Riyadh confirms capital expenditure cuts
7 May 2025
Saudi Arabia has reported a 19% drop in government capital expenditure (capex) during the first quarter of this year compared to the same period last year. Capex spending in Q1 2025 was SR27.8bn ($7.4bn), down from SR34.5bn in Q1 2024.
The Ministry of Finance reported the drop in expenditure in its Quarterly Budget Performance Report for Q1 2025.
The government’s reduction in capex occurred at the same time as a drop in contract awards. According to regional projects tracker MEED Projects, there was a significant reduction in contract awards during Q1 2025.
There were $16.9bn of contract awards in the kingdom during Q1 2025, which includes private and public sector clients – including the Public Investment Fund (PIF) and its subsidiary development companies, as well as public-private partnership (PPP) projects.
The number of contract awards has also declined. According to MEED Projects, there were 108 contract awards during Q1 2025, which is down from 191 during Q1 2024 and 186 in Q4 2024.
Big deals
The largest project deal during Q1 2025 was the $2.2bn PPP deal awarded by Saudi Water Partnership Company (SWPC) to develop and operate the kingdom’s second independent water transmission pipeline (IWTP). The project involves building a 587-kilometre pipeline that can transmit 650,000 cubic metres a day of water between Jubail in the Eastern Province and Buraydah in the Qassim region. A developer team comprising local companies Aljomaih Energy & Water, Nesma Company and Buhur for Investment Company was selected for the project.
Only two other contract awards were valued at over $1bn. Saudi Aramco awarded Larsen & Toubro Energy Hydrocarbon, a subsidiary of India’s Larsen & Toubro Group, a $1.5bn contract to build a large-scale carbon capture and storage hub in Jubail Industrial City.
Gigaproject developer Diriyah Company awarded the other $1bn-plus deal. It awarded a joint venture of local firm El-Seif Engineering & Contracting, Beijing-headquartered China State Construction Engineering Corporation and Qatari firm Midmac Contracting a $1.3bn contract to build the Royal Diriyah Opera House.
The total value of contract awards in Q1 2025 was down by almost half compared to the $33.5bn of contract awards made during Q1 2024. On a quarterly basis, the drop is more than 60% compared to the $42.7bn of contract awards made during Q4 2024.
Budget deficit
For the broader economy, Saudi Arabia ran a deficit of SR58.7bn during Q1 2025, which was fully financed through borrowing, as there were no withdrawals from government reserves.
Public debt increased in both domestic and external components. Domestic debt closed at SR797bn, and external debt closed at SR531.7bn, indicating active debt management strategies to finance the deficit.
Most recently, the National Debt Management Centre announced the closure of its April 2025 issuance under the government’s Saudi riyal-denominated sukuk programme, with a total allocation amounting to SR3.710bn.
The sukuk issuance was structured into four distinct tranches to cater to varying investor needs. The first tranche, valued at SR1.315bn, is set to mature in 2029. The second tranche, amounting to SR80m, will mature in 2032. The third tranche, with a size of SR765m, is scheduled for maturity in 2036, while the fourth tranche, the largest at SR1.55bn, will mature in 2039.
In Q1 2025, total revenues reached SR263.6bn, with oil revenues accounting for SR149.8bn. This signifies a notable 18% decrease in oil revenues compared to the same period in 2024.
Also, oil income in the first quarter of this year accounted for 56% of total government revenues, down from 62% in the same period last year.
The slide in oil revenues is mainly due to lower crude oil prices, with the first quarter average for global benchmark Brent declining by 15% to around $75 a barrel compared to the same period in 2024.
Oil production
Oil production cuts by the Opec+ alliance also led to a fall in oil revenues for Saudi Arabia. The kingdom’s crude output declined by 1% in the first quarter to 8.95 million barrels a day (b/d), according to Opec data.
Saudi Arabia and Russia-led Opec+, however, began unwinding 2.2 million b/d of oil production cuts from April, with the coalition recently announcing a further output hike of 411,000 b/d in June. This move could result in an increased oil market share for Saudi Arabia, bringing in more oil revenues for the kingdom in the second quarter.
Non-oil revenues increased by 2%, reaching SR113.8bn, indicating some success in diversification efforts. Taxes on goods and services and other revenues contributed to this rise.
Total expenditures stood at SR322.3bn, which was a 5% increase on Q1 2024. Although capex decreased, other areas of spending increased.
Social spending
Notably, social benefits saw a significant 28% increase, reflecting the government’s commitment to social welfare programmes. Compensation of employees and use of goods and services also experienced increases.
For sectors, health and social development saw a 19% increase in actual expenditure compared to Q1 2024. This indicates a strong focus on these areas. Public administration also experienced a notable 14% increase.
Sectors such as municipal services and economic resources recorded slight decreases in spending.
The Finance Ministry report also provides insights into the government’s reserves and current account balances, with closing balances of SR393bn and SR91bn, respectively.
