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Saudi Q3 construction deals value down as Covid crisis bites

RIYADH, December 1, 2020

Saudi Arabia said the total value of awarded contracts for the third quarter fell to SR7.4 billion ($2 billion) as Covid-19 related strains on government and private sector entities persist, leading to a slowdown in the construction sector.
 
The total value of awarded contracts through the first three quarters of 2020 reached SR63.6 billion ($17 billion), stated US-Saudi Business Council (USSBC) in its Q3 Contract Awards Index.
 
The index fell to 105.26 points by the end of the third quarter steadily declining through the
quarter as the slowdown in the construction sector continued. 
 
A majority of the awarded contracts were in transportation, power, and real estate which accounted for approximately 59% of the total value of contracts awarded. 
 
Water, urban development, and petrochemicals accounted for 32% of the total value while oil & gas
accounted for only 7% of the total, the lowest on record. 2% were awarded in other sectors.
 
Sector-wise, the lion's share of the awarded contracts (SR1.7 billion) came from transportation industry followed by power sector with SR1.6 billion contracts and the real estate sector with SR1.1 billion deals, stated the USSBC Index.
 
Among the regions, the Eastern Province accounted for nearly a third of the value of awarded contracts (32%) in Q3, including a new chlorine derivatives plant and an industrial wastewater processing plant in Jubail. 
 
Makkah Province came a distant second with 20% of contract awards, primarily in the power
and real estate sectors followed by Tabuk Province which hit a new high this year with SR1.4 billion contracts (around 19%) including major infrastructure works at Red Sea International Airport. 
 
The other mega project contracts in Q3 include transportation infrastructure works at mega entertainment project Qiddiya in Riyadh Province.ccording to USSBC, the construction sector continued to weather the Covid-19 pandemic as project owners and contractors faced ongoing challenges. 
 
Revised budget spending along with fiscal consolidations by the government and private sector strained the pipeline of awarded contracts during Q3 as the value reached SR7.4 billion ($2 billion), stated the council in its Q3 review. 
 
The government’s commitment to absorbing the financial impact of the pandemic on the
economy through fiscal spending cuts has mainly impacted its capital expenditures, it added. 
 
According to the Q3 2020 budget update report from the Ministry of Finance, capital expenditures have decreased by 26 per cent compared to Q3 2019. 
 
Furthermore, the ‘Economic Resources’ sector, which includes infrastructure and tourism related spending witnessed a 38 percent decline through Q3’20 compared to 2019. 



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