CH2M enters Saudi through Olayan venture
Riyadh, January 25, 2010
Engineering giant CH2M Hill has teamed up with Saudi Olayan Group to bid for a growing number of building projects in the country, whose government is spending $400 billion in five years to meet the needs of its rising population.
Colorado-based CH2M Hill hopes that its partnership with one of Saudi Arabia's oldest conglomerates, owned by the billionaire Olayan family, will help it to win some of the projects, such as water desalination and power plants, said Lee McIntire, the US firm's chief executive.
Major international firms often need to team up with influential Saudi-owned firms to make a foray into the kingdom, the Arab world's biggest economy and Opec's most influential member state.
'We need to be local. It is very much in our strategic interest. The timing is good,' McIntire told reporters on the sidelines of a business conference in Riyadh. 'Projects are getting bigger and bigger...in Saudi Arabia.'
Because it has a rapidly growing population, authorities in the desert kingdom have been stepping up spending and involving private sector partners in building integrated water desalination and power generation plants.
The country's state-controlled power utility Saudi Electricity plans to spend 300 billion riyals ($80 billion) to add a total of 20,000 megawatts through 2018.
Olayan Group's Chairman Khaled Olayan, who also chairs HSBC's Saudi affiliate SABB bank, said the joint-venture called CH2MOlayan would start off with a paid-up capital of 10 million riyals which ($2.7 million) could be increased later.
'It will bring expertise, transfer knowledge...and execute large projects on time and at competitive costs,' Olayan said.
CH2MOlayan is already eyeing a paint plant Dutch Akzo Nobel plans for Saudi Arabia, McIntire said. – Reuters