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Acwa Power takes China bank loan in first for Saudi Arabia

An Acwa Power solar facility in Saudi Arabia. The Bank Of China loan will help finance its solar projects in Uzbekistan Acwa Power
An Acwa Power solar facility in Saudi Arabia. The Bank Of China loan will help finance its solar projects in Uzbekistan
  • $80m loan deal with Bank Of China
  • Currency gains traction in GCC
  • Boost to China’s influence

Saudi energy major Acwa Power has secured an $80 million loan from the Bank of China as the appeal of the Chinese Renminbi as a trade currency gains traction in the GCC.

Acwa Power, the world’s largest private water desalination company and a first mover into green hydrogen, has received the equity bridge loan to finance its solar and battery energy projects in Uzbekistan. 

The loan consists of two tranches: 50 percent in Renminbi (RMB), also known as the yuan, and 50 percent in US dollars.

It represents the first RMB loan deal between a Chinese bank and a Saudi-based company.



According to Asia House, a think tank in London, the deal marks the continued internationalisation of the RMB as a global trade currency. This could further enhance China’s economic sway in the GCC region. 

RMB use in trade settlement has trebled in the past three years. It now accounts for about 6 percent of global trade, surpassing the Euro, Asia House said. 

Vijay Valecha, chief investment officer at Century Financial in Dubai, said China has established cross-border trade settlement agreements with all six GCC members and set up yuan clearing centres in various cities.

“This could bolster the yuan’s role as a trade invoicing currency, reduce costs and enhance yuan liquidity,” he said.

Abdulhameed Al Muhaidib, chief financial officer of Acwa Power, said Chinese companies have invested more than $10 billion in projects since the company’s inception. 

Its portfolio comprises 81 projects with an investment value of nearly $85 billion, and the capacity to generate 55 gigawatts of power and manage 7.6 million cubic metres per day of desalinated water. 

Pan Xinyuan, general manager of Bank of China, said the bank “will continue to improve financial connectivity to push the Belt and Road economies on a track of sustainable and high-quality development”.

China-Saudi trade stood at $106 billion in 2022, an increase of about 30 percent from 2021 and nearly double the figure recorded in 2010. 

Official figures show bilateral trade reached $90 billion in the first 11 months of last year. 

Redmond Wong, chief China strategist at Saxo Bank, said the Acwa Power loan highlights the alignment between Saudi Arabia’s Vision 2030 and China’s Belt and Road Initiative

“As Saudi Arabia seeks to enhance its renewable energy capacity both domestically and through investments abroad, such partnerships play a pivotal role in achieving its drive for economic diversification,” he said.

China is also making progress in persuading the Gulf states to accept payment for their oil in RMB. 

In April 2023 Adnoc completed the region’s first cross-border RMB-settled LNG trade with China. 

The People’s Bank of China and the Central Bank of the UAE in November renewed their currency swap agreement worth nearly $5 billion for five years. The Chinese bank also did a similar deal with the Saudi Arabian Monetary Authority worth $7 billion for three years. 

China also has a $5.7 billion currency swap agreement with Qatar, signed a decade ago.

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