meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh reins in spending

24 May 2024

 

Register for MEED's guest programme 

On the surface, it feels like business as usual in Saudi Arabia as new projects continue to be launched.

On 8 May, designs for another futuristic project at Neom’s Gulf of Aqaba were released with slick computer-generated imagery. Known as Jaumur (pictured), it includes the development of a mixed-use community featuring 1,200 residential units and two hotels offering 350 rooms. The most eye-catching part of the project is at the marina, which will have a 1.5-kilometre aerofoil that will rise above the yacht berths.

Beneath the surface, a consensus is emerging that the kingdom’s projects market is in the midst of a recalibration as spending is reined in.

The challenge for Riyadh over the next few years will be balancing the delivery of its ambitions with the reality of its financial capabilities.

The first public sign that things were changing came in December 2023, when Finance Minister Mohammed Al Jadaan told reporters at the launch of the 2024 budget that the delivery of some of the projects included in the Saudi Vision 2030 plan may be delayed to avoid pressure on the economy.

Tightening the purse strings

The ministry-level decision is trickling down as individual development companies are not getting their full budgets approved. “Our firm is working on almost all of the major projects in Saudi Arabia in some capacity,” says an international consultant. “The feedback we are getting is that budget spending for 2024 has been reduced by about 30% on average.”

Many of these delivery companies are subsidiaries of sovereign wealth vehicle the Public Investment Fund (PIF), which has taken a leading role in transforming the kingdom’s economy over the past eight years with development schemes including its five official gigaprojects, Neom, Roshn, Red Sea Global (RSG), Qiddiya and Diriyah.

The reports of budget cuts have coincided with a drop in contract awards. According to MEED’s Gigaprojects Tracker, there has been a sharp decline in the value of contracts awarded by the five official gigaprojects this year. 

In April, they awarded $166m of work, down from $271m in March and $509m in February. The total in January was $5.56bn, largely due to the $4.7bn contract awarded to the local Webuild for the construction of dams at the Trojena mountain resort in Neom.

The reports of budget cuts have coincided with a drop in contract awards

Funding options

The budget cuts are just part of the message, says the consultant. The delivery companies are being told to find external investment to deliver their projects, and there are already signs of this happening. The clearest came in late April, when Neom announced a $2.7bn revolving credit facility from nine local banks to cater to the project’s short-term financing requirements.

In a statement, Neom CEO Nadhmi Nasser highlighted the project’s drive to find new sources of funding. “As Neom continues to gather pace, this new credit facility, backed by Saudi Arabia’s leading financial institutions, is a natural fit within our wider strategy for funding. We continue to explore a variety of funding sources as we deliver transformational infrastructure assets while supporting the wider Vision 2030 programme,” he said. 

In a research note following the deal, London-based Capital Economics said: “While this does take some of the onus away from the government and Public Investment Fund, it is increasingly using resources that could be used more productively in the private non-oil sector.”

Capital Economics also noted that the facility adds to the growing share of commercial banks’ lending to the public sector. Since 2015, this share has increased from 7% to 22% in March 2024.

Another solution for development companies is deploying public-private partnerships (PPPs) to deliver infrastructure and utilities. This is attractive because PPPs reduce the initial capital expenditure required for a project. 

RSG has already pursued this route for The Red Sea Project and Amaala; other development companies are exploring the PPP avenue for their projects.

Real estate investment is another option. There is an expectation that Riyadh will introduce a foreign ownership law that could turbocharge the market as a similar law did for Dubai in the early 2000s. 

There are already examples of real estate investment deals being done, including the National Housing Company with Spain’s Urbas Group for housing in Riyadh, RSG with Kingdom Holding Company for hotels, and King Salman with a real estate development fund.

PPP offers budget and efficiency routes

Prioritising projects

As projects in the kingdom are developed differently, the challenge for the construction industry will be identifying which of the many schemes that aim to transform the Saudi economy are a top priority.

Much will depend on the success of the investment drive. The most likely projects to go ahead are those linked to global events with immovable deadlines. Experience across the region over the past decade has shown that even if construction elsewhere slowed down, construction for Expo 2020 in Dubai and the 2022 Fifa World Cup in Qatar continued regardless. 

“For Saudi Arabia, there are three major events: the Asian Winter Games in 2029, Expo 2030 and World Cup 2034. They will be the obvious priorities,” says the international consultant.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11816519/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • Kuwait selects firms for power works at housing projects

    20 October 2026

     

    Kuwait’s Public Authority for Housing Welfare (PAHW) has appointed contractors for works covering the supply and installation of 132kV underground cables at South Sabah Al-Ahmad Residential City.

    The contracts relate to engineering, procurement and construction (EPC) packages for works for 28 main 132/11kV substations across four phases.

    According to sources, Egypt’s Elsewedy Cables has won contracts for phases 1 and 3, while China’s TBEA Shandong Luneng Taishan Cable Company has won contracts for phases 2 and 4 of the development.

