meed-logo

line1 line2 line3
SIGN IN / REGISTER

Liquidity drives project finance appetite

27 October 2023

 

This report on project finance and PPP also includes: PPP activity rebounds in 2023

Activity in the Gulf region has triggered a boom in the project finance market, with Saudi Arabia leading the way on the back of schemes linked to its Vision 2030 strategy.

Deals are fanning out from power and water and infrastructure schemes into unexplored territory: hydrogen projects and ever-larger solar power plants have opened up opportunities for international and regional banks that are awash with liquidity and looking for long-term means to deploy it.

Deal advisers attest to the vibrancy of Saudi Arabia, the largest regional projects market with $1.2tn-worth of known work in the pipeline. The kingdom has seen the largest project financing this year, a facility worth at least $6bn arranged for the Neom green hydrogen project.

“Saudi Arabia is a market that really is firing on all cylinders,” says Rob Harker, a partner at law firm DLA Piper, which advised Neom Green Hydrogen Company in connection with its green hydrogen and ammonia project in Saudi Arabia.

“That demand is not limited to utility sector projects. In addition to the very large solar and wind projects – including a Saudi solar deal that is 1.1GW – we are also seeing a large volume of social infrastructure projects being procured across the GCC, including in education, healthcare, social accommodation and transport,” he adds. 

“Bank debt – both regional and international – is still the principal source of financing for these projects. However, robustly structured projects should also be attractive, particularly on a refinancing, to a capital markets issuance.”

Robust liquidity support

There is increased liquidity in the regional banking market, notes John Dewar, partner in international law firm Milbank’s global project, energy and infrastructure practice, which advised the export credit agencies (ECAs) and commercial banks in connection with Project Lightning, Abu Dhabi National Oil Company’s offshore power transmission project.

“With the bullish medium-term oil price outlook, there is significant liquidity in the Saudi and UAE bank markets, with these banks looking to on-lend their petrodollar deposits on a longer-term basis.”

This still poses some challenges. Analysts note that despite the bountiful credit availability, things can change.

“There is still a lot of liquidity in the system in the GCC, but some have voiced concerns that liquidity in the banking market could dry up in the future if they have to compete with projects that are much larger in scale,” says Christiane Kuti, a director at Fitch Ratings. 

“Overall liquidity in the market could get tight at some point, although we are not there at the moment.”

Even then, notes Kuti, a lower oil price could add impetus to the need to develop frameworks to make projects more bankable, and provide an opportunity for the capital market to play a bigger role.

Most of the larger deals are witnessing a heterodox mix of local and international banks participating. For example, a consortium of five local and international banks has agreed to provide $545m of financing for the Rabigh 4 independent water producer project in Saudi Arabia, with Standard Chartered Bank lining up alongside Bank of China and the local trio of Saudi National Bank, Riyad Bank and Saudi Investment Bank.

The Chinese bank presence is a pointer. “We have seen Chinese banks participating in project finance deals, and that is set to continue as they are not as constrained as some of the regional banks in terms of the tenor on which they can lend. Their ability to lend on a longer-term tenor is sometimes attractive for sponsors and developers,” a source tells MEED.

The flipside of this is that Chinese lenders are less knowledgeable about the market.

Global uncertainties

Despite the robust oil price climate, project financings across the Middle East and North Africa (Mena) region have had to cope with a choppy global interest rate environment, with inflationary pressures also impinging.

Higher interest rates have militated against the use of capital market instruments in some regional deals. For Abu Dhabi’s subsea transmission system deal, which reached financial close earlier this year, higher interest rates were responsible for adding $200m to the $3.8bn deal.

This has implications for other projects that are seeking refinancing on the capital market. In Saudi Arabia, BlackRock-led investors in Saudi Aramco’s gas pipeline network attempted early in 2023 to raise $4.5bn from a sale of bonds to refinance a multibillion-dollar loan. The 10-year mature sukuk (Islamic bond) tranche spread placed it about 120 basis points above where Aramco bonds maturing in October 2030 were trading, according to Reuters’ calculations.

Another consortium led by US-based energy infrastructure investment firm EIG Global Energy Partners had also looked to the bond markets to refinance.

“The EIG and BlackRock-led consortiums investing in Saudi Aramco’s oil and gas pipelines infrastructure have been looking to refinance more than $20bn of acquisition debt,” says Dewar. 

