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.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
Abu Dhabi seeks firms for Mid Island Parkway PPP15 May 2026
-
Oman seeks adviser for gas-fired IPPs15 May 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
-
Abu Dhabi seeks firms for Mid Island Parkway PPP
15 May 2026
Modon Infrastructure, formerly known as Gridora, has invited firms to submit their registrations for the next phase of Abu Dhabi’s Mid Island Parkway Project (MIPP), which will be developed on a public-private partnership (PPP) basis.
The request for qualifications (RFQ) is expected to be issued to interested parties soon.
Modon Infrastructure will act as the lead developer with the majority of the equity in the project company. It will award the engineering, procurement, and construction contractor, the operations and maintenance providers, and the advisers.
The second phase of the MIPP involves the construction of about 11 kilometres (km) of highways, including a mix of three-, four- and five-lane highways. The highways will connect the Um-Yifeenah, Al-Jubail, Al-Sammaliyyah and Sas Al-Nakhl islands to Khalifa City and the E10 road.
The scope also covers the construction of three interchanges: the E20, E10 and Dumbbell interchanges on Al-Sammaliyyