meed-logo

line1 line2 line3
SIGN IN / REGISTER

PPP offers budget and efficiency routes

7 May 2024

 

The procurement of the multi-utility packages for the Red Sea and Amaala developments, as well as for the staff accommodation packages at Neom, used a public-private partnership (PPP) model, opening up an alternative route for Saudi Arabia to finance and ensure the efficiency of its gigaprojects.

In the case of the Red Sea and Amaala schemes, bundling the utility elements of these greenfield projects – including renewable energy generation, cooling, water desalination and treatment and waste recycling – makes sense for both the procuring entity and the utility developers and investors.

Instead of dealing with several developers or suppliers, the client – which does not necessarily specialise in providing utility services – only has to deal with the selected developer, which then manages the contractors and operations and maintenance companies.

Complex infrastructure takes a long time to procure. This is a fact, particularly when quality is a focal point"

Cost and operational efficiencies are also incentives, given that each component of the project is relatively small and may require a bigger budget if they were to be procured as separate contracts.

PPPs serve both as a solution and challenge to perceived budget and liquidity issues that are facing the official gigaprojects as they enter the execution phase, not to mention their tight delivery timelines.

Neom, for instance, is pursuing both PPP and conventional procurement models for the renewable energy and water desalination facilities it requires for the SR1.9tn ($500bn) development.

“Complex infrastructure takes a long time to procure. This is a fact, particularly when quality is a focal point," note Jason Gouveia and Joanna McGuire, senior associates at UK-headquartered legal consultancy Ashurst. 

"There will, therefore, always exist a natural tension between urgency and procurement duration in the context of PPP deals, and it is important to keep a tight handle on the efficiency of the procurement process.”

This requires procurers and their advisers to carry out feasibility assessments before going to market, and to address any issues that bidders and their lenders are likely to raise as part of their due diligence on a PPP project, they add.

The kingdom's gigaprojects are contending with 200 other infrastructure schemes that are being planned by various ministries through the National Centre for Privatisation & PPP (NCP), the state PPP procuring authority.

Among the schemes in the NCP’s pipeline are airports, seaports, roads and healthcare facilities, which all cater to Saudi Arabia’s growing infrastructure needs as the population and economy expand.

This pipeline will only grow, as it is anticipated that the procurement models for some aspects of the gigaprojects will be changed in response to budgetary cuts, and more lenient execution timelines may also be adopted, potentially extending the deadlines from 2030 to 2040.

Liquidity squeeze

Some experts cite the overall liquidity of local banks and the willingness of international lenders to participate in future projects in response to the growing PPP pipeline.

“The liquidity levels of local banks are not readily ascertainable. However, given the rate of progress on projects within the kingdom, which assumes committed financing is in place, it seems that local banks, together with the support of their international counterparts and institutional investors, are able to meet the liquidity demands of projects,” say Gouveia and McGuire.

The pair adds that an efficient, robust and safe monetary policy is key to attracting international banks to the Saudi PPP market.

“On the projects we are advising on, international lenders and development investment funds are a common feature, as the international lending market seeks to diversify their books of debt.

“Depending on the complexity and capital intensity of a PPP project, there may be no other option but for the lending market to be a syndication of local and international lenders, to ensure that capital requirements are met.”

Lenders are also most likely to target the more lucrative projects – such as the gigaprojects and those schemes initiated by the Saudi sovereign wealth vehicle, the Public Investment Fund (PIF) – over others in the PPP ecosystem.

“Given that the capacity of the market is naturally limited in terms of resourcing, there is a potential danger that the NCP's PPP programme may find itself suffering in comparison to those other market segments,” the two lawyers warn.

A senior PPP transaction expert does not entirely agree, noting that PPPs account for only a small percentage of the pipeline of gigaprojects.

The impact of the budget shift and the scope for the gigaprojects to move parts of their projects to a PPP model remains limited.

He agrees, however, that developers do tend to prefer to be associated with the gigaprojects over the NCP projects.

Within the gigaprojects sphere, concerns about who ultimately bears the payment risk in a PPP project become relevant. Ashurst’s Gouveia and McGuire say it is always preferable for the entity with the greater financial wherewithal to bear the burden of payment.

"Often, there may be certain governmental-level letters of comfort or support provided by the finance ministry that are added as a supplementary means of payment protections and credit support," they explain.