“Both have been active in the bond market, but the interest rate environment has moved against bonds, so there has been an increasing focus by borrowers on accessing other longer-term liquidity sources, particularly from the highly liquid regional banks.”

Capital market instruments

For the moment, capital market instruments are largely confined to refinancing rather than greenfield projects. However, once some of these projects are financed, it could encourage others to lend on that basis.

“Once a project has been up and running, and it has got consistent revenue from the offtaker of the electricity or the water, and they are paying an index-linked revenue stream that is 100 per cent take or pay and insulated from the erosion of any inflationary pressures, that is very attractive for bondholders, pension funds and other institutions that want stable revenues,” says one industry insider.

Beyond the Gulf, Egypt has managed to attract project finance for its renewable energy schemes, with significant ECA support. In March 2023, a $690m non-recourse financing was arranged for the 500MW Gulf of Suez Wind 2 project in Egypt. 

The renewable energy push has continued after Cairo’s hosting of the 2022 Conference of the Parties of the UN Framework Convention on Climate Change (Cop27). The drive has included the Amunet wind and Abydos solar projects closed by Amea Power, as well as the Gulf of Suez Wind 2 project sponsored by Engie, TTC-Eurus and Orascom.

“They are both important deals in a global context because they mark the first occasions on which the Japanese ECAs have co-financed with the International Finance Corporation and the European Bank for Reconstruction & Development, respectively, opening up important new financing opportunities in emerging markets,” says Dewar.

Support from ECAs is particularly valued in Egypt, given the economic challenges the country is facing. 

A planned polypropylene complex due to be developed in Egypt’s Suez Canal Economic Zone has been put on hold, with the $1.7bn project developed by Red Sea Refining & Petrochemical Company having been affected by the depreciation of the Egyptian pound.

More regional financing

Another emerging theme will be for the larger Mena banks to play a bigger role in regional project financings.

The likes of First Abu Dhabi Bank have been active across GCC borders, including in Saudi Arabia. Given their healthy liquidity profiles, the biggest banks in the GCC are better positioned for longer-tenor project finance deals than ever before. 

Not that it will be plain sailing. Structural impediments will still have to be overcome.

For example, most Saudi banks still need to get consent from the Saudi Arabian Monetary Agency (Sama) to participate in dollar loans. “That can constrain their ability to operate outside the kingdom,” says Dewar. 

“There is a regulatory preference for them to make Saudi riyal loans rather than dollars. But because of the increase in dollar liquidity, there is much more availability in the Saudi market than there was a year ago.”

Project finance will remain a critical part of the funding mix in the Mena region. As Fitch Ratings notes, the significant growth needed to achieve the GCC’s investment requirements cannot be attained using traditional financing channels, such as on-balance-sheet funding by governments. Instead, there is a need to broaden the investor base, including through project financing.

The likelihood of a more benign global interest rate environment in 2024 should pave the way for a reassertion of capital market-based deals, making the next few months busy ones for banks and deal-makers across the Mena region.

 PPP activity rebounds in 2023 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11227315/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Risk accelerates Saudi spending shift

    27 March 2026

    Commentary
    John Bambridge
    Analysis editor

    The headline story of Saudi Arabia’s project economy in 2026 is what is no longer being built: The Line deferred. The Mukaab suspended. Trojena stripped of its marquee event. Saudi Arabia’s construction sector is in a period of readjustment, pivoting away from prestige-driven capital expenditure towards deliverable priorities.

    Operation Epic Fury changes none of this. The pivot was already under way following the Public Investment Fund’s board review in late 2024, which cut budgets across more than 100 investee companies by up to 60%. However, the Iran war has helped accelerate and clarify the shift.

    Grasping the full picture of this pivot, it is less austere than it might appear. Project awards declined in 2025, but remained above historical averages, resulting in a net gain for the sector.

    Activity generally remains strong. Saudi Arabia’s rail network is expanding on multiple fronts: the Jeddah Metro Blue Line has returned to procurement, while high-speed and national rail projects are advancing. Desalination capacity is forecast to nearly double by 2031, and wind power contract values surged by 175% in 2025. Saudi Aramco is maintaining high capital expenditure in 2026, focused on offshore projects and gas production.

    These programmes may not attract the global attention of a 170-kilometre mirrored city, but they share something gigaprojects often lacked: a clear functional return. Water security, energy diversification, transport connectivity and domestic gas supply are the load-bearing infrastructure of a modern economy. The kingdom is now building that infrastructure again in earnest.

