Time to Revise Saudi Subsidies?→

Saudi Arabia’s system of electricity subsidies “should be revised,” the chief executive of Saudi Electricity Co, the country's majority state-owned power utility, said on Tuesday.

“Subsidies are becoming a big part of the government budget,” Ali al-Barrak said at a financial conference in Riyadh. “Subsidies should be revised and done in a different way. They should be smarter and support the low-income people.”

The International Energy Agency estimates that the Saudi government incurs an annual subsidy bill of US$61 billion, the second-highest subsidy in the world after Iran.

Alarming But Not Hopeless→

Abdel Aziz Aluwaisheg on the staggering costs of domestic energy consumption in Saudi Arabia and the efforts of conservation:

Saudi Arabia has by far the highest per capita oil consumption in the world. It consumes about four million barrels a day or (1.5) billion barrels per year. This translates into (48) barrels a year for every man, woman and child. By comparison, the United States per capita consumption is about (9) barrels a year and Japan’s is (5) barrels. In other words, Saudi Arabia consumes oil, per capita, at a rate of over five times the US and nearly ten times as much as Japan.

The cost of this waste is staggering: At $ 100 a barrel, domestic consumption is depriving Saudi Arabia of nearly ($ 150) billion of foreign earnings. Opportunity cost is equivalent to 20 percent of its annual budget.

The situation is certainly alarming, but not hopeless. There is a lot that can be done, as most countries have since the 1970s, when the first price shocks changed the way we looked at oil scarcity. Major oil producing nations did not suffer those shocks, and did not have to go through the same stringent conservation requirements as oil importers did. That experience led to profligate energy usage among oil producers, which now realize how such waste is depriving them of resources they could put for better use.

Saudi Arabia to go 30 percent Solar by 2030?→

Robert Kennedy reports for Al Jazeera:

Synonymous with crude oil and the vast wealth it has bestowed, Saudi Arabia is now planning to tap its copious exposure to the sun to become the world’s titan of solar power.

The Saudi government is placing its bets squarely on the country’s abundant sunlight, as it seeks $109bn in investment to fire up its solar energy sector. A total of $136bn was invested worldwide in solar energy in 2011, underscoring the kingdom’s determination to develop its own industry.

The goal is to power about 30 per cent of the country's burgeoning energy needs by 2030.

Bold plans.

Saudi Government Accused of Favoritism in Awarding Major Contract

The state-owned Saudi National Water Co. reportedly plans to spend $38 billion on water projects over the next 16 years. As the world’s largest producer of desalinated water, the Saudi government sure spends a lot of money on water projects. There are, however, some questions over how this money is being spent and the lack of necessary oversight in the process for awarding major government contracts.

On November 21, al-Riyadh daily reported that China’s SEPCO3 complained to several Saudi government departments, including the National Anti-Corruption Commission and the General Audit Bureau, after they lost competition for a contract to build a power plant in Yanbu. The company chief sent an angry letter to the Minister of Water and Electricity saying that the contract was awarded to a local company that lacks experience to build the project, which would cost SR11 billion and supply Madinah with water and electricity

SPECO3 chief wrote in his letter to the minister: “I met with you in your office on 14/11/2012 and the meeting was attended by the representative of the Chinese Embassy. You said you would award the project to a local company despite the fact it does not meet the requirements of the bid, did not submit complete documents and did not have enough experience,” Saudi Gazette reported.

The Ministry of Water and Electricity has rejected the assertion that it has favored a local company, the newspaper reported. In a statement issued earlier this week, the ministry said the contract was awarded to the local company because SEPCO3’s tender was SR700 million higher in terms of capital, saying “All information Sepco Electric mentioned in its letter did not have a shred of truth and was mere fabrications.”

Renewable Influence?

The Guardian ran a story Friday saying that Saudi Arabia has plans to depend entirely on renewable energy at some point in the future. The source for this story, which has been much talked in the past few hours, is Prince Turki al-Faisal. The newspaper first refers to him as “an influential member of the royal family,” which is all well and fine.

In the third paragraph, however, they go further to describe him as “one of the state’s top spokesmen.” This would have been all well and fine, too, if they have inserted the word “unofficial” there somewhere.

Prince Turki was Saudi Arabia’s intelligence chief for 25 years and later served as ambassador to the UK and the US, but he currently does not hold any official position with the Saudi government. As the Chairman of King Faisal Center for Research and Islamic Studies, he does a lot of interviews and speaking, but he is always careful to repeatedly point out that he does not speak for the Saudi government.

“I can’t speak for my government,” he told Charlie Rose during an interview last month.

Neither the Guardian nor any of the other sources who cited the ‘Saudi going 100% renewables’ story bothered to make that fact clear, and that bothers me. When I complained about it on Twitter, Rasheed Abou-Alsameh said that while Turki al-Faisal may not have a government position, he knows the government and the royal family inside out:

@ahmed He doesn't have an official govt position, but he's knows everything that's going on in Saudi govt & royal family.

— Rasheed Abou-Alsamh (@RasheedsWorld) October 19, 2012

That supposedly makes him influential, but let me just say that the word ‘influential’ is sometimes used very liberally in the conservative Kingdom. When was the last time we have seen a change in any government policy based on an opinion expressed publicly by Prince Turki al-Faisal? Yes, he may go out there to promote and defend the Saudi government policies, but it would be inaccurate to make an assertion about future government plans based on his statements.

SEC Monopoly→

Salman al-Jishi, a businessman from the Eastern Province, writes:

It is hardly possible to identify where the real problem lies — with the unwieldy SEC or the ECRA — which is expected to regulate the power sector and end the monopoly of the SEC to pave the way for fair competition in the sector.

Repeated blackouts during the hot summer months this year caused many people to complain loudly, but SEC tried to play down the cuts. Meanwhile, ECRA seemed unable to stand firmly for consumers in the face of SEC monopoly over the sector. ♦

‘X Country Is The Saudi Arabia of Y’→

The Economist:

Spain is the Saudi Arabia of olive oil, accounting for nearly half of global production.

A Google search for the phrase “is the Saudi Arabia of” shows that:

• America is the Saudi Arabia of coal
• Maine is the Saudi Arabia of wind
• Sweden is the Saudi Arabia of feminism

For an extensive list, head over to Salon where Daniel Rigney wrote yesterday about the Saudi Arabia of Metaphors. ♦

Makkah Goes Solar→

Wael Mahdi reports for Bloomberg:

The city on Jan. 5 plans to select from a group of at least 20 bidders competing to build and operate facilities producing 385 gigawatt-hours per year of power including 100 megawatts of solar capacity, said Mayor Osama al-Bar.

The country should have moved in that direction years ago. Better late than never, I guess. ♦