MEED's April 2024 special report on Saudi Arabia includes:

> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospects

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11734003/main0304.jpg
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Seven companies show interest in $3.3bn Kuwait gas project

    23 February 2026

     

    At least seven companies have shown interest in participating in the planned tender for a Kuwait Gulf Oil Company (KGOC) project to develop an onshore gas plant, according to industry sources.

    The project budget is estimated to be $3.3bn and the last meeting with contractors to discuss the project took place in Kuwait on 10 February.

    Previous meetings with contractors took place at the offices of Technip Energies in Abu Dhabi.

    Contractors that have sent representatives to the meetings include:

    • Samsung E&A (South Korea)
    • Larsen & Toubro (India)
    • Tecnicas Reunidas (Spain)
    • Saipem (Italy)
    • Hyundai Engineering & Construction (South Korea)
    • Hyundai Engineering Company (South Korea)
    • JGC (Japan)

    At the last meeting, contractors were told that the invitation to bid is currently scheduled to be issued at the end of March.

    It was also confirmed that Kuwait’s Central Agency for Public Tenders (Capt) will not be involved in the tender process.

    Capt is supposed to review technical and commercial evaluations of bids and verify that bidding is competitive.

    It is understood that not requiring Capt to approve this tender will speed up the tender process.

    The plant will have the capacity to process up to 632 million cubic feet a day of gas and 88.9 million barrels a day of condensates from the Dorra offshore field, located in Gulf waters in the Saudi-Kuwait Neutral Zone.

    In July last year, MEED reported that KGOC had initiated the project by launching an early engagement process with contractors for the main engineering, procurement and construction tender.

    France-based Technip Energies completed the contract for the front-end engineering and design.

    The facility will be developed next to Kuwait’s Al-Zour refinery.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15717358/main.png
    Wil Crisp
  • Egypt tenders 500MW solar IPP

    19 February 2026

    Register for MEED’s 14-day trial access 

    Egyptian Electricity Transmission Company (EETC) has issued a request for qualifications for a 500MW solar photovoltaic (PV) independent power producer project in Egypt’s West of Nile area.

    The bid submission deadline is 11 May.

    The project is being supported by the European Bank for Reconstruction & Development and will be developed under a build-own-operate model.

    Developers will be responsible for designing, financing, constructing, owning and operating the plant, with EETC acting as the offtaker for generated electricity.

    US/India-based Synergy Consulting is acting as lead, financial and commercial advisor for this transaction.

    The project forms part of Egypt’s strategy to strengthen long-term electricity supply and increase renewable generation capacity.

    Egypt is targeting 42% renewable energy in its power mix by 2030. The country aims to raise this share to 65% by 2040.

    EETC previously had plans to build a 200MW solar plant in a west Nile area but cancelled the tender for the project in 2020.

    Egypt's power sector had its strongest year in over a decade last year, accounting for $4.2bn of total contract awards.

    Despite dipping from the previous year, solar accounted for about $1bn of total awards. 

    In November, a consortium of local firms Hassan Allam Utilities and Infinity Power won contracts to develop two solar PV projects with a combined capacity of 1,200MW, supported by 720 megawatt-hours (MWh) of battery storage.

    The UAE’s Amea Power and Japan’s Kyuden International Corporation also recently reached financial close on a $700m project comprising a 1,000MW solar plant and 600MWh battery system in Aswan.

    The scheme is backed by a $570m debt package led by the International Finance Corporation and is expected to become Africa’s largest single-asset solar and storage facility when it enters operation later this year.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15701778/main.jpg
    Mark Dowdall
  • Local contractor wins $143m Jeddah sewage contracts

    19 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s National Water Company (NWC) has awarded two sewage network contracts worth a combined SR536.3m ($143m) to local contractor Civil Works Company.

    The projects will be implemented over 32 months from site handover and will serve northern Jeddah districts.

    The first contract, valued at SR278.5m ($74.3m), covers incomplete main lines and secondary sewage networks serving parts of the Al-Bashair, Al-Asala and Al-Falah neighbourhoods.

    The scope includes pipelines ranging from 200mm to 800mm in diameter with a total length of about 54.8 kilometres (km).

    The package also includes sewage tunnels with diameters ranging from 600mm to 1,800mm and a total length of approximately 6.5km. Works will also serve the Taybah, Abhar Al-Shamaliyah and Al-Hamdaniyah districts.