MEED’s April 2025 report on Saudi Arabia includes:
> GOVERNMENT: Riyadh takes the diplomatic initiative
> ECONOMY: Saudi Arabia’s non-oil economy forges onward
> BANKING: Saudi banks work to keep pace with credit expansion
> UPSTREAM: Saudi oil and gas spending to surpass 2024 level
> DOWNSTREAM: Aramco’s recalibrated chemical goals reflect realism
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> DATABANK: Saudi Arabia’s growth trend heads up
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
-
Doosan confirms Saudi Jafurah 2 cogen contract2 June 2026
-
-
-
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Kuwait receives bids for Al-Khairan phase one IWPP
2 June 2026
Two developer consortiums have submitted bids for the first phase of Kuwait’s Al-Khairan independent water and power producer (IWPP) project, according to a source.
Bids were received by the Kuwait Authority for Partnership Projects (Kapp) on 1 June.
The facility will have a capacity of 1,800MW and 150,000 cubic metres a day of desalinated water. It will be located in Al-Khairan, adjacent to the Al-Zour South thermal plant.
The bidders include:
- Abu Dhabi National Energy Company (Taqa) / A H Al-Sagar & Brothers (Saudi Arabia)
- Acwa (Saudi Arabia) / Gulf Investment Corporation (Kuwait)
The Al-Khairan IWPP is being procured by Kapp in partnership with the Ministry of Electricity, Water & Renewable Energy (MEWRE).
The main contract was tendered last September. Three consortiums and two individual companies were previously prequalified to participate in the tender.
Ernst & Young, BNP Paribas, AtkinsRealis and Addleshaw Goddard are financial advisers on the project. Chadbourne & Parke is acting as legal adviser.
The winning bidder will sign a set of public-private partnership agreements covering financing, design, construction, operation and transfer of the project. The energy conversion and water-purchase agreement is expected to cover a 25-year supply period.
Future phases
The Al-Khairan IWPP project is expected to run on low-sulphur fuel oil as the primary fuel and to accommodate crude oil, gas oil and natural gas as backup fuels. Future phases will further expand capacity.
It is understood that the estimated $750m second phase of the Al-Khairan IWPP project will add a further 1,800MW of generation capacity through a combined-cycle gas-fired power plant.
The project, first mooted over a decade ago, remains in the early development stages, with no plans currently to advance to procurement in 2026, a source said.
According to the source, the immediate focus is on advancing plans for the 3,600MW Nuwaiseeb power and water desalination IWPP project.
The Nuwaiseeb IWPP plant will have a desalination capacity of 75 million imperial gallons a day.
Kapp plans to release a transaction advisory tender for the project by the end of the year.
> Be recognised among the best in the industry at the MEED Projects Awards 2026 …
https://image.digitalinsightresearch.in/uploads/NewsArticle/17072685/main.jpg -
Doosan confirms Saudi Jafurah 2 cogen contract
2 June 2026
South Korea’s Doosan Enerbility has confirmed it has signed an engineering, procurement and construction (EPC) contract worth about $556m for the second phase of the Jafurah combined heat and power (CHP) plant in Saudi Arabia.
The project is being developed by Korea Electric Power Corporation (Kepco) in partnership with Saudi Aramco.
Doosan said the contract covers design, equipment supply, installation, construction and commissioning of the facility.
The Jafurah CHP phase 2 project will be built near the Jafurah gas field, about 400 kilometres east of Riyadh. Once operational, it will generate 330MW of electricity and produce 465 tonnes of steam an hour for the nearby gas field.
According to the firm, the project’s main steam turbine will be supplied by Doosan Skoda Power, a subsidiary of Doosan Enerbility.
WSP is acting as the project management consultant for the project, which is scheduled for completion in 2029.
The Jafurah gas development is part of Aramco’s $3.2bn unconventional resources programme, which aims to develop shale gas in three areas. Jafurah lies southeast of Ghawar, the world’s largest conventional oil field.
The programme is part of Riyadh’s plans under Vision 20230 to ensure the kingdom remains self-sufficient in gas supply amid rising demand from the residential and industrial power sectors.
Jafurah phase one
In February 2025, MEED exclusively reported that talks were under way to expand the capacity of the $500m Jafurah cogeneration independent steam and power plant (ISPP).
Construction works were completed on the facility last November.
At the time of its procurement, the plant’s first phase was to have a power capacity of 270-320MW, and a low-pressure (LP) steam demand of 77-166 thousand pounds an hour (klb/hr) and high-pressure (HP) steam demand of 29-126 klb/hour by 2023.
The LP and HP steam demand will increase to 283-373 klb/hr and 66-321 klb/hr by 2027, respectively.
The oil giant issued the letter of award to Kepco for the contract to develop the Jafurah ISPP scheme in July 2022.
Kepco subsequently awarded South Korea’s Doosan Heavy Industries & Construction the project’s EPC contract.
US/India-based Synergy Consulting provided financial advisory services to Kepco on its bid.
Sumitomo Mitsui Banking Corporation (SMBC) served as the client’s financial adviser for the project. Germany’s Fichtner Consulting Engineers is technical consultant, while the UK’s Wood Group is project management consultant.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17072199/main.jpg -
Al-Mabanee submits lowest bids for Kuwait infrastructure
2 June 2026
Kuwait’s Public Authority for Housing Welfare (PAHW) has opened commercial bids for two major infrastructure and public buildings packages at South Al-Mutlaa Residential City.
