after fears of a global economic slowdown helped push oil prices down to under $70 a barrel from double that three months ago.
Sagia will bear little of the costs of the project, 30 percent of which the developers said last year they plan to sell to the public in an initial public offering that has still not materialised. The bourse recently fell heavily in response to the global financial crisis.
The developers will need to raise around $13 billion to fund the $30 billion project, MMC Corp's chief executive officer Feizal Ali said in 2006 when it was first announced.
"Jizan Economic City reflects the state's faith in the importance of balanced regional development for all areas of the kingdom," SPA said, stating that the city would be an export centre providing impetus for the local economy.
Jizan is one of four economic cities the government is establishing in an effort to diversify the economy away from reliance on oil, attract foreign investment and provide its burgeoning youth population with jobs.
SPA said road building would begin this month for completion in 2010, while energy and water desalination plants will be ready by 2013. The building of mosques, schools and hospitals will begin next year, SPA said.
It said an oil refinery would be constructed by 2011. The oil ministry has set a deadline of March 2009 for bidders to build the refinery but said last month that the delayed project will not come online until 2015.
Spiralling costs have cast doubt over the viability of new oil refineries worldwide, and industry observers have been sceptical over the Jizan plan since it is a long way from crude production facilities. - Reuters