meed-logo

line1 line2 line3
SIGN IN / REGISTER

Rise in PPPs reflects Saudi budgetary pragmatism

7 March 2025

 

Register for MEED’s 14-day trial access 

The value of public-private partnership (PPP) contracts in Saudi Arabia has risen sharply over the past two years as the government seeks to develop projects through the private sector and diversify funding sources.

According to MEED Projects data, in 2023, the value of PPP concession contracts hit an all-time high of $28.2bn, equivalent to more than 23% of the total value of all project contracts awarded that year. Although that figure fell to 18.3% last year, it was still far higher than the historical average in the kingdom.


Source: MEED Projects

The figures are even starker when taking only government spending into account. In 2023, the value of signed PPP contracts totalled more than a third of the value of government or government-related projects awarded in 2023 and more than a quarter last year. This is compared to the average of 15.6% between 2019 and 2022, and just 3.5% recorded in 2018. 

Government contracts include awards made by ministries, municipalities and royal commissions, in addition to state-funded key project clients such as Saudi Water Authority, the National Housing Company and Jeddah Airports Company. Public Investment Fund (PIF) subsidiaries such as Neom, the National Water Company and Rua Al-Madinah are also included.

Reducing spending

The government increasingly views the development of projects through the PPP framework as a means of delivering strategic schemes like power and desalination plants off-balance sheet using private sector funding, thereby reducing its capital expenditure requirements. 

This has been particularly important as Riyadh’s financing commitments for its gigaprojects and infrastructure programmes have soared in line with its Saudi 2030 Vision. New contract awards overall in the kingdom reached $149bn, the highest ever recorded by a single country in the region and one of the largest globally.


*Government contracts include awards made by ministries, municipalities and royal commissions, in addition to state-managed key project clients such as Saudi Electricity Company, the National Housing Company and Jeddah Airports Company. Public Investment Fund (PIF) subsidiaries like Neom and Rua Al-Madinah are also included. Capital expenditure by Saudi Aramco is excluded from the analysis | Source: MEED Projects

Beyond utilities

PPPs have been used in Saudi Arabia and the wider GCC region for over two decades, but have been mainly limited to power generation and water desalination plants, where the developer benefits from guaranteed take-or-pay power-purchase agreements that eliminate demand risk.

However, over the past three years, the government has successfully implemented PPPs in a number of new sectors, including education and healthcare, to finance, build and operate schools and hospitals. Forthcoming PPP projects include the estimated $2.5bn Asir-Jizan highway, which would be the first road concession in the GCC, and the multibillion-dollar contract to develop the expansion of Abha International airport.

The NCP is expected to add dozens more PPPs to its future pipeline to relieve the state’s financial burden and to stimulate the private sector’s involvement in the local projects market 

Outside the utilities sector, the body responsible for pushing the PPP agenda is the National Centre for Privatisation (NCP). It has more than 170 PPPs in the pipeline, covering long-term concession agreements in projects as diverse as municipal laboratories, television and radio tower infrastructure, court complexes and logistics zones.

As capital expenditure continues to increase, the NCP is expected to add dozens more PPPs to its future pipeline to relieve the state’s financial burden and to stimulate the private sector’s involvement in the local projects market.

Gigaproject delivery

The gigaproject development companies will likely follow a similar path. Off-grid developers Neom and Red Sea Global have both signed utilities concessions with the private sector for their power, desalination, water treatment and district cooling requirements, with the former also contracting companies to build and operate labour accommodation.

Going forward, other PIF developer subsidiaries like New Murabba Development Company (NMDC), Diriyah Company, Roshn Group and King Salman International Airport Development Company are attempting to harness the private sector for a number of their project components. 

NMDC, for example, will seek companies over the next five years to finance and operate its water treatment, power, district cooling, waste collection, telecommunication, secondary roads, street lighting, social infrastructure and EV charging infrastructure requirements under its partnership strategy. 

The use of PPP contractual frameworks will be critical to ensure delivery of the gigaprojects as soaring construction costs have resulted in delays to the programme and put a strain on the PIF and government’s finances. 

