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
  • Saudi Arabia’s private sector picks up the baton

    2 March 2026

     

    Ten years of ambitious construction project launches ended on 25 January 2026, when the Olympic Council of Asia and the Saudi Olympic & Paralympic Committee released a joint statement saying that they had agreed to indefinitely postpone the 2029 Asian Winter Games. In early February, it was announced that Almaty in Kazakhstan will host the event.

    The Trojena mountain resort at Neom in northwest Saudi Arabia was selected in 2022 as the venue for the games, and despite significant construction work on the project, rumours had been circulating throughout most of 2025 that the greenfield venue would not be ready by the 2029 deadline.

    Project reprioritisation

    Trojena is not the only project in the kingdom that has been subject to scrutiny. There have been reports of other projects, including The Line and the Mukaab, either being scaled back, delayed or put on hold as Riyadh reassesses its priorities. This has created an air of uncertainty over Saudi Arabia’s upcoming project pipeline.

    Speaking at the Private Sector Forum (PSF), held in Riyadh in early February, Khalid Al-Falih, then Saudi Arabia’s investment minister and now minister of state, said that much has changed since Vision 2030 was launched in 2016, and that this has naturally warranted a reprioritisation. 

    Al-Falih, who also sits on the Public Investment Fund’s (PIF’s) board of directors, said that with Saudi Arabia having been chosen to host football’s Fifa World Cup in 2034 and Expo 2030 Riyadh – and as the global economy is evolving rapidly with the rise of artificial intelligence (AI) – some projects such as The Line at Neom have slowed down. However, other projects related to the World Cup, Expo 2030, technology and AI have accelerated. 

    PIF strategy

    In his speech at the PSF, Yasir Al-Rumayyan, governor of the PIF, also alluded to changing priorities and said that this is a pivotal moment for Saudi Arabia’s economy. 

    Launched in 2016, Saudi Arabia’s Vision 2030 is described as “a transformative and ambitious blueprint to unlock the potential of its people and create a diversified, innovative and world-leading nation”. 

    The agency charged with delivering many of the objectives outlined in the strategy is the PIF. Established in 1971, it was moved from the Finance Ministry in 2015 to the Council of Economic & Development Affairs, where it was given a more active mandate. It then grew from a staff of about 50 in 2015 to almost 3,000 in 2024, according to the most recently published annual report.

    Over the past 10 years, the PIF has helped drive the development of key sectors with direct capital spending on projects. The Red Sea Project and the Qiddiya entertainment city development aim to position the kingdom as a leisure tourism destination, while Roshn’s portfolio of residential communities has helped transform the housing market.

    The PIF had $913bn of assets under management in 2024. Its activities are too varied to list, but they include developing the kingdom’s five official gigaprojects; holding investments in Saudi companies including Saudi Aramco and Maaden; owning stakes in electric vehicle manufacturers Lucid and Ceer, and gaming companies Nintendo and Electronic Arts; and owning UK Premier League football team Newcastle United.

    In 2026, the role of the PIF is changing. Speaking at the PSF, Al-Rumayyan extended an invitation to the private sector to play a bigger role in achieving the kingdom’s economic ambitions. 

    “Today, in line with the objectives of the third phase of Saudi Vision 2030 and the PIF’s strategy for the coming five years, we are moving from building sectors to integrating ecosystems, and from launching opportunities to accelerating growth – through an open invitation to the private sector to invest and partner in shaping a diversified and resilient economy,” he said.  

    Having raised the bar, PIF officials say that sectors such as tourism and real estate are now ready for the private sector to take over. They describe sectors reaching what they call ‘escape velocity’, which is the point where a sufficient level of maturity has been reached for the private sector to come in and take the lead.

    [In 2026, the PIF is] moving from building sectors to integrating ecosystems, and from launching opportunities to accelerating growth

    Financial considerations

    The decision to pass the baton to the private sector comes at a time when Saudi Arabia’s ability to finance all its project commitments directly has been questioned amid lower-than-desired oil prices. 

    Reflecting the constrained backdrop, the Ministry of Finance’s final budget statement for 2026 projects a deficit of SR165bn ($44bn), equivalent to about 3.3% of GDP. 

    The private sector has a tough act to follow. While the PIF has embarked on some of the world’s most ambitious projects in recent years, it has also introduced international standards that it hopes will lead to ways of doing business in Saudi Arabia that are more in tune with international best practices. 

    “The fund will continue to enable ecosystems and lay the foundations for growth. At the same time, the next phase requires a higher level of readiness and ambition from the private sector, alongside the ability to scale and innovate – a phase in which the role of the private sector evolves from execution to contributing to economic building and value creation,” Al-Rumayyan said. 

