An economic report links the need to create blocks and business partnerships to invest in renewable energy in the Middle East and particularly in Saudi Arabia to lack of funding instruments. This is because there are no means of funding to implement the projects that the governments of the region propose within their renewable energy programs
According to a report by the Eversheds foundation on renewable projects in the Middle East, the Islamic finance instruments have not yet been used in renewable projects in the region and the formation of alliances or joint ventures of foreign and local companies. Using them could make them more competitive, especially in Saudi Arabia and Jordan, where they are promoted as part of the tender requirements.
The renewable energy sector in the Middle East has become an attractive option, but the financing of projects in the region differs significantly from the methods used in the West. The report gives the example of Saudi Arabia where the government funds 50 % of the infrastructure projects. However, as most of the development operations of renewable energy are made with conventionally financed debt, investors believe that Saudi banks might not be willing to invest if the Saudi government is not involved in the projects
The Eversheds report also maintains that projects such as the production of 54GW of renewable energy proposed by K. A. Care, the wind farm project in Ma’an, Jordan and the Masdar project in Abu Dhabi offer great opportunities for developers, investors and local and international financial operators.
The report also indicates that any interested party has to have a local partner to win competitive bids since personal relationships are very important for doing business in the Middle East. In this regard, the formation of a partnership or a joint venture with local partners can give companies a competitive advantage.
Source: Al Watan, 21/01/2014
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