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Saudi Arabia awards $22bn construction contracts in Q2

RIYADH, October 12, 2015

The value of awarded contracts awarded in Saudi Arabia’s construction sector during the second quarter of this year topped SR82.8 billion ($22 billion), staging a strong comeback compared to the first quarter, said a report.

It marked a rebound from the first quarter, which stood at SR57 billion ($15 billion), registering an increase of 45 per cent, stated Saudi Arabia's largest lender NCB in its Construction Contracts Index report.

Despite the falling oil prices, and accordingly oil revenues, the awarded contracts in the first half 2015 showed a higher pace than 2014, but was likely to weaken in 2016, it said.

Anchor sectors, led by roads and residential real estate, took the lion’s share (57 per cent) of the total spending which hit SR47.5 billion ($12.6 billion), while the power sector came third with 14 per cent of the value of awarded contracts, stated the report.

According to NCB, the prominent road schemes in the second quarter of this year included the SR23 billion ($6.13 billion) Makkah project awarded by Umm Al Qura for Development & Construction to Dallah Albaraka Group.

The project features a mixed-used infrastructure known as Tareeq Al Mawazee that will focus on widening the main road into Makkah and redeveloping the land on both sides of the highway. The project is expected to be completed by the first quarter of 2025, said the report.

A contract worth SR6.6 billion ($1.75 billion) was also awarded by Umm Al Qura for Development & Construction to Nesma & partners. The infrastructure work involves building roads and general infrastructure for the project. It is expected to be completed by the fourth quarter of 2019.

The NCB report pointed out that additionally, Ministry of Transportation awarded a contract worth SR225 million ($60 million) to Bin Tamy Saudi Pan for Taif, Al Baha and Abha road expansion.

Arriyadh Development Authority awarded three contracts to the tune of SR5.02 billion ($1.3 billion). The first contract was awarded to Yuksel Construction, while the second and third contracts were awarded to Saudi Constructioneers.

These projects include rehabilitation works, and construction of 21 bus rapid transit stations, 2,574 community bus stops and seven pedestrian bridges with all civil, mechanical and electrical works.

The first and third contracts will be completed by the second quarter of 2017, and the second contract is expected to be completed by the fourth quarter of 2016, it stated.

Within the residential real estate sector, the NCB report said three major contracts had been awarded during the period. The largest contract to the tune of SR5.2 billion ($1.38 billion) was given by the Ministry of Interior to El Seif Engineering Contracting to build a residential compound in Najran comprising 2,800 units, which includes 337 apartment buildings. The project is expected to be completed by the second quarter of 2018.

The second and third projects worth SR750 million ($200 million) and SR375 million ($100 million) were awarded by the Ministry of Housing to Emdad Najed Group for constructing residential units featuring 985 apartments of 192 sq m each. The two projects are expected to be completed by the second quarter of 2018.

Also a contract worth SR2.2 billion ($586 million) was awarded by Ministry of Interior to IVRCL Infrastructure & Projects for the construction of 513 residential units at three sites in the Dharan Al Janoube, Al Qahmah and Asir region of the kingdom.

The project will include administrative buildings, schools, shopping centres and fuel stations, and is expected to be completed by the second quarter of 2018, said the top Saudi lender in the report.

The second contract worth SR1.6 billion ($426 million) was awarded by Saudi General Organisation for Social Insurance to Saudi Constructioneers to build villas and apartment buildings with 854 apartments, garden, and associated facilities. The project is expected to be completed by the second quarter of 2018.

Two contracts to the tune of SR1.01 billion ($266 million) were awarded by Sabic to Azmeel Contracting for development works in Mutrafiah Phase One, which features 2,600 villas, infrastructure works, and associated facilities, it added.

On the commercial real estate scenario, NCB said two key contracts worth SR4.03 billion ($1 billion) were awarded by Arabian Centers to Fare Construction. The first contract was for developing a mega-scale mixed-use project called Dhahran Boulevard, located in front of Dhahran Mall in Dhahran city.

