Riyadh/Washington: Saudi Arabia has signed a memorandum of understanding with SoftBank Group Corp. for a $200 billion solar power project in the kingdom, calling it the single largest of its kind in the world.
SoftBank founder Masayoshi Son said he envisions the project, which runs the gamut from power generation to panel and equipment manufacturing, as a way to help wean Saudi Arabia off its dependence on oil for electricity, create as many as 100,000 jobs and shave $40 billion off power costs. The total capacity to be built under its umbrella will be 200 gigawatts by 2030, the company said.
Saudi Crown Prince Mohammed Bin Salman is on a three-week tour of the US, his first visit since being designated the successor of his father, King Salman bin Abdulaziz. He and Son signed the memorandum of understanding in New York on Tuesday. The deal deepens SoftBank’s ties with the world’s largest crude exporter and advances the crown prince’s ambition to diversify Saudi Arabia’s economy.
“It’s a huge step in human history. It’s bold, risky and we hope we succeed doing that," Prince Mohammed said late Tuesday night as he left a press briefing at the Plaza Hotel.
“The kingdom has great sunshine, great size of available land and great engineers great labor, but most importantly, the best and greatest vision," Son told reporters at the briefing.
SoftBank was said to be planning to invest as much as $25 billion in Saudi Arabia over the next three to four years. That’s a boost for Prince Mohammed, who’s been at the forefront of the Vision 2030 campaign to diversify the kingdom’s economy away from oil by that year. SoftBank is said to have aimed to deploy as much as $15 billion in a new city called Neom that Prince Mohammed plans to build on the Red Sea coast.
The Japanese company’s Vision Fund is also said to plan investments of as much as $10 billion in state-controlled Saudi Electricity Co. as part of efforts to diversify the utility into renewables and solar energy, and SoftBank will also have some of its portfolio companies open offices in Neom.
“This fits in with Saudi Arabia’s push to restructure their economy and is not very surprising," said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. “What’s not clear is how much will this benefit SoftBank itself."
The kingdom’s deal-making has quickened as it pursues Prince Mohammed’s diversification goals. Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, which has more than $224 billion in assets, spent about $54 billion on investments last year. The sale of about a 5% stake in oil giant Saudi Arabian Oil Co. is expected to provide more funds for investments.
Prince Mohammed met last week with President Donald Trump, who welcomed him to the White House. The US and Saudi Arabia are developing an increasingly close partnership, encompassing everything from isolating Iran to bolstering business ties beyond energy into technology, defence and entertainment, according to top US and Saudi officials.
The prince used his Washington visit to nurture contacts across party lines, meeting with both Republican and Democratic Congressional leaders in Congress. His tour is expected to include stops in San Francisco, Los Angeles and Houston. Bloomberg