meed-logo

line1 line2 line3
SIGN IN / REGISTER

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

https://image.digitalinsightresearch.in/uploads/NewsArticle/13822355/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • Solar deals signal Saudi Arabia’s energy ambitions

    13 February 2026

    Commentary
    Mark Dowdall
    Power & water editor

    Saudi Arabia’s recent agreement to build $2bn-worth of solar power plants in Turkiye is the latest sign that the kingdom’s energy influence is changing.

    Historically, this was measured in oil barrels and export volumes. Increasingly, this is extending to capital, structuring expertise and the ability to deliver record-low tariffs in competitive markets.

    Announcing the deal, Turkish Energy Minister Alparslan Bayraktar said tariffs for the plants would be the country’s lowest on record, with electricity purchased under 25-year power purchase agreements.

    It followed another announcement, in January, that Acwa is investing $200m to build a large-scale solar photovoltaic (PV) plant in the Philippines.

    Whether Saudi-backed companies ultimately retain long-term stakes or primarily develop and build the assets, their role at the front end is significant.

    Sponsors that bring sovereign backing, clear procurement processes and access to low-cost financing can influence tariffs and contract terms from the outset.

    There is also a geopolitical layer. Investing in Turkiye, or anywhere for that matter, strengthens political and economic ties at a time when regional alignments are shifting.

    Energy infrastructure is also long-term by its nature. It connects ministries, regulators, lenders and operators in relationships that often extend well beyond a single transaction.

    Saudi Arabia has spent the past few years refining its approach to pricing, structuring and financing large-scale renewables at home.

    Exporting that expertise may not rival oil in scale or visibility, but it does signal that Saudi Arabia is becoming more than just an energy supplier.

    Increasingly, it is becoming a participant in how other countries design and finance their energy transitions. That influence is still significant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15645903/main.jpg
    Mark Dowdall
  • Saudi Arabia appoints new investment minister

    13 February 2026

    Register for MEED’s 14-day trial access 

    King Salman Bin Abdulaziz Al-Saud has made a series of senior government changes, including Khalid Al-Falih leaving his role as investment minister to become minister of state and a member of the cabinet.

    Al-Falih has been replaced by Fahad Al-Saif as investment minister. Al-Saif has been head of the Investment Strategy and Economic Insights Division at the Public Investment Fund (PIF) since 2024. That role involved formulating PIF’s long-term investment strategy. He has also served as head of the Global Capital Finance Division, a role he has held since joining PIF in 2021.

    The change of investment minister comes at a time when securing investments has become a key priority for Saudi Arabia as it prepares to hand over more projects to the private sector for delivery.

    King Salman also named Abdullah Al-Maghlouth as vice-minister of media and Abdulmohsen Al-Mazyad as vice-minister of tourism. Khalid Al-Yousef was named attorney general, and Sheikh Ali Al-Ahaideb will serve as president of the Board of Grievances.

    Faihan Al-Sahli was selected as director general of the General Directorate of Investigation, while Abdulaziz Al-Arifi was chosen to lead the National Development Fund. Haytham Al-Ohali will head the Communications, Space and Technology Commission, and Fawaz Al-Sahli will chair the Transport General Authority.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15645415/main.gif
    Colin Foreman
  • Indian firm wins major Oman substation contract

    12 February 2026

     

    India’s Larsen & Toubro has won a contract to build the Majan 400/220/132kV grid station in Oman.

    Estimated to cost $100m, the project includes an associated 400kV line-in line-out underground cable from Sohar Free Zone to the Sohar Interconnector Station.

    The contract was awarded by Oman Electricity Transmission Company (OETC), part of the government-owned Nama Group.

    The grid station will comprise eight 400kV gas-insulated switchgear (GIS) bays, eight 220kV GIS bays and 10 132kV GIS bays at the new Sohar Free Zone substation.

    The scope includes the installation of two 500MVA, 400/220kV transformers and two 500MVA, 220/132kV transformers.

    Local firm Monenco Consulting Engineers was appointed in April last year to provide design and supervision services for the project.

    As MEED exclusively revealed, the main contract was tendered in June, as part of three significant contracts to build new substations in the sultanate.