Growing appetite

Power and water production schemes aside, it remains to be seen whether the private sector and banks will have the appetite to take on the investment risk these projects will entail, especially if they do not come with government guarantees, explicit or otherwise.

However, the experience to date suggests that there is a big appetite in the private sector – at least locally – to take on an expanded role in absorbing some of the state’s financing burden. Whether this will remain the case as the PPP pipeline continues to grow will be key to Saudi Arabia’s project and 2030 Vision ambitions.

https://image.digitalinsightresearch.in/uploads/NewsArticle/13466076/main.gif
Edward James

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

Click here to register
Exclusive from Meed
Related Articles
  • Oman extends deadline for $150m water transmission project

    11 August 2026

     

    State-owned Nama Water Services (NWS) has extended the bid submission deadline for a contract to build a $150m water distribution network project in Jalan Bani Bu Ali Wilayat in Oman’s South Sharqiyah Governorate.

    The new deadline is 24 August. The original deadline was 17 August.

    The engineering, procurement and construction (EPC) contract covers the development of water distribution infrastructure in the JBBA North and JBBA Coastal areas.

    The scope includes new water storage reservoirs, elevated tanks, booster pump stations and transmission and distribution pipelines.

    The project includes two reservoirs in the JBBA North area with a capacity of 40,000 cubic metres, along with about 58 kilometres of ductile iron distribution pipelines and 343km of high-density polyethylene (HDPE) pipelines.

    The JBBA Coastal works include reservoirs at Asilah, Ashkarah, Wadi Sal and Khabbah, as well as elevated tanks and pump stations. The scope also includes about 38.5km of 400mm-diameter ductile iron transmission pipeline.

    NWS issued the main contract tender on 4 June. UK-headquartered Mott MacDonald is the main consultant on the project.

    The project is one of three water distribution schemes being tendered under a wider $350m masterplan covering Jalan Bani Bu Hassan, Jalan Bani Bu Ali, and Al-Kamil and Al-Wafi wilayats.

    The Jalan Bani Bu Hassan scheme includes a new 40,000-cubic-metre ground reservoir at Al-Sayah Al-Sharqi 4, a pump station and associated transmission and distribution pipelines. It will also include a pump station serving the Industrial Area and an inline booster pump station supplying Al-Mintajjah and Sariq Haryah.

    The projects covering Jalan Bani Bu Ali and Al-Kamil and Al-Wafi wilayats are estimated to cost £100m each. The bid submission deadline for both projects is 17 August.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18326851/main.jpg
    Mark Dowdall
  • Medina invites bids for major stormwater project

    11 August 2026

     

    Saudi Arabia’s Madinah Municipality has issued a tender for an engineering, procurement and construction (EPC) contract to upgrade the city’s rainwater drainage network.

    According to regional project tracker MEED Projects, it is the first main contract tender the municipality has issued for a major water infrastructure project since 2022.

    The $30m project covers the construction of rainwater drainage networks and the repair of existing stormwater pipelines across major roads and corridors within the urban area of Medina.

    It aims to improve the performance of the city’s stormwater drainage system, reduce surface flooding, and protect roads and nearby assets during heavy rainfall.

    The bid submission deadline is 5 September.

    According to MEED Projects data, Madinah Municipality completed two rainwater drainage network projects in Medina in 2024.

    The local Al-Ayuni Investment & Contracting was the EPC contractor for both Phase 1 and Phase 2 projects. Saudi contractor Azmeel Contracting also previously submitted bids for both projects.

    The municipality is also understood to be nearing completion of a separate Phase 1 rainwater drainage network project in Al-Rawabi in Al-Madinah province. This project was tendered in 2022 and awarded to Al-Naeim Contracting (Saudi Arabia) in 2023.

    Meanwhile, Madinah Municipality received prequalification documents at the beginning of the year for two stormwater drainage projects in Yanbu. It is unclear if the main contract tender will be issued this year.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18325305/main.jpg
    Mark Dowdall
  • Adnoc Gas expects Habshan to hit full capacity in 2027

    11 August 2026

    Adnoc Gas hopes to restore full output capacity at its Habshan gas processing facility in Abu Dhabi by the second quarter of next year, following attacks on the facility in March and April during the US-Iran conflict.