    The closure of the Strait of Hormuz has made the strategic logic of this reorientation even harder to ignore. Glitzy projects do not secure borders. By contrast, a country that cannot guarantee the security of its export corridors is strongly incentivised to invest in infrastructure that supports its domestic economic base and strengthens resilience. Every desalination plant, rail link and gigawatt of renewable capacity reduces Saudi Arabia’s exposure to external shocks.

    The medium-term direction was already clear: capital was being redeployed from speculative projects towards infrastructure with bankable returns. That rationale has now gained additional strategic weight.

    As Saudi Arabia’s project economy matures, what is emerging is less photogenic but far more defensible: the infrastructure backbone that Vision 2030 always required, and that the kingdom’s exposure to regional instability now demands. The Iran war did not create this shift, but it has removed any remaining argument for reversing it.

     

    MEED’s April 2026 report on Saudi Arabia includes:

    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16163037/main.gif
    John Bambridge
  • Remaking construction in Saudi Arabia

    27 March 2026

     

    As the Public Investment Fund (PIF) took a leading role in developing projects following the launch of Vision 2030, it quickly realised that Saudi Arabia’s construction sector needed support if the kingdom was to achieve its broader economic ambitions.

    The PIF’s National Development Division (NDD) is the entity tasked with building capacity and capability in the construction sector to support PIF projects and other strategically important schemes in the kingdom. 

    “Our job is to facilitate the development of the local value chains, which are essential to support the development and operations of PIF portfolio companies,” says Leyla Abdimomunova, head of real estate and construction, National Development Division, PIF.

    The scale of this undertaking requires a multi-front strategy, targeting everything from consultancy services and contracting capacity to raw materials and advanced technologies. 

    “The focus is on design and construction services, building materials, construction equipment and the value chain for all things in construction technology. This work requires engagements with stakeholders within the PIF portfolio: development and contracting companies where PIF has a share,” says Abdimomunova. “We also work closely with governmental stakeholders – including the Ministry of Municipalities & Housing, the Ministry of Investment and the Ministry of Industry & Mineral Resources – alongside our private sector partners, to ensure alignment across the ecosystem. 

    “This collaboration approach is essential to addressing market challenges holistically and creating an environment where businesses can invest, grow and participate more effectively in Saudi Arabia’s development,” she notes.

    Unified strategy 

    The integrated approach was born out of necessity. 

    “When we started this work five years ago, the initial challenge we dealt with was the shortage of the local supply of construction services and materials,” says Abdimomunova.

    To bridge the gap, the NDD looked to both support local players and attract international firms. 

    “The focus was on the localisation of the supply chain, bringing the manufacturing capacity into the kingdom by either expanding the existing capacities of local players or installing new capacity together with local players, but also bringing foreign investments into the country to set up factories,” she says.

    On the services side, the challenge was reputational. Riyadh had to convince the world’s best builders that the Saudi market had fundamentally changed. While courting global giants, the NDD also had to address the fragmentation of the domestic market. 

    “We found that there were two primary obstacles in our portfolio: a high concentration of contractors on one hand, and underutilised capabilities of the local contractors on the other hand.”

    The challenge was moving the large number of small and medium-sized enterprises (SMEs) from the periphery to the core of the PIF’s portfolio of projects. 

    “In order to overcome these obstacles, a lot of focus was on attracting international contractors – those that were not working in the kingdom at the time – in order to expand and diversify the pool of contractors, while also putting a lot of effort into building up the capabilities within the local market,” Abdimomunova notes. 

    “The local contracting market is very fragmented. A large proportion of contractors are SMEs, and only the large Saudi contractors are predominantly known inside the kingdom. 

    “We put in place programmes to support the development of the medium-sized contractors and increase their visibility to our development companies,” she says.

    A lot of effort went into making sure contractors have access to financing
    Leyla Abdimomunova, National Development Division, PIF

    The NDD has also introduced practical upskilling and financial tools. “We put in place a few tools, working together with ecosystem partners. For example, the Prequalification Platform, which was launched and is being operated with the Saudi Contractors Authority, [and] contractor upskilling bootcamps that have been delivered by our development companies to provide contractors with the basic understanding needed to be able to bid for projects.

    “A lot of effort went into making sure contractors have access to financing,” Abdimomunova adds.

    Indeed, addressing the finances of the construction sector was another critical area for the NDD. 

