Monday 28 September 2020

Khodari sees delay in Saudi university deals

DUBAI, December 9, 2015

A Saudi Arabian university has not signed $84 million in construction contracts agreed last year with Abdullah Al Khodari Sons Company, the builder said on Wednesday, another sign that the oil price slump has forced state spending cut-backs.

The government of Saudi Arabia, the world's largest oil exporter, has said it was delaying some construction projects while last month Khodari's chief executive Fawwaz Al Khodari warned the kingdom's building sector faced a tough 18 months.

Khodari had agreed the two contracts, worth a combined SR315.3 million ($84.1 million), with Northern Border University in August 2014 to build a business college and administration building.

The academic institution, however, asked for two performance bonds submitted by Khodari to be returned, the company said in a bourse statement, indicating the two contracts will not go ahead. The bonds were worth five per cent of the construction contracts, according to Reuters calculations.

Khodari said it had received a letter from the university "advising the difficulty of signing the project accordance with the supreme orders concerning new projects and the directives issued by the Ministry of Finance".

It did not provide further details, but Reuters reported in October that Saudi's finance ministry would close the national accounts - the deadline to make payments - on November 15, one month earlier than usual.

Brent crude is down 65 per cent from a June 2014 peak.-Reuters

Tags: project | Khodari | Saudi university |

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