    Adnoc Gas, the natural gas processing business of Abu Dhabi National Oil Company (Adnoc Group), said it has already restored 85% of the Habshan facility’s capacity, surpassing the year-end target set in May.

    The Habshan complex is one of the largest gas processing facilities in the UAE and the wider Middle East and North Africa region. It has a processing capacity of 6.1 billion cubic feet a day. The complex comprises five trains and 14 processing units that receive gas feedstock from onshore and offshore fields in Abu Dhabi.

    The Habshan facility was struck at least three times in March and April by Iranian drones and missiles. On 19 March, UAE authorities suspended operations at Habshan after it was affected by debris falling from Iranian missiles intercepted by the country’s air defence systems.

    Adnoc Gas then announced on 23 March that operations were continuing safely across its asset base, after similar missile and drone attacks by Iran on facilities owned by its parent, Adnoc Group, although it did not specifically mention the Habshan plant.

    The worst of the attacks on Habshan took place on 3 April, when Iranian drones intercepted by the UAE’s air defence systems caused damage at the site, resulting in the death of an engineer working at the facility for Egyptian contractor Petrojet during an evacuation. Four other contractors sustained minor injuries, but were later discharged from hospital after receiving treatment.

    ALSO READ: Adnoc Gas to move prudently on Bab Gas Cap project

    On 8 April, Abu Dhabi authorities said three people – two Emiratis and an Indian national – sustained minor injuries after debris fell at the Habshan gas complex following a successful interception by the UAE’s air defence systems.

    The debris also sparked several fires at the facility, prompting a temporary suspension of operations as safety and response teams assessed the situation.

    “Adnoc Gas responded swiftly to the security-related incidents at the Habshan site on 3 and 8 April, prioritising safety and minimising disruptions to customers,” the company said on 10 August.

    “The company has concluded its technical assessment of the impact from these incidents and recovery has progressed ahead of schedule, with gas supply already restored to 85%,” Adnoc Gas said as part of its announcement of financial results for the second quarter of 2026.

    During a press conference to discuss Adnoc Gas’ Q2 2026 results, Peter Van Driel, the company’s chief financial officer, said: “At the moment, we have progressed to 85% of supply being reinstated, so the balance will be reinstated between now and the first half of 2027.

    “If I look at the cost impact, we are still firming up our estimates. There are uncertainties around the pricing of certain items that we need to install as part of the final reinstatement.

    “If we look at the key driver for our results in the second half, the 85% reinstatement of supply is definitely important. We’re encouraged by the fact that the 85% was delivered ahead of schedule,” Van Driel told journalists.

    Fatema Al-Nuaimi, Adnoc Gas’ CEO and board member, said: “If I may add one point: it might be 85%, but in reality, today we are supplying 100% of our customers’ requirements locally.”

    She added: “On exports, of course, we try our best to satisfy requirements and work closely with customers. But in terms of gas supply to the UAE, we are at 100%.”

    Role of robotics and AI

    Responding to a question about the deployment of robotics and artificial intelligence (AI) to carry out damage assessment and repair work at the Habshan gas processing facility, Al-Nuaimi said: “One of the technical challenges in restoring the facilities quickly was that we had to inspect a significant part of our assets – some 600 kilometres of piping of different sizes across the facilities.

    “If we had done this in the conventional way, we would have spent around 100 additional days putting up scaffolding and sending people to conduct manual and visual inspections.”

    The CEO continued: “Instead, we used robotics supported by AI-driven software, which enabled us to shorten the inspection and response time and carry out repairs faster.

    “It was not just about time; it was also about safety. It spared us from sending our people into critical areas that might not yet have been safe.”

    She added: “We also used robotics in responding to fires and accessing certain parts of the assets.

    “When we talk about AI, it is not a headline. It is real work and real value that we see every day in our business,” Al-Nuaimi further remarked.

    ALSO READ: Adnoc announces FID on $6.2bn Umm Shaif gas cap project
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18324488/main.jpg
    Indrajit Sen
  • Dewa receives eight bids for 132kV cable works

    11 August 2026

    Eight companies have submitted bids for a contract to supply, install, test and commission 132kV cable works serving multiple substations across Dubai.