    By moving beyond traditional methods and practices, it has introduced more flexible liquidity options for the industry. 

    “We launched the Contractor Financing Programme to expand access to financing and strengthen liquidity for contactors supporting Saudi Arabia’s development pipeline. 

    “In partnership with the National Infrastructure Fund, we introduced guarantee mechanisms to unlock additional bank lending capacity, alongside a new product for the region: surety bonds – as an insurance alternative to traditional bank guarantees,” says Abdimomunova. 

    “Since receiving regulatory approval last year, 34 surety bonds have already been issued, helping contractors participate more effectively in large-scale projects.”

    Adjusting priorities

    With the foundational work established, the NDD is now shifting its focus towards streamlining the experience for international companies and tackling the sector’s long-standing structural hurdles. 

    Looking ahead, the NDD intends to tackle the perennial problems of the industry – payment delays and productivity – to ensure that the transformation of the sector is permanent.

    “Going forwards, our work will go one level deeper, focusing on resolving structural challenges and strengthening the underlying enablers that support private sector participation. 

    “We are working closely with our partners across Saudi Arabia to ensure these improvements are sustainable, scalable and embedded not only within the PIF’s ecosystem, but across the broader national economy,” Abdimomunova concludes. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16160974/main.gif
    Colin Foreman
  • Contractor appointed for Morocco grand stadium rail station

    27 March 2026

    Moroccan construction firm Jet Contractors has won a contract to build a railway station at the Grand Stade Hassan II stadium in Benslimane, as part of the Kenitra-Marrakech high-speed rail project.

    The estimated $45m deal was awarded by the Moroccan National Railways Office (ONCF).

    The new station will serve the 115,000-seat Grand Stade Hassan II and will allow passengers to travel from Casablanca and Rabat in 20 minutes using the high-speed rail network.

    It is expected to handle around 12 million passengers a year. Construction of the station is scheduled for completion in 2028.

    Construction work on the main stadium started in June last year, when a joint venture of local contractors Travaux Generaux de Construction de Casablanca and Societe Generale des Travaux du Maroc was awarded a $320m contract for the next stage of works on the stadium. The venue will be one of the hosts for the 2030 Fifa World Cup.

    The stadium is being built on a 100-hectare site in the El-Mansouria area of Benslimane Province, 38 kilometres north of Casablanca.

    Morocco has been investing heavily in upgrading its infrastructure for the football World Cup, which it is co-hosting with Spain and Portugal.

    Morocco was effectively confirmed as a host country alongside Spain and Portugal in October 2023, after the group emerged as the sole bidder for the event. The official selection was announced in December last year.

    Along with building a stadium in Benslimane, the Moroccan government plans to revamp six existing stadiums in Agadir, Casablanca, Fez, Marrakech, Rabat and Tangier, and upgrade air, road and rail projects.

    Last year, Morocco’s transport and logistics minister unveiled a MD96bn ($9.5bn) investment plan to transform the country’s rail infrastructure by 2030.

    The announcement followed the award of about MD20bn-worth of contracts in November 2024 – mostly to local and Chinese firms – for civil works packages on the Marrakech-Kenitra high-speed rail line.

    The link will extend the Al-Boraq railway, a high-speed rail line between Tangier, Rabat and Casablanca. The line started operating in 2018 and was Africa’s first high-speed railway system.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16159882/main.jpg
    Yasir Iqbal
  • March 2026: Data drives regional projects

    27 March 2026

    Click here to download the PDF

    Includes: Commodity tracker | Top 10 global contractors | Brent spot price | Construction output

    MEED’s April 2026 report on Saudi Arabia includes:

    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16146608/main.gif
    MEED Editorial
  • Redefining the region’s arbitration landscape

    27 March 2026

     

    In the midst of increasing international investments and commercial transactions in the Middle East, arbitration remains a key component for the resolution of complex commercial disputes. Its effectiveness, however, depends not only on arbitral tribunals, but also on how national courts define their roles in oversight and enforcement.

    Recent trends in the Middle East have shown a more disciplined judicial approach with a clearer delineation of roles between courts and arbitral tribunals.

    Enforcement: a narrower approach

    Enforcement of foreign awards has been a key area of development.

    In the UAE, the Committee for the Unification of Federal and Local Judicial Principles ruled in Petition No. 1 of 2025 that an award shall be valid and enforceable provided the arbitrators sign only the final page. Referring to earlier Dubai Court of Cassation decisions (1), the Committee noted that procedural rules should not be used to defeat substantive rights and that legal procedures are meant to serve justice, not to create technical barriers. 