Local firm Al-Mabanee United Company has emerged as the lowest bidder for both contracts, submitting combined offers worth KD44m. Both packages entail the construction, completion and maintenance of services, infrastructure works and public buildings for different district centres within the city.
The first contract covers the infrastructure and public buildings for the N3 District Centre. PAHW received proposals from eight bidders, with Al-Mabanee United Company submitting the lowest price at KD20.9m. The second-lowest offer was submitted by The Contractor General Trading & Contracting Company at KD22.4m, followed by Golden Engineering Group for General Trading & Contracting at KD22.7m, though Golden Engineering Group was flagged for not providing a bid bond.
Al-Khonaini General Trading & Contracting Company, operating as Inshat Al-Khonaini, ranked fourth with a bid of KD22.7m, followed closely by Kuwait Industrial Centre Company at KD22.8m. Combined Group Contracting Company submitted a bid of KD23.8m, Al-Dar Engineering & Construction Company bid KD25.7m, and China’s Sichuan Road & Bridge Group Corporation submitted the highest active proposal at KD29m.
The second contract is for identical infrastructure and public building works at the N1 District Centre. Al-Mabanee United Company submitted the lowest bid of KD22.8m. Its closest competitor was The Contractor General Trading & Contracting Company, which submitted an offer of KD23.9m.
Al-Khonaini General Trading & Contracting Company came in third with a bid of KD24.2m, followed by Kuwait Industrial Centre Company at KD24.4m and Golden Engineering Group for General Trading & Contracting at KD24.4m. Combined Group Contracting Company placed a bid of KD26m, Al-Dar Engineering & Construction Company bid KD26.5m, and United Construction Company, known as Al-Inshat Al-Muttahida, submitted an offer of KD 30.9m. Al-Ghanim International General Trading & Contracting filed the highest bid at KD344m and was also noted for lacking a bid bond.
South Mutlaa Residential City is a large-scale planned development designed to accommodate around 400,000 residents in a modern, fully serviced urban environment. Once completed, it will offer contemporary housing alongside extensive logistical services and a wide range of public and commercial areas, including hospitals, schools and other social services.
The project also includes major infrastructure works such as approximately 150 kilometres of roads and related structures, lighting and other public works, as well as integrated systems for water distribution, rainwater collection and sewage. In addition, it will provide the civil infrastructure needed for electricity distribution, telecommunications networks and traffic control to support a well-connected, functional city.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17071938/main.gif -
Local developer secures finance for three Riyadh projects
2 June 2026
Qimam Noshoz for Real Estate Development Company, a subsidiary of Saudi Arabia’s Banan Real Estate Company, has signed a sharia-compliant credit facility agreement worth SR84m ($22.4m) with Riyad Bank to fund three commercial, hospitality and sports developments in the kingdom.
The financing agreement is split into two distinct tranches to align with the projects’ development timelines. The first tranche consists of SR49m with a maturity duration of seven years, while the remaining SR35m has been secured for an eight-year term.
Qimam Noshoz will utilise the capital to fund construction works for the Al-Rahmaniyah Gem and Al-Wadi District Gem projects. Both of these projects are already leased to the fitness operator Armah Sports Company. The other project is an independent hotel located within the Al-Wadi District.
The Al-Wadi development is designed as an integrated commercial complex spanning approximately 7,818.5 square metres of land, with a built-up area of about 975 square metres. It includes a men’s gym, a women’s gym and a hotel building.
The Al-Rahmaniyah project is an integrated commercial development combining fitness facilities with retail. The asset features men’s and women’s gyms operating alongside an independent commercial zone.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17071628/main.jpg -
SLB wins $385m contract for Kuwait oil research centre
2 June 2026
Schlumberger Oilfield Eastern, a unit of the US-headquartered oilfield services company SLB, has been awarded a KD118m ($385m) contract to develop an oil and gas research centre in Kuwait.
The contract was awarded by the state-owned upstream operator Kuwait Oil Company (KOC), according to a report by Kuwait’s Al-Rai newspaper.
The Ahmadi Innovation Valley (AIV) project is planned as an advanced research and innovation hub equipped with specialised facilities and technical teams focused on applied research for Kuwait’s oil and gas sector.
The contract was awarded after the Higher Purchase Committee (HPC) of Kuwait’s national oil and gas company Kuwait Petroleum Corporation (KPC) determined the bid to be compliant with the project’s technical and commercial requirements.
In February 2025, KOC signed memorandums of understanding (MoUs) with five international oilfield service companies to support the development of the AIV initiative.
These companies were:
- SLB (US)
- Baker Hughes (US)
- Weatherford (US)
- Halliburton (US)
- National Energy Services Reunited (US)
Under the preliminary agreements, each of the five companies agreed to establish a world-class research and development centre at the project site, focused on helping KOC meet challenges in the upstream sector.
KOC’s CEO Ahmad Jaber Al-Eidan had said in February 2025 that the project will enable Kuwait to keep pace with global transformations while investing in advanced technologies to ensure the sector’s sustainability and achieve operational excellence.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17063475/main.gif