    The tender was issued by Dubai Electricity & Water Authority (Dewa) in April.

    It covers 132kV cable works for the Autosouq, Crystal, Danaroad, Dsrtisld, Elwood, Horizion, Mesmgolf, Naseemst, Orchidst, Yfravaly and Ylysisld 132/11kV substations. The scope also includes a new 132kV cable circuit and cable shifting works.

    The bidders include:

    • Acume Electrical Engineering Services (UAE, $10.7m)
    • Sociedad Espanola de Montajes Industriales (Spain, $17.8m)
    • Danway Electricity & Mechanical Engineering (UAE, $67.6m)
    • Arar Utility Company (UAE, $71.9m)
    • Mannai Trading Company (Qatar, $91.3m)
    • AASA Middle East Contracting Company (UAE, $174.5m)
    • Centaur Electro Mechanical Contracting Company (UAE, $199.6m)
    • Saudi Modern Company for Metals, Cables & Plastic Industries (Saudi Arabia, $351.4m)
    Transmission investment

    Dewa has been accelerating investment in Dubai’s electricity transmission network to meet rising electricity demand. In July, the utility said that its investments in transmission projects had exceeded AED10bn ($2.7bn).

    Dewa is currently building 65 new 132kV substations and one 400kV substation. It plans to issue tenders for more than 30 additional 132kV substations over the next three years, alongside plans to extend 340 kilometres of underground transmission cables and construct two 400kV substations.

    In the first half of 2026, Dewa said it awarded 21 contracts for 132kV transmission substations and contracts to extend 132kV cables connecting the substations to the main network. The cable contracts cover 64km and have a combined value of AED3bn ($817m).

    The utility also commissioned eight 132kV substations with a combined conversion capacity of 1,200MVA and an investment of AED970m ($264m). The projects included 20km of transmission cables.

    Dewa said it had 402 transmission substations in operation at the end of June, with 374 substations at the 132kV level. The rest are 400kV substations.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18322875/main.jpg
    Mark Dowdall
  • Adnoc Gas to move prudently on Bab gas cap project

    10 August 2026

    Adnoc Gas, the natural gas processing business of Abu Dhabi National Oil Company (Adnoc Group), has said it is treading cautiously towards a final investment decision (FID) on its estimated $8bn Bab gas cap development project.

    The project aims to build a gas processing plant in the Bab area, about 170 kilometres from Abu Dhabi city, along with associated pipeline networks and ancillary units, to process up to 1.85 billion cubic feet a day (cf/d) of additional raw gas once its parent company starts production from the Bab gas caps.

    “We are at an early stage when it comes to engagement with the market on Bab gas cap. At this stage, we are not in a position to discuss any of the technical or commercial aspects of the Bab gas cap project,” Fatema Al-Nuaimi, Adnoc Gas CEO, said in response to a question from MEED during a press conference on 10 August.

    Adnoc Gas has divided the engineering, procurement and construction (EPC) scope of work on the Bab gas cap development project into four main packages:

    • EPC package 1 – Main Bab gas cap plant
    • EPC package 2 – Early civil works
    • EPC package 3 – Pipelines
    • EPC package 4 – Non-process facilities and associated works package

    Adnoc Gas issued the tender for the main Bab gas cap plant on 25 June and set an initial deadline of 17 July for contractors to submit technical bids. The company then extended the technical bid submission deadline by four months until 16 November, MEED recently reported.

    Peter Van Driel, chief financial officer of Adnoc Gas, said: “There are two parts to this. You have an upstream decision and an Adnoc Gas decision.

    “Upstream [Adnoc Group] has started to develop the Bab gas cap reservoir. At Adnoc Gas, we have a funnel of opportunities. Today, we announced the FID on phases two and three of the Rich Gas Development project,” Van Driel said.

    “As part of future opportunities, we may invest in infrastructure specifically for the Bab gas cap project, and that is a pending decision,” he added.

