Saudi Focus

King Salman Energy Park (Spark) ... set to be a catalyst for growth in the Eastern Province, which accounted for a 40 per cent share of Q1 contract awards.

King Salman Energy Park (Spark) ... set to be a catalyst for growth in the Eastern Province, which accounted for a 40 per cent share of Q1 contract awards.

Contracts worth $13.3bn awarded in first quarter

June 2019

Saudi Arabia’s construction industry witnessed a strong uptick during the first quarter on the back of SR48.9 billion ($13.3 billion) worth of awarded contracts mainly in the energy and utility sectors, according to a report by the US-Saudi Arabian Business Council (USSABC).

Improved oil prices coupled with a focus by the government to spend heavily on its capital expenditures have helped in the turnaround, said the report.

The awarded contracts were for significant mega-projects across numerous sectors. Most notable were the oil and gas, water, and transportation sectors, which accounted for 67 per cent of all awarded contracts during Q1 2019.

The USSABC Contract Awards Index (CAI) reached 168.69 points at the end of the first quarter. This highlights a rebound in the index after an extended lull during 2017 and 2018. The CAI’s 168.69 points marks a 29 per cent increase versus Q1 2018, which ended at 130.63 points. Furthermore, the impressive turnaround during Q1 2019 has not been witnessed since July 2016 when the CAI reached 176.53 points, said the USSABC report.

The CAI has seen a gradual increase during each successive month of the first quarter, it stated. January’s CAI reached 143.29 points, February increased to 155.34 points, and March ended higher at 168.69 points.

In terms of  value, the SR48.9 billion in awarded contracts during the first quarter marks an overwhelming 113 per cent increase compared to Q1 2018, when the value was SR23 billion.

According to the report, the first quarter had the highest value of awarded contracts since Q1 2015 when the value reached SR88.6 billion.

Furthermore, the value of awarded contracts in Q1 2019 alone accounts for 48 per cent of the total value witnessed in 2018, it stated.

“Consequently, the pace of awarded contracts thus far indicates that construction activities across all sectors will re-emerge as a strategic focal point in the kingdom,” the council said in its report.

The power sector, which usually garners a significant share of awarded contracts, contributed only five per cent of awarded contracts. However, it is expected to be a larger contributor as the year progresses, it stated.

From a geographical viewpoint, contract awards were heavily concentrated in the Eastern Province, which accounted for a 40 per cent share, stated the report.

This comes as no surprise given the number of heavy industries in that region. A significant portion of the awarded contracts in the Eastern Province were in the oil and gas and water sectors, bringing the total value of contracts to SR19.3 billion in Q1, it stated.  




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