    The Dubai Court of Cassation adopted the same approach, confirming that arbitrators are not required to sign every page of the award and that issues already examined during arbitration, including signatory capacity, cannot be reopened at the enforcement stage. (2) 

    A similar emphasis on clarity can be seen in Saudi Arabia, where the Arbitration Law is currently under review, with the aim of modernising the legislative framework and enhancing predictability. The draft reform includes clearer provisions regarding court–tribunal interaction, permits courts to stay annulment proceedings or enforcement challenges for up to 60 days to enable tribunals to cure defects, and confirms that partial and interim awards have the authority of a final judgment and are directly enforceable.

    The ADGM and Dubai Courts have also introduced a system of reciprocal enforcement of ratified arbitral awards without the need to re-examine the underlying award.

    These developments therefore suggest a narrower approach and a reduced scope for expansive review at the enforcement stage.

    Recent trends have shown a more disciplined judicial approach with a clearer delineation of roles between courts and arbitral tribunals

    Judicial intervention: limits of review

    Courts have also refined the scope of annulment and supervisory review.

    The Abu Dhabi Court of Cassation clarified that annulment is not an appeal on the merits. Courts may not reweigh evidence or revisit a tribunal’s interpretation of the law. The grounds of annulment remain limited to the statutory grounds set out in the Federal Arbitration Law. (3)

    Egyptian courts likewise limit grounds for annulment to exhaustively listed statutory grounds, excluding reassessment of the merits.

    In the wider regional landscape, Morocco’s arbitration reform demonstrates a similar trajectory. The updated framework modernises the regime and clarifies the supportive role of domestic courts, reinforcing a structured balance between oversight and arbitral autonomy.

    Across these jurisdictions, review powers are increasingly exercised within defined legal parameters rather than through re-examination of arbitral reasoning.

    Public policy: a limited exception

    Public policy continues to be a ground for refusing enforcement, but recent decisions suggest it is applied with greater restraint. For instance, in the UAE, the imposition of compound interest is not considered to be in contravention of public policy. (4) At the DIFC level, the Court specified that the refusal on public policy grounds is subject to a high standard and is only justified where enforcement would “violate the forum state’s most basic notions of morality and justice”. (5)

    Saudi Arabia recognises sharia compliance and public policy as potential grounds for refusal. While rooted in the foundations of its legal system, they operate within defined statutory boundaries.

    Public policy therefore functions as a defined safeguard rather than a vehicle for broad review.

    Implications for cross-border activity

    Where enforcement review is confined to the grounds set out in the New York Convention and annulment remains limited to statutory bases, the interaction between tribunals and courts becomes more predictable. In disputes involving assets across multiple states, this delineation contributes to greater certainty at the post-award stage.

    The complementary role of the ICC

    Institutional practice operates alongside these developments.

    The ICC Court and its Secretariat ensure proceedings are conducted with care, independence, impartiality and integrity, in strict compliance with the Court’s obligations and duties under its rules. In doing so, the Court and the Secretariat monitor cases to safeguard due process and procedural fairness.

    One of the distinctive features of ICC arbitration and a cornerstone of the Rules is the Court’s scrutiny of all draft awards. Such a process serves to enhance the quality of the award, improve its general accuracy and persuasiveness; and maximise its legal effectiveness by identifying any defects that could be used in an attempt to have it set aside at the place of arbitration or resist its enforcement elsewhere. 

    In complex, multi-contract and multi-jurisdictional disputes, this scrutiny plays an important role in safeguarding enforceability across different jurisdictions. 

    As courts continue to define the limits of intervention, institutional discipline and judicial oversight increasingly operate side by side, reinforcing confidence in arbitration across the Middle East.

    1. Dubai Court of Cassation – Cases No. 109/2022 and No. 403/2020  2. Dubai Court of Cassation – Appeals Nos. 778 and 887 of 2025  3. Abu Dhabi Court of Cassation – Cases Nos. 1115/2024 and No. 166/2024  4. Dubai Court of Cassation – Appeals Nos. 778 and 887 of 2025  5. DIFC Court of Appeal’s decision dated 9 January 2025

    About the author
    Laetitia Rabbat is deputy counsel, ICC International Court of Arbitration, Abu Dhabi

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16145450/main.gif