    In April, MEED reported that PAHW had received at least five bids for each of the first two packages, with Elsewedy and TBEA offering $44m and $40.5m, respectively.

    The first contract (phase 1) covers seven substations in zones N9, N7 and N5. The second contract (phase 2) covers seven substations in zones N10 and N5.

    PAHW issued two further 132kV underground cable tenders for the South Sabah Al-Ahmad residential development at the end of May, as reported by MEED.

    This included a contract (phase 3) covering the supply, extension and maintenance of 132kV underground cables linked to seven substations serving the N5, N6, N8 and N10 districts. Egytech Cables, a subsidiary of Elsewedy, submitted an offer of $39.95m, the lowest of four bids.

    The other contract (phase 4) covers the supply, extension and maintenance of 132kV underground cables feeding eight main transformer substations serving the N1, N6 and N11 districts. 

    MEED reported in July that TBEA had submitted an offer of $44.06m for the contract.

    South Saad Al-Abdullah 

    Separately, PAHW has appointed contractors for power transmission works at the South Saad Al-Abdullah residential development.

    The local firm Sayed Hamid Behbehani & Sons has won a contract to supply, install and maintain 10 main 132/11kV transformer substations for the development’s third phase. 

    Another local firm, Al-Ahleia Switchgear, has won a contract to supply, install and maintain 10 main 132/11kV transformer substations for the project’s fourth phase. 

    As reported in August, the contractors submitted bids of $104.2m and $103.3m, respectively.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20761431/main.jpg
    Mark Dowdall
  • Taqa moves forward with Mirfa-Liwa scheme

    20 October 2026

     

    Taqa Transmission and Taqa Distribution are advancing a major water transmission and distribution scheme serving Mirfa, Madinat Zayed and Liwa in Abu Dhabi, sources told MEED.

    The project, originally estimated to cost $775m, has been in procurement for several years. According to sources, a request for proposals has been issued, with bids due on 5 January 2027.

    The initial submission deadline was 11 November, before it was extended.

    The project was previously tendered in December 2024, with contractors submitting bids for transmission and distribution packages in January 2025.  As of August, the bids were still under evaluation. It is unclear whether the latest tender represents a revised procurement process for the same scheme.

    The project comprises a water transmission system from Mirfa, alongside distribution networks serving farms and settlements in the western region.

    According to details seen by MEED, the latest scope includes a pumping station at Mirfa with a capacity of 128 million imperial gallons a day, about 125 kilometres of transmission pipelines to Muzairah, with branches to Madinat Zayed and Liwa Summit, and storage tanks at the three locations.

    The distribution network is divided into four geographic clusters covering Liwa East, Liwa West, Madinat Zayed and Seih Al-Kheir. The works include associated pipelines, pumping stations and storage facilities.

    The earlier procurement was structured as an engineering, procurement and construction scheme, divided between transmission and distribution works.

    As MEED understands, the latest tender is being pursued under a design, build and operate model, which extends the contractor’s responsibilities to operating the infrastructure after construction.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20758109/main2934.jpg
    Mark Dowdall
  • Contractors prepare prices for Adnoc Onshore field facilities project

    20 October 2026

     

    Contractors are preparing commercial bids for Adnoc Onshore’s project to build on-plot and off-plot facilities at the Rumaitha and Shanayel fields in Abu Dhabi’s North East Bab oil field cluster.

    The project will enhance and sustain crude output at Rumaitha and Shanayel at 45,000 barrels a day (b/d), supporting Adnoc’s Accelerated Integrated Programme 5 (AiP5) drive to lift capacity to 5 million b/d by 2027.

    Adnoc Onshore issued the main tender for engineering, procurement and construction (EPC) works on 19 June. Contractors submitted technical bids by 5 August, sources told MEED.

    The on-plot works include adding a crude processing train, produced water treatment and reinjection systems, surface water pumps, and multi-stage gas compression and dehydration units. Works also include utilities, safety and control systems, modifications to existing Phase 1 units and 220kV power infrastructure.

    The off-plot scope includes installing and tying in new gas-lifted producer and water-injection wells, as well as building and expanding wellhead clusters. Contractors will also lay crude-gathering, water-injection and gas-export pipelines connecting to the Adnoc Gas network and extend 33kV overhead power lines across the fields.

    The tender follows Adnoc Onshore’s shift in strategy for the wider North East Bab development – comprising the Al-Nouf, Rumaitha and Shanayel fields – after scrapping an earlier engineering, procurement and construction management (EPCm) approach. MEED reported in December that the operator had cancelled an off-plot EPCm contract awarded to China Petroleum Engineering & Construction Corporation (CPECC) in October 2024. Adnoc later cancelled a separate on-plot EPCm tender that it received bids for in the second quarter of 2025.

    In addition to the North East cluster, Adnoc Onshore continues to make progress on EPC works for another similar project to build off-plot facilities at the South East cluster of oil fields in Abu Dhabi, which is also integral to Adnoc Group’s AiP5 campaign.

