01 July 2020

The total value of awarded contracts across Saudi Arabia for the first quarter reached SR45.2 billion ($12 billion), down eight per cent when compared to the same period last year. However, the value grew by 28 per cent quarter-on-quarter, according to a report by US Saudi Business Council (USSBC).

While the pace of awarded contracts during the first quarter exhibited the continued rebound in both the value and volume of awarded contracts that was witnessed in 2019, it was spared what is expected to be a downturn in the number of projects for the remainder of 2020 resulting from Covid-19 and the plunge in global oil prices.

The Saudi government’s five per cent budget cut move to combat the effects of Covid-19 in March did not materially impact project awards during the first quarter but is likely to hit the execution timeline of those contracts moving forward, said the USSBC.

According to experts, the implementation of budgetary cuts in March as well as the more recent additional budget cut announced in May of SR100 billion ($26 billion) are likely to dampen the kingdom’s capital expenditures in 2020.

The awarded contracts  involved numerous mega-projects across several sectors. According to USSBC, the lion’s share of the contract value was garnered by the military sector with SR15 billion ($4 billion) deals followed by oil and gas (SR11.2 billion) and petrochemicals (SR8.3 billion).

These three sectors accounted for 76 per cent of all awarded contracts alone, while the other contributing sectors included water, power, and real estate.

The military sector was led by two mega-projects associated with the construction of the King Salman airbase as well as the King Faisal air academy, each valued at SR7.5 billion.

The oil and gas sector continued its momentum from 2019 as it accounted for SR11.2 billion or 25  per cent of awarded contracts led by state oil giant Saudi Aramco.

Contracts were awarded for the development of the Marjan oil field as well as Safaniya and South Ghawar in the Eastern Province.

The petrochemicals sector rose this quarter after a relatively slow year in 2019. The value of awarded contracts surged to SR8.3 billion from two contracts, accounting for 18 per cent of total projects.

This reflects a significant jump as the total value of awarded contracts in 2019 was SR2.5 billion for the petrochemicals sector.  

• Amane Advisors wins Spark contract
• 8pc drop in kingdom’s Q1 awarded deals
• Saudi group starts work on Diriyah Gate project
• Riyadh’s centres, compounds set to go green
• Finance deal signed for Dammam ISTP
• Global giants vie for Madinah 3 sewage plant
• Qiddiya hub work progresses
• Al Murjan, Mediclinic to set up $266m hospital
• C&D waste recycling plant nearing completion

Tags

Airport Construction IAQ & Ventilation Drones & Digitalisation Focus: Covid-19 Just Out Regional News Saudi Focus UAE Focus Events Legally Bound Interiors Real Estate Architecture & Design Contractors Tenders Manufacturers & Procurement

Gulf Construction is the undisputed leading trade journal for the building and construction industries of Saudi Arabia and the other Gulf states. The magazine provides editorial coverage on a wide range of topics which are of interest to industry professionals. In addition, regular features highlight technological developments within specific industry fields. Launched 40 years ago, the magazine has established an enviable reputation as an authoritative, respected journal with unmatched coverage of the Gulf region. Gulf Construction is essential reading for anyone with a serious interest in the region’s building and construction industry.