Saudi Arabia reportedly postponed the $200 billion project that would have seen SoftBank Group Corporation building a solar power generated facility that is set to be the biggest around the world. The halted project would have also provided the country with an alternative energy source that is more than three times what the nation needs every day.
The project was put on hold for lack of progress according to Saudi government officials who spoke with The Wall Street Journal under the condition of anonymity.
The sources said the kingdom is now considering an alternative project that is more economical to boost the nation's renewable energy. The said project will be announced later this month at a financial event in Riyadh, The Wall Street Journal reported.
SoftBank did not comment on the matter as of press time.
Saudi is in the middle of an economic deceleration as a result of the aftermath of the fall down of crude oil in 2014. The kingdom, touted as the world's largest oil exporter, has since been entangled with the mounting budget deficit and other financial challenges. The nation has been compelled to focus on non-oil revenue but the move has taken a toll on oil businesses because the non-oil industry resulted in rising unemployment rate in the country.
The solar project with SoftBank was jointly announced in March by Saudi Arabia's Crown Prince Mohammed bin Salman and Softbank chief executive Masayoshi Son. At the time they entered into a preliminary agreement involving the construction of a number of solar parks. These parks were supposed to generate 200 gigawatts which are enough to supply power to 150 million houses.
Son said at the time that the project will create 10,000 jobs and generate $40 billion in cost savings by substituting electricity to oil.
The solar project would have been a significant part of Prince Mohammed's push for Saudi to find an alternative industry besides oil. He wanted to develop Saudi's tourism, technology, logistics, and entertainment sector.
The report on the postponement of the $200 billion solar projects with SoftBank comes as the demand for Saudi oil is projected to peak as soon as U.S. sanctions on Iranian oil import takes effect. It is estimated that nations who wanted to avoid angering the United States would instead purchase their oil from Saudi.
The peak for Saudi oil demand is expected to kick in as early as October from 10.5 million to 10.6 million barrels a day, Bloomberg reported, citing Saudi Energy Minister Khalid Al-Falih.
With this, the kingdom is said to be planning to increase its spending on its oil industry again to take advantage of higher oil prices. The kingdom expects an economic growth in 2019 that will be led by its oil sector anew.