    The South East cluster comprises the Asab, Mender, Qusahwira, Sahil and Shah fields and accounts for approximately a third of Adnoc Onshore’s oil production capacity.

    MEED previously reported that Adnoc Onshore awarded CPECC the EPC works for the South East off-plot facilities project, with the contract value estimated at around $1.2bn.

    CPECC is also performing EPC works on the South East on-plot facilities project in a consortium with Greece-headquartered Archirodon. Adnoc Onshore awarded an estimated $1.5bn contract for that project to the consortium in December 2024, with EPC works scheduled for completion in 2027.

    ALSO READ: Adnoc Onshore seeks bids for Bu Hasa field EOR project

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20757699/main.jpeg
    Indrajit Sen
  • Lowest bidder emerges for Kuwait Airport Terminal 2 operations

    19 October 2026

     

    Ireland’s DAA International has emerged as the lowest bidder for the contract to operate, manage and maintain the new passenger Terminal 2 (T2) at Kuwait International airport, submitting an offer of KD419m ($1.35bn).

    Official price-opening records released by Kuwait’s Central Agency for Public Tenders on behalf of the Directorate General of Civil Aviation show three international airport operators submitted commercial bids for the tender.

    DAA International’s proposal undercut its nearest rival by about 45%. Turkiye’s TAV Airports Holding submitted the second-lowest offer at KD764.15m ($2.46bn), while South Korea’s Incheon International Airport Corporation bid KD959.48m ($3.1bn).

    All three proposals were marked as approved in the tender committee’s price disclosure.

    The contract entails the operation, management and improvement of training, maintenance and development services across Terminal 2 and its associated aircraft parking aprons.

    The remit also includes corporate management of centralised operation and maintenance across the broader Kuwait International airport model, centralising operational procedures, systems integration and service delivery across the aviation hub.

    Technical documents indicate the winning operator will oversee facility management, terminal operational readiness, passenger processing systems, apron operations and staff development programmes before and after the complex’s commercial launch.

    MEED reported in June 2023 that six airport operators had initially been invited to bid for the Terminal 2 operating concession.

    Terminal 2 is the centrepiece of Kuwait International airport’s multibillion-dollar expansion, aimed at boosting total handling capacity to 25 million passengers a year.

    Turkish contractor Limak Insaat is executing the main terminal building under an estimated $4.34bn contract awarded in 2016.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20747061/main.png
    Yasir Iqbal
  • Dubai tenders Al-Maktoum-Dubai South drainage scheme

    19 October 2026

    Dubai Municipality has invited contractors to submit bids by 5 November for the construction of a stormwater drainage system connecting Al-Maktoum Airport and Dubai South

    The project, designated TF-06-C2, involves approximately 20 kilometres of pipelines with diameters ranging from 400mm to 3,000mm. The works will use deep trenchless construction and conventional open-cut methods. 

    The scheme is one of four projects, for which a project management consultancy (PMC) tender was issued earlier this month.

    The tender for TF-06-S1 Supervision of Stormwater Drainage System Projects – Package 4 was issued on 6 October.

    The consultancy covers the following projects:

    • TF-06-C1: Construction of a stormwater pond connecting Al-Maktoum Airport and Dubai South
    • TF-06-C2: Construction of a stormwater drainage system connecting Al-Maktoum Airport and Dubai South
    • TF-07-C1: Construction of a stormwater drainage system on Sheikh Zayed Bin Hamdan Road connecting developers
    • TF-24-C1: Connecting developers’ areas to the stormwater networks in Dubailand 

    The projects are part of Dubai Municipality’s wider Tasreef programme, intended to increase Dubai’s rainwater drainage capacity by 700% by 2033 and provide capacity for the emirate’s needs for the next 100 years.

    Investment in the UAE water sector has been dominated by stormwater drainage and network resilience schemes this year, as Dubai Municipality advances procurement under its AED30bn ($8.1bn) Tasreef programme.

    TF-07-C1

    As previously reported, contractors are preparing to submit bids on 22 October for the main construction contract for TF-07-C1.

    The project covers more than 100 million square metres between Sheikh Mohammed Bin Zayed Road and Emirates Road, and from Expo Road to Dubailand.

    It will provide stormwater infrastructure and service connections for more than 20 private developers and Al-Yalayis 5, as well as supporting major roads in the Jebel Ali area. The construction scope includes a major gravity drainage system with pipeline diameters of up to 3,000mm.

    TF-24-C1

    Bids for TF-24-C1 were submitted on 1 October, with Nael Construction & Contracting, Al-Nasr Contracting Company and Al-Kharafi & Sons understood to be among the bidders. 

    The project will connect developers’ areas in Dubailand to the stormwater network. It includes 18km of stormwater drainage pipelines with diameters of up to 1,800mm and 3.5km of gravity sewer pipelines with diameters of up to 1,000mm.

    As MEED understands, the main contract tender for TF-06-C1 has yet to be released.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20746611/main.jpg
    Mark Dowdall