Thursday, April 19, 2018 1:33 PM

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Saudi economy awaits $250 billion worth of projects

Saudi Arabia has a pipeline of projects worth over $250 billion that have not yet had their main construction contracts awarded, according to MEED. Saudi Arabia’s pipeline of unawarded projects accounts for about 39 per cent of the GCC total, confirming the kingdom’s status as the region’s biggest projects market, says the report Saudi Arabia 2017: Delivering Vision 2030.

The report reveals that with nearly $82billion worth of projects, the kingdom’s energy sector has the biggest pipeline of unawarded project contracts, accounting for about 33 per cent of the national total. The construction sector is the second biggest segment at 29 per cent, with the transport sector in third place at 27 per cent.

Together, power, construction and transport account for about $225bn of unplaced contracts, almost 89 per cent of the total value of contracts in the kingdom that are at the pre-execution stage.  

The report adds that after a year of uncertainty in 2016 as Riyadh formulated its response to lower oil prices, Saudi Arabia will begin delivering on its promises.

Having drawn up a blueprint for economic transformation in its Vision 2030 document, Riyadh is now getting ready to implement those reforms in order to reposition the country to tackle the low oil price era.

One of the first major steps has been to establish the National Centre for Privatisation to plan and oversee the procurement of public-private partnerships (PPPs) and other private sector initiatives. A host of state bodies are now being prepared for part privatisation.

Four PPPs have already been awarded this year to develop airport projects at Yanbu, Taif, Qassim and Hail. Saudi Arabia wants to privatise the operations of all airports by 2020. Advisers have also been enlisted to develop plans to engage private investors in other sectors such as healthcare.

The Ministry of Health is seeking the help of advisers to help it draft a framework to build about 3,000 mega and primary medical centres with the participation of the private sector.

Saudi Arabia 2017: Delivering Vision 2030 by MEED identifies new and emerging opportunities for investors and companies in the Middle East’s biggest market. It also highlights the challenges that companies need to be aware of in the kingdom.   

Creating a successful partnership between private sector investors and the government will be the critical factor in achieving the targets set out in the Vision and accompanying National Transformation Programme, says the report.

“This report confirms that, despite the challenges we have seen over the past two years as a result of the fall in oil prices, Saudi Arabia continues to be the biggest and most important market in the region,” says Richard Thompson, MEED editorial director.

 “Anybody serious about growing their business in the region needs to understand the fundamental changes taking place in the kingdom,” Thompson adds. “In particular, it is vital to understand how Riyadh will implement its plans to increase private sector participation in the implementation of its strategic plans,” he opines.

2017 has also seen major progress on Saudi Arabia’s ambitious renewable energy programme. Under the National Transformation Programme, the kingdom is targeting 3.45GW of installed capacity by 2020.

 In early February, the Ministry of Energy, Industry & Mineral Resources announced it was establishing the Renewable Energy Project Development Office (Repdo) to head the National Renewable Energy Programme (NREP). The same month, Repdo issued prequalification documents for the first 700MW of solar schemes.