    The second contract, worth about $35m, covers the construction of the Sultan Haitham City 132/33kV grid station and associated 132kV line-in line-out underground cables running 4 kilometres from Mabella to Mabella Industrial Zone.

    The third contract, valued at about $100m, covers the construction of the Surab 400/33kV grid station and an associated 400kV line-in line-out cable from the Duqm grid station to the Mahout grid station. 

    Local firms Muscat Engineering Consulting and Hamed Engineering Services are consultants for the Sultan Haitham City and Surab projects, respectively.

    The two remaining contracts are currently under bid evaluation, with awards expected this quarter.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15638107/main.jpg
    Mark Dowdall
  • Developers appoint contractor for $500m wastewater treatment project

    12 February 2026

     

    Register for MEED’s 14-day trial access 

    Egypt’s Orascom Construction has won the engineering, procurement and construction (EPC) contract for a major wastewater treatment project in Saudi Arabia’s Eastern Province.

    A consortium of Saudi utilities provider Marafiq, the regional business of France’s Veolia and Bahrain/Saudi Arabia-based Lamar Holding is developing the $500m (SR1.875bn) industrial wastewater treatment plant (IWWTP) in Jubail Industrial City 2.

    Sources close to the project confirmed the appointment to MEED, adding that the project has now entered the construction phase.

    Industry sources also said that financial close on the project is expected to be reached in the coming days.

    In September, the developer consortium was awarded a contract, under a 30-year concession agreement, by Saudi Aramco Total Refining & Petrochemical Company (Satorp), a joint venture of Saudi Aramco and France’s TotalEnergies.

    The planned facility will treat and recycle wastewater from Satorp’s under-construction Amiral chemical derivatives complex, also in Jubail.

    Marafiq, formally Power & Water Utility Company for Jubail and Yanbu, will own a 40% stake in the dedicated project company. Veolia Middle East SAS will hold a 35% stake, and Lamar Holding’s Lamar Arabia for Energy will hold the other 25%.

    The planned IWWTP, which will primarily serve the $11bn sprawling Amiral chemicals zone, will implement advanced water treatment and recovery technologies to process complex industrial effluents, including spent caustic streams. Treated water will be reintegrated into the industrial processes, supporting closed-loop reuse and energy efficiency.

    The project follows a concession-style model, akin to a public-private partnership (PPP), where the developer consortium invests in, builds and operates the wastewater plant over a 30-year period, with returns linked to service delivery.

    Marafiq has been involved in several similar projects across Saudi Arabia, including as the sole owner of the Jubail industrial water treatment plant (IWTP8), which treats complex industrial effluents for petrochemical and heavy industrial companies.

    In 2020, Saudi Services for Electro Mechanic Works was awarded the $202m main contract for the fourth expansion phase of IWTP8. Construction works on the project are expected to be completed by the end of the quarter.

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

    Spending on oil and gas production surges; Doha’s efforts support extraordinary growth in 2026; Water sector regains momentum in 2025.

    Distributed to senior decision-makers in the region and around the world, the February 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15637523/main.jpg
    Mark Dowdall
  • Dewa raises Empower stake in $1.41bn deal

    12 February 2026

    Dubai Electricity & Water Authority (Dewa) has announced it has increased its stake in Emirates Central Cooling Systems Corporation (Empower) from 56% to 80%.

    The transaction was completed through the purchase of 2.4 billion shares and the transfer of the entire ownership of Emirates Power Investment (EPI), which is wholly owned by Dubai Holding.

    The total value of the deal is AED5.184bn ($1.41bn).

    Empower currently holds over 80% of Dubai’s district cooling market and operates 88 district cooling plants across the emirate.

    According to MEED Projects, the UAE’s district cooling sector currently has nine projects worth $1.29bn in the pre-execution phase.

    Empower has ownership in four of these projects, which have a combined value of $472m.

    This includes a $200 million district cooling plant at Dubai Science Park, with a total capacity of 47,000 refrigeration tonnes serving 80 buildings.

    Empower signed a contract to design the plant last August, with construction scheduled to begin by the end of the first quarter of 2026.

    The utility is also building a district cooling plant at Dubai Internet City.

    UAE-based TMF Euro Foundations was recently appointed as the enabling and piling subcontractor for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15635949/main.jpg
    Mark Dowdall