Saudi Arabia wants its Public Investment Fund (PIF) to control more than $2 trillion by 2030 so that it can be used to support transition from oil.
Saudi Arabia wants to diversify its the economy away from oil, under a plan known as Vision 2030.
Saudi Arabia has tried and mostly failed to diversify its economy for over 40 years. Oil and oil-related industry is still about 90% of the kingdom’s export earnings, 87% of budget revenues, and 42% of Gross Domestic Product (GDP) in 2017.
The PIF has $150 billion of assets in listed Saudi companies, including stakes in Saudi Basic Industries Corp (Sabic) the world’s second-biggest chemicals manufacturer. It currently has assets of about $230 billion.
PIF is investing $45 billion into the Softbank Vision Fund. Saudi Arabia is building a $500 billion high technology city called Neom. They are investing $20 billion in a Blackstone infrastructure fund.
Aramco is being ordered by the Prince to buy a 70% ownership in the $100 billion Sabic. This would provide PIF with $70 billion in liquidity.
Aramco had been looking at a $100 billion IPO but they were not getting the $2 trillion valuation that they wanted. Investors have valued it at as low as $400 billion. Aramco does not own the oil. It is owned by the State.
Saudi Arabia has been educating its workforce but they are not productive. The economy and businesses are dependent upon harder working and more competent expats.
Saudi Arabia compared to Dubai and UAE
UAE and Dubai are more successfully diversify into tourism, finance and trade. Dubai has a population of 3 million. UAE has a population of 5.3 million. Dubai is part of the UAE. Saudi Arabia has a population of 33.6 million. Saudi Arabia will have a population of 39-40 million in 2030.
Saudi Arabia GDP is about $750 billion. UAE has a GDP of $408 billion.
Nuclear and Solar Energy
Saudi Arabia will build two large nuclear power reactors as part of a plan for up to 16 nuclear power plants over the next 20 to 25 years at a cost of more than $80 billion. They could have 17 gigawatts (GW) of nuclear capacity by 2032 to provide 15% of electricity and have more than 40 GW of solar power.