    “We have focused our decision-making on phases two and three of the Rich Gas Development project. With all of these decisions, we do a very thorough assessment. We are not in a hurry to make these decisions. We want to ensure we have the right feed composition, competitive landscape and demand.

    “[Gas] demand in the UAE remains strong. Electricity demand, for example, grows by approximately 3% every year, and we also see a very robust demand profile for gas in export markets,” he told journalists on the call.

    Bab Gas Cap project tendering

    As part of its upstream production growth targets for 2030, Adnoc Group is working to extract gas from four underdeveloped gas cap reservoirs at the Bab onshore field – Thammama A, Thammama B, Thammama F and Thammama H. The Thammama A, B and H reservoirs are estimated to collectively produce 1.45 billion cubic feet a day (cf/d) of gas, while output from the Thammama F gas cap is expected to reach 396 million cf/d.

    Existing trains at the Habshan processing complex in Abu Dhabi will be unable to handle the new gas volumes. Adnoc Gas is therefore required to build new facilities to process up to 1.85 billion cf/d of additional raw gas when its parent company starts production from the Bab gas caps.

    Abu Dhabi Securities Exchange-listed Adnoc Gas issued an expression of interest (EoI) to contractors for the main EPC tendering process for the Bab gas cap plant on 10 February. The company set an initial EoI submission deadline of 17 February, which it later extended to 20 February. Contractors submitted responses by that date, MEED reported.

    Following completion of the prequalification phase, contractors that expressed interest formed the following teams to compete in the main contract tendering round, according to sources:

    • Larsen & Toubro Energy Hydrocarbon (India) + Samsung E&A (South Korea)
    • Saipem (Italy) + NMDC Energy (UAE)
    • Technip Energies (France) + JGC Corporation (Japan) + Sinopec (China)
    • Tecnimont (Italy) + China Petroleum Engineering and Construction Corporation (CPECC)

    The other three packages are also in the main contract tendering stages, sources have said. Separately, another Adnoc Group subsidiary, Adnoc Onshore, is preparing to issue the main tender for a project involving the tie-in of gas-producing and injection wells at the gas cap reservoirs of Abu Dhabi’s onshore Bab field, which forms part of the wider integrated Bab gas cap development programme.

    Prior to issuing the EoIs for the Bab gas cap development project packages, Adnoc Gas completed an early engagement process with contractors in September and October last year, as MEED previously reported.

    In December last year, Adnoc Gas awarded the front-end engineering and design (feed) works for the Bab gas cap development project – which will increase its gas processing capacity by about 20% – to Australia-based consultancy Worley. The feed contract covers more than 1.2 million man-hours, making it the largest engineering job awarded by Adnoc Gas to date.

    Bab Gas Cap concession

    In addition to Adnoc Gas overseeing the main EPC tendering exercise for the gas processing plant, Abu Dhabi’s Supreme Council for Financial and Economic Affairs (SCFEA) awarded concession agreements in June for the development and production of the Bab gas cap reserve in the emirate.

    Adnoc will hold the majority 60% participating interest in the concession. The remaining stakes will be held by France’s TotalEnergies (10%), the UK’s BP (10%), China National Petroleum Corporation (CNPC) International (8%), Japan Oil Development Company (Jodco) Onshore (5%), China ZhenHua Oil (4%) and Korea GS E&P (3%).

    According to SCFEA, the Bab gas cap development and production concession represents the largest gas cap development project of its kind globally, the Abu Dhabi Media Office said in a report.

    A gas cap refers to the free natural gas that sits above an underlying oil reservoir — in this case, the giant Bab onshore oil field in Abu Dhabi.

    The project, operated by Adnoc Onshore, is expected to have a production capacity of approximately 1.5 billion cf/d of natural gas, equivalent to about 15% of Adnoc Gas’ total operational gas processing capacity.

    “This underscores the strategic significance of the project, which is expected to contribute to the UAE’s gas self-sufficiency, support the continued development of the country’s petrochemicals sector and advance Adnoc’s plans to expand its liquefied natural gas export capacity,” the Abu Dhabi Media Office said in its report.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18281827/main4640.jpg
    Indrajit Sen