    Whether the private sector is ready to take over is the critical question in 2026. 

    According to PIF subsidiary development companies (devcos) that engage with private sector investors, the tide is turning. They say that five years ago, the appetite to invest was limited and devcos had to step in and deliver a greater proportion of project masterplans. As these investors complete their first projects, however, confidence is building.

     

    Deals signed

    This growing appetite could be seen at the PSF, where agreements were signed by private sector investors and devcos. 

    Rua Al-Madinah, which is responsible for Medina’s tourism and cultural development, signed a memorandum of understanding (MoU) with Indonesian sovereign wealth fund, Danantara Indonesia. It covers identifying and assessing investment opportunities in the Rua Al-Madinah and Dar Al-Hijrah projects.

    King Salman International Airport Development Company signed several MoUs with local firms to develop mixed-use projects within its airport masterplan. The agreements were signed with Sumou Holding, Mohammed Al-Habib Investment, Kinan, Ajdan, Retal, Urjuan and Osus and comprise residential, commercial, retail, hospitality, entertainment and other related projects.

    Roshn Group also signed an agreement with Kuwait’s Agility Logistics Parks to establish a joint venture that will develop a Grade A logistics hub.

    In mid-February, two further deals were signed. PIF-backed Smart Accommodation for Residential Complexes Company (Sarcc) signed an agreement with Dammam-based Tamimi Global Company to develop a 4,000-bed worker accommodation project in North Riyadh. The development is expected to cost over SR1.5bn ($400m).

    Sarcc also signed a separate agreement with Riyadh-based Mawref Company to develop another North Riyadh worker accommodation project. This deal involves building a 12,000-bed facility with a development cost of over SR669m ($178m). 

    The first phases of both projects are expected to be completed in 2029.

    While momentum continues to build and deals are signed, some private sector players remain to be convinced. In the kingdom’s real estate sector, for example, recent amendments to legislation, which include a white land tax and a rent freeze, have created a level of uncertainty that some potential investors say makes it difficult to sign off on investment commitments. 

    Much will depend on the success of the deals already signed. If these agreements result in positive outcomes, then the fear of missing out will kick in and other private sector players will be keen to invest. 

    The risk is that, should deals turn sour and fail to produce the expected results, then attracting future investments from the private sector will be challenging.

    Main image: Yasir Al-Rumayyan, governor of the PIF, inaugurates the PSF 2026. Credit: Saudi Press Agency 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15827282/main.gif
    Colin Foreman
  • Algiers moves on new railway project

    2 March 2026

     

    Algeria’s state railway company Agence Nationale d’Etudes et de Suivi de la Realisation des Investissements Ferroviaires (Anesrif) has formally started the procurement process for its multibillion-dollar Laghouat-Ghardaia-El-Meniaa railway project.

    International and local firms have been given until 8 March to submit expressions of interest for the overall client’s engineer role on the 495-kilometre-long railway development.

    Consultancies have also been given until 12 March for two separate contracts covering the project supervision and control of the first 265km-long element between Laghouat and Ghardaia, and the 230km-long line between Ghardaia and El-Meniaa.

    This Laghouat-Ghardaia section, which is estimated to cost about $1.4bn, will comprise 21 viaducts, one tunnel, 55 pipe crossings and five stations.

    The 230km-long Ghardaia to El-Meniaa second section will start at Metlili station and extend south to El-Meniaa. It will comprise six viaducts, 35 railway structures and three stations, and have an estimated total construction cost of about $1.2bn.

    The speed of passenger trains on the railway will be 220 kilometres an hour (km/h) and 100km/h for freight trains.

    The solicitations of interest for the construction of the two sections were originally scheduled for February, but to date have not been released.

    READ MORE: Algeria prepares 495km railway construction tender

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15826676/main.gif
    Edward James
  • Saudi developer Acwa names new CEO

    2 March 2026

    Saudi Arabia’s Acwa has appointed Samir J Serhan as CEO, effective 1 March 2026.

    Serhan joined Acwa, formerly Acwa Power, last year as president for Saudi Arabia and the Middle East. He previously served as chief operating officer of US-based Air Products, where he had global responsibility for operational business and project execution across the Americas, Asia, Europe, Africa, the Middle East and India.

    Earlier in his career, he was president of hydrogen at Praxair and held senior leadership roles at Linde Group in the US and Germany, including managing director of Linde Engineering.

    Outgoing CEO Marco Arcelli will remain as an adviser to the chairman to ensure continuity.

    Arcelli said: “Over the past three years, Acwa’s portfolio has doubled in size, and we are on track to double it again by 2030, scaling both our footprint and our impact. Acwa now produces around 25% of the world’s desalinated seawater.”