    The second contract is valued at SR257.8m ($68.8m). It covers the implementation of main lines and sub-networks to serve part of the Al-Hamdaniya neighbourhood.

    The works include pipelines ranging from 200mm to 1,500mm in diameter with a total length of about 78.5km. The scope also includes horizontal drilling works for sewage tunnels with diameters from 1,200mm to 1,400mm and a total length of approximately 205 metres.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15699620/main.jpg
    Mark Dowdall
  • Saudi Arabia prequalifies firms for gas transmission grids

    19 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia's Energy Ministry has prequalified companies to develop natural gas distribution networks in five industrial cities in the kingdom on a build-own-operate (BOO) basis.

    The industrial zones earmarked are Al-Kharj Industrial City; Sudair City for Industry and Business; and the First, Second and Third Industrial Cities in Jeddah, the Energy Ministry said in a statement.

    The contractors prequalified to bid for the natural gas transmission grids BOO scheme include eight standalone firms and seven consortiums:

    • East Gas (Egypt)
    • Natural Gas Distribution Company (Saudi Arabia)
    • Egyptian Kuwaiti Advanced Operation and Maintenance (Saudi Arabia)
    • Modern Gas (Egypt)
    • Saab Energy Solutions (Saudi Arabia)
    • Sergas Contracting (Saudi Arabia)
    • Bharat Petroleum Corporation (India)
    • UniGas Arabia (Saudi Arabia)
    • Best Gas Carrier / Khazeen / Mubadra (Saudi Arabia)
    • Al Sharif Contracting (Saudi Arabia) / Anton Oilfield Services Group (China) China Oil and Gas Group
    • Hulul (owned by Saudi Arabia’s National Gas and Industrialization Company) /Al-Fanar Gas Group (UAE)
    • Indraprastha Gas (India) / Masah Contracting (Saudi Arabia)
    • Expertise Contracting / PGL Pipelines (UK)
    • National Gas Company (Egypt) / Egypt Gas (Egypt)
    • Taqa Arabia (Egypt) / Taqa Group (UAE)

    The Energy Ministry has set a deadline of 23 April for these prequalified contractors to submit technical bids.

    The ministry added in its statement that it has identified a total of 36 industrial cities in Saudi Arabia for gas infrastructure development.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15699582/main0334.png
    Indrajit Sen
  • Consultants bid for Abu Dhabi airport delivery partner role

    19 February 2026

     

    Abu Dhabi Airports Company (Adac) received bids from major international firms on 19 January for a contract covering the delivery partner role for the upcoming packages at Zayed International airport (AUH).

    The project is part of the AUH satellite terminal programme, estimated at AED10bn ($2.7bn).

    MEED understands that the following firms have submitted bids:

    • Aecom (US)
    • AtkinsRealis/Egis/Mace (Canada/France/UK)
    • Bechtel (US)
    • Hill International (US)
    • Jacobs / Surbana Jurong (US/Singapore)
    • Parsons Corporation / Arup  (US/UK)

    The plan includes a new satellite concourse east of Terminal A, linked by an underground tunnel housing both an automated people mover and a baggage handling system.

    It also includes apron stands, taxi lanes and taxiways, East Midfield landside access and utilities, additional bus gates and the reconfiguration of the North and South aprons and Apron 6.

    The latest tendering activity follows the start of construction works on the East Midfield cargo terminal located at AUH, as MEED reported in December 2024.

    Local firm Raq Contracting is undertaking the construction works on this project. 

    The terminal will cover an area of 90,000 square metres and will have the capacity to handle about 1.5 million tonnes of cargo annually.

    The project is part of a broader plan to enhance the new airport's profile.

    Abu Dhabi opened a new passenger terminal in November 2023 as part of the airport’s plan to increase its passenger traffic in line with the UAE’s wider growth plans, along with projects such as the rail network being built by Etihad Rail.

    In May 2024, MEED reported that AUH's new Terminal A could connect to the Etihad Rail network in the future, as part of its growth and interconnectivity plans. 

    Plans are in progress to link the new terminal at AUH to the UAE’s growing rail network, according to the CEO of Adac.

    Speaking to UK analytic firm GlobalData's Airport Technology during a tour of the new Terminal A at AUH, CEO Elena Sorlini said that Abu Dhabi Aviation is planning to improve the transport links to the site. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15698728/main.png
    Yasir Iqbal