Managing Saudi’s New Energy Mega-ministry May Bring Challenges

Graphic for News Item: Managing Saudi's New Energy Mega-ministry May Bring Challenges

Managing Saudi Arabia’s new energy mega-ministry, set to oversee over half the economy and designed to cut through a tangled bureaucracy to make government more coherent and efficient, will be a formidable challenge.

The new Energy, Industry and Mineral Resources Ministry, under Khalid al-Falih, already chairman of state oil company Saudi Aramco, will handle oil and gas extraction, power generation and distribution, mining and industrial development.

The changes were announced on Saturday as part of a major reshuffle by King Salman aimed at making the Vision 2030 economic reform program easier to implement by ending decades of miscommunication and turf war between government departments.

But in creating a ministry to oversee sectors that account for 53 percent of the kingdom’s economic output, the vision’s architect, Deputy Crown Prince Mohammed bin Salman, is entrusting a huge part of his sweeping reforms to Falih’s hands.

How the new minister will juggle a host of responsibilities, and whether he can enact massive change across this broad swathe of the economy while integrating once rival departments, is already fodder for avid speculation in Saudi energy circles.

“In order for the restructuring to succeed, accountability and responsibility has to be concentrated in the same office. This is the reason for assigning all those sectors in one ministry,” said Sadad al-Husseini, an energy consultant and former senior executive with Saudi Aramco.

“It remains to be seen what kind of specific organizational changes happen at the operational level.”

Previously, the oil ministry was in charge of hydrocarbons extraction and mining, the water and electricity ministry handled power generation and the commerce ministry oversaw industry. Other departments overlapped with these, covering such policy areas as nuclear and renewable energy and the running of industrial cities.

The big state-controlled companies, oil producer Aramco, petrochemicals and metals conglomerate Saudi Basic Industries Corp (Sabic), Saudi Arabian Mining Co (Maaden) and state utility Saudi Electricity Co (SEC), fit in between them. Falih is likely to now have a big say in running them all.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.