The second was for constructing Mall of Arabia in Riyadh. The scope of work includes a shopping mall, shops, hyper market, entertainment area, and food court. These two projects are expected to be completed by 2015 and 2018, respectively.

In the government sector, the Ministry of Justice awarded a SR862.5 million ($229 million) contract to Hashem Contracting & Trading to build a court complex in Riyadh. The project is expected to be completed by the fourth quarter of 2018.

Within the healthcare sector, two contracts were awarded amounting to SR937.6 million ($249 million). The first was for building a 20,000-sq-m hospital in Riyadh. The 400-bed unit is expected to be completed by the second quarter of 2018.

The second one was for a 300-bed hospital project which is due to be completed by the fourth quarter of 2018, stated the NCB report.

In the education sector, the Ministry of Higher Education awarded two contracts worth SR221.3 million ($59 million). The first one was for the construction of college of education for women in Zulfi at Al Majmaah University, while the second contract was to construct college of Art & Science in Kamel at King Abdul Aziz University.

In the power sector too, three major contracts were awarded. The largest contract worth SR7.1 billion ($1.89 billion) was awarded by Saudi Aramco to JV of Air products & Acwa Holding for construction of multiple power plant at Jizan refinery.

The second contract worth SR450 million ($120 million) was awarded by Saudi Electricity Company (SEC) to Archiorodon for building a power plant named PP13 at Riyadh. The third worth SR450 million ($120 million) was awarded to Al Gihaz Holding for building Tabuk substation 380/kV, and associated facilities.

In addition to these, SEC has awarded Initec SA/Saudi Services a contract worth SR1.2 billion ($320 million) for executing electro-mechanical works on the first phase of a project, which covers plant PP9 conversion of eight gas turbines to combined cycle.

Another contract worth SR600 million ($160 million) was awarded to Alfanar Bena Contracting Company. The work involves construction of a combined cycle gas turbine based power plant at Riyadh, Saudi Arabia, said the NCB in its report.

SEC has also awarded nine contracts worth SR1.5 billion ($400 million). Four contracts at SR506 million ($134 million) were awarded to ABB Contracting Company for expanding sub-stations in central region, and they are expected to be completed by 2017.

The other four contracts at SR521.3 million ($138 million) were awarded to Alstom for constructing (132kv) substations in Al Arida, Balqarn, Bisha central, and Dabiya with associated facilities. They are expected to be completed by 2017, said the top Saudi lender in the report.

In addition, another contract was awarded to Alfanar Group at SR468.8 million to construct 380/115/ 13.8 kV substation in North Dammam with associated facilities, the report stated.

This project is expected to be completed by the fourth quarter of 2017.

According to NCB, the industrial sector witnessed the largest (engineering, procurement and construction) EPC contract worth SR1.08 billion awarded to Taiwan’s CTCI and Japan’s Chiyoda Corporation by the Local National Industrial Company (Tasnee) to build a titanium sponge plant. The project is expected to be completed by the first quarter of 2017.

Additionally, Saudi Aramco awarded a contract worth SR5.6 billion ($1.49 billion) to McDermott for providing EPC services on its offshore facilities, it stated.

NCB said over the past few years, the value of awarded contracts in the kingdom have been rising considerably, reaching a record of SR290 billion ($77 billion) in 2013. However, on lower oil prices in the second half, this value fell to SR220 billion in 2014.

In the second quarter of 2015, the value of awarded contracts made a comeback, amounting to SR82 billion ($21.86 billion), recording a 45 per cent increase from the first quarter.

On the future outlook, NCB said looking towards the second half of 2015 and 2016, the government-led initiatives will continue in the medium term to drive growth in the kingdom’s construction sector, as it continues to focus on social and physical infrastructure projects.-TradeArabia News Service




Tags: Saudi Arabia | Construction | contracts |

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