The role of private capital infrastructure deals in the Middle East is evolving as the region is intensifying efforts to invest in renewables. This is according to the Middle Eastern Infrastructure Factsheet published by Preqin, the global leader in alternative assets data, analytics and insights.
According to Preqin, aggregate value of renewable energy deals between 2011 and 2021 is $13 billion, with over 60% of this having occurred more recently since 2017.
Energy transition has increasingly become a priority for many governments and oil producers in the Middle East, as they have been impacted by both low oil prices during the pandemic and a global desire to decarbonise energy generation.
Among private capital infrastructure deals in the Middle East in recent years, secondary transactions have seen their share rise from 19% in 2016 to 40% in 2019. However, the secondary sales of the Adnoc Oil Pipelines in 2019 and Gas Pipelines in 2020 underscore the attractiveness of traditional infrastructure assets in the region, particularly in the UAE.
Current aggregate value of infrastructure deals in the UAE since 2016 now stands at $83 billion; 29% ($24 billion) of this came from the Barakah Nuclear Energy Project alone. However, while natural resources remain central to Middle Eastern infrastructure assets, recent large-scale renewable investments are providing avenues away from primary deployment in hydrocarbons.
For example, the recent Al Dhafra Solar project saw a consortium of developers including EDF Group and Masdar secure $1.05 billion in debt financing from a global syndicate of lenders at the end of 2020. Alongside the 2019 fourth phase of the 5GW Mohammed Bin Rashid Al Maktoum solar power complex, these greenfield investments illustrate how the Middle East is moving away from investing in new hydrocarbon capacity towards cleaner energy generating technoogy, making the most of the region's other abundant natural resource.
Alex Murray, VP, Research Insights at Preqin, said: “Private capital investments are playing an increasingly important role in the Middle East, particularly in renewable energy investment. Looking ahead, we expect countries in the region to further ramp up investments in this sector, ensuring progress towards long term emission targets. With the right regulatory environments, this will create more opportunity for alternative models to deliver infrastructure assets and networks.”-- TradeArabia News Service
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