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NON-OIL ECONOMY BOOST

Saudi Arabia forges ahead with $442bn construction projects

RIYADH, May 8, 2016

Saudi Arabia’s projects market in 2016 boasts $500 billion worth of schemes in the pre-execution phase spanning the power and water, transport, hydrocarbons and construction sectors, said a report.

Under the ambitious reform agenda being driven by Deputy Crown Prince Mohammed bin Salman, within its recently announced Vision 2030 framework, Saudi Arabia is seeking to drive the non-oil economy and stimulate private investment in state activities, reported Arab News, citing a study by Meed, a leading source of Middle East business intelligence.

The report, titled "Saudi Arabia Strategies 2016: Adapting to a new economic reality" provides detailed news and analysis of the kingdom’s plans to deliver these projects and also examines how its recently-revealed Vision 2030 strategy will change the business landscape in the country.

In its Vision 2030 strategy, Riyadh has set itself the target of increasing the private sector’s contribution to GDP (gross domestic product) from 40 per cent today to 65 per cent by 2030, and growing non-oil government revenues from SR163 billion ($43 billion) to SR1 trillion ($267 billion) by the end of the next decade.

The latest market report on Saudi Arabia by Meed identifies new and emerging opportunities for investors and companies in the region’s biggest market.

It also highlights the challenges that companies need to be aware of as the kingdom forges ahead with its economic development plan for the next 14 years.

According to the report, construction is the largest sector with a pipeline worth $442 billion, followed transport with $228 billion and power with $170 billion in the pipeline.

"Construction and transport have traditionally been the largest sectors in the Saudi Arabia, awarding $155 billion and $98 billion of major contracts respectively between 2006 and 2015. Nearly $89 billion of power contracts were awarded over the period," stated Richard Thompson, the editorial director at Meed.

Creating a successful partnership between private sector investors and the government will be the critical factor in shaping Saudi Arabia’s development over the coming five years, he added.

Thompson pointed out that with government debt rising sharply in the wake of the collapse in oil prices, Riyadh was exploring the use of public-private partnerships (PPP) for its most important infrastructure projects.

And with a raft of road, rail, port and airport projects planned, the report looks at how PPP and other financing models will be used to deliver transport projects, he stated.

In addition, Meed’s latest market report provides an up-to-date and expert assessment of Saudi Arabia’s giant power and water sector, which is Riyadh’s priority sector for investment and reform.

“Saudi Arabia needs to install nearly 48 GW new electricity generation capacity by 2024 in order to meet demand, which is growing by seven per cent a year,” stated Thompson.

“To deliver this, Riyadh will return to building power and water capacity using the private developer market. It will take the same approach to deliver the estimated $25 billion of planned water and wastewater projects over the next five years,” he added.




Tags: Saudi Arabia | Meed | construction projects |

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