Saudi Arabian Finance Minister Mr. Mohammed Al-Jadaan has stated that the Kingdom could save more than $200 billion over the next decade by replacing liquid fuel used for domestic consumption with gas and renewable energy sources, as the country seeks to reduce costs in order to fund investments.
The world’s largest oil exporter has recently launched a reform program to modernize the economy, create jobs and reduce dependence on oil revenues.
Mohammed Al-Jadaan Finance Minister Saudi Arabia
“One initiative we’re about to finalize is the displacement of liquids. This program would represent savings for the government of about $213.34 billion (800 billion riyals) over the next 10 years which can be utilized for investment. Instead of buying fuel from the international markets at $60 and then selling it at $6 for Saudi utilities, or using some of our quota in OPEC to sell at $6, we’re going to actually displace at least 1 million barrels a day of oil equivalent in the next 10 years and replace it with gas and renewables.”
According to the reports, some companies have been asked to reduce dividends paid to the government to increase capital spending to shift the burden of some planned investments away from the treasury.
“Between now and 2025, and possibly until 2030, fiscal sustainability is a priority for us. We believe that until we achieve all the targets that Vision 2030 has set, we need to maintain fiscal sustainability and control government expenditure,” commented Mr. Jadaan.
Crown Prince Mohammed bin Salman’s Vision 2030 is a plan to shake up Saudi Arabia by weaning the economy off oil and constructing new industries and megaprojects with the private sector to create millions of jobs.
By the end of 2020, the unemployment rate was 12.6 percent. It was a record 15.4 percent in the second quarter of last year. Although the economy was hit by the Pandemic, it was well above the 7 percent rate the Kingdom wants to reach by 2030, as per the reports.
“We are maintaining our unemployment target for 2030 but because we are not out of the woods yet it is very difficult to say what the unemployment rate is going to be for 2021. We aim to reduce the number so we will end up the year below where we ended up in 2019, pre-COVID, but I can’t tell you this is going to happen for certain,” Mr. Jadaan said.