    He added: “We have expanded into new markets, including Azerbaijan, China, Kuwait and Senegal, while advancing energy export opportunities from Saudi Arabia.”

    Acwa recently extended its lead at the top of the GCC Water Developer Ranking, adding 265,925 cubic metres a day (cm/d) in net capacity from new contract awards in 2025.

    The biggest of these involves a contract to develop the Ras Mohaisen independent water plant, awarded by the Saudi Arabian state offtaker Sharakat, formerly Saudi Water Partnership Company.

    The project is located on the kingdom’s Red Sea coast and will have the capacity to treat 300,000 cm/d of seawater using reverse osmosis technology.

    MEED reported last September that Acwa’s net power generation capacity in the GCC was 28.1GW, with the company holding more equity than the rest of the region’s top 10 private power developers combined.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15823921/main.jpg
    Mark Dowdall
  • Amazon data centre hit highlights sector vulnerabilities

    2 March 2026

     

    Amid ongoing Iranian missile and drone attacks on GCC states, US cloud provider Amazon Web Services (AWS) has reported service outages following separate incidents at two of its UAE data centres.

    “At around 4.30AM PST [16.30 UAE time on 1 March], one of our Availability Zones (mec1-az2) was impacted by objects that struck the data centre, creating sparks and fire,” AWS said in an operational update on 1 March.

    At 10.46 UAE time on 2 March, the company announced a further update, saying that another of its three UAE Availability Zones had gone down.

    “We can confirm that a localised power issue has affected another Availability Zone in the ME-CENTRAL-1 Region (mec1-az3),” it said in the latest update. “Customers are also experiencing increased EC2 APIs and instance launch errors for the remaining zone (mec1-az1). At this point, it is not possible to launch new instances in the region, although existing instances should not be affected in mec1-az1.

    “Other AWS services, such as DynamoDB and S3, are also experiencing significant error rates and latencies. We are actively working to restore power and connectivity, at which time we will begin to work to recover affected resources. As of this time, we expect recovery is multiple hours away.”

    Regional footprint

    The company, part of the US’ giant Amazon group, is one of the world’s largest data centre and cloud operators. It operates three data centres in the UAE – one in Dubai and two in Abu Dhabi – and provides critical IT services to government and private sector operations and systems.

    Its Availability Zones consist of infrastructure in separate geographic locations, spaced far enough apart to significantly reduce the risk of a single event affecting customers’ business continuity, yet near enough to provide low latency for high-availability applications that use multiple zones.

    The targeting of the two data centres – and potentially others if the conflict continues – highlights the strategic importance of these types of facilities. The AWS attacks are believed to be the first time a data centre has been targeted in a conflict and are likely to drive a reconfiguration of future campus designs to account for similar risks.

    Such changes could include increased redundancies – particularly in power provision – enhanced structural resilience, and potentially a reconsideration of the location and clustering of data centre facilities.

    WATCH: Ed James explores the rapidly evolving GCC data centres market

    Historically, data centres in the region were largely smaller enterprise facilities dedicated to storage services for organisations such as banks. Their locations were often confidential and in areas that were difficult to target, making them harder to disrupt.

    However, the emergence of large in-region hyperscale data centres – with IT loads of 200MW or more and larger physical footprints – may necessitate a rethink of how such infrastructure is delivered, not just in the GCC but worldwide.

    According to MEED Projects data, there are believed to be about 185 data centres in the region, each with an estimated capex investment value of more than $10m, of which about 99 are either planned or under construction.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15823937/main.gif
    Edward James
  • Contractor wins Oman water network contract

    2 March 2026

    Egypt’s Hassan Allam Construction has won an engineering, procurement and construction (EPC) contract for a water transmission network project from Al-Jardaa to Mihlaih (Sawt) in Oman’s North Al-Sharqiyah Governorate.

    The contract was awarded by Oman Water & Wastewater Services Company (OWWSC).

    The scope includes 76 kilometres of transmission lines and nearly 600km of distribution networks.

    The project also covers seven high-capacity reservoirs, two pumping stations and seven solar-powered systems.

    Hassan Allam Construction won a separate contract with OWWSC in August 2025 to build and supervise the construction of a large-scale water supply and wastewater system in Al-Amerat, Muscat.

    The Al-Amerat Catchment 10 water supply, sewer system and treated effluent networks project covers the construction of a 64km gravity sewer network.

    Last month, MEED exclusively revealed that China’s Hunan Installation Overseas Engineering had won an EPC contract to build water supply and sewage networks in Muscat. 

    The contract was awarded by state utility Nama Water Services (NWS).

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15823693/main.jpg
    Mark Dowdall