APICORP: Private sector’s share in energy investments falls to 19 per cent in 2020

apicorp 17 June trmeThe planned and committed investments in the MENA region will exceed US$792bn from 2020–2024, according to the Arab Petroleum Investments Corporation (APICORP)

As per APICORP’s MENA Energy Investment Outlook 2020-2024, the amount marks a US$173mn decline from the US$965bn in last year’s five-year outlook.

The overall decline in the investment outlook - mostly in planned investments - is largely attributed to the 2020 triple crisis: the COVID-19-related health crisis, oil crisis and a looming financial crisis.

Despite these difficult circumstances however, the GCC region’s committed investments increased by 2.3 per cent compared to a six per cent overall decrease in the MENA region as a whole, indicating a higher project execution rate in the GCC.

At the end of the first quarter of 2020, most countries around the world were facing the same dilemma in how to deal with the COVID-19 health crisis: choosing between maintaining business as usual and thus risking a massive loss of lives, or imposing lockdowns and restrictions to contain the virus. This dilemma called for uncoordinated trade-offs among countries. The resumption of travel and trade however will require international coordination.

The power sector registered a US$114bn decline in investments due to the commissioning of several projects during 2019 in Egypt, UAE and Saudi Arabia. Globally and in the region however, utilities’ share prices did not fall as much as their counterparts in the oil and gas sector. This was due to a relatively milder decrease in demand for electricity and government utilities subsidies in select countries.

Although the power sector has not witnessed major credit issues so far, the impact on investments has been more acute in 2020. Spending on renewable projects and transmission and distribution (T&D) networks were cut due to delays in project development, the various restrictions imposed and expectations of lower demand. As per the outlook however, the MENA region does not seem to have been affected so far as renewables auctions remained unchanged, namely Saudi Arabia’s Renewable Energy Development Office (REPDO) programme.

 

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

twn Are you sure that you want to switch to desktop version?