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SAUDI EYES SUKUK FOR FUNDING

GCC, Iraq plan $1 trillion infrastructure investment

Riyadh, April 5, 2014

Sukuk could unlock financing for the region’s $1 trillion worth of infrastructure projects, as Saudi Arabia drives innovation in Islamic finance to support its development needs, stated senior experts ahead of one of the region’s most important finance events.

The Euromoney Saudi Arabia Conference will provide a platform for key players in Islamic finance and infrastructure – including NCB, the Saudi Kuwait Finance House, ACWA Power, HSBC Saudi Arabia and Bechtel – to discuss the Saudi Arabian government’s priorities and strategic direction, and the roles of international investors, contractors, and public-private partnerships in funding infrastructure investment.

Co-hosted with the Saudi Ministry of Finance, the 9th Euromoney Saudi Arabic Conference will be held under the theme of “Innovation, Competition, and the Changing Dynamics of Globalisation,” and will run from May 6 to 7.

The region is facing rapid population growth and urbanization, with the UN projecting that the GCC’s urban population will increase by 36 per cent from 36.4 million in 2010 to 49.4 million in 2025.

In response, GCC states and other Mena countries like Iraq are investing $1 trillion in 117 major infrastructure projects across construction, utilities, transportation and logistics sectors, which are set to be completed by 2030, stated the experts citing a report from EC Harris.

Saudi Arabia, with the GCC’s largest population and economy, has $375 billion worth of infrastructure projects in the pipeline, the report said.

To finance these massive projects, the Kingdom is increasingly turning to Shariah-compliant Islamic finance, such as sukuk, in part due to the lower levels of risk and more predictable rates of return they added.

Richard Banks, the regional director, Euromoney Conferences, said: "The Mena region will need to raise significant funds to meet its infrastructure needs in the coming years, and Islamic finance will play a key role in enabling governments to do this."

As both a major issuer of sukuk, and also a nation that is committed to infrastructure investment, the kingdom is an ideal host for serious discussions on the role of Islamic finance in this area.

“We are bringing global experts together with senior executives with practical experience within the Kingdom to discuss the issues surrounding sukuk and examine the road ahead for projects and Islamic finance,” he added.  

The total global sukuk issued is set to grow from $130 billion in 2014 to $237 billion in 2018. Leading MENA, the Kingdom of Saudi Arabia issued $8.69 billion worth of sukuk in the first nine months of 2013.

One key point of discussion will be the public-private partnership funding model for the Riyadh Public Transport Project, one of the world’s largest public transport systems under development.

The Riyadh Public Transport Project is slated to cost $22.5 billion, including 176.5 km of rail and 85 stations, according to the Ar-Riyadh Development Authority.

Bechtel, the US-based engineering, construction, and project management firm, led a consortium that won a $9.4 billion contract to design and build two of the Riyadh Public Transport Project’s lines, totalling 63.3 km.

Executives from the company will take part in panels during the conference, outlining how public-private partnerships are playing a key role in infrastructure investment and sharing their experiences on the project to date.

The 9th Euromoney Saudi Arabia Conference is the longest-running, largest and most influential financial conference in the Kingdom. The event, to be held at the Al Faisaliah Hotel in Riyadh, is expected to attract more than 1,200 delegates from all over the region and the world.-TradeArabia News Service




Tags: Saudi | GCC | Iraq | Infrastructure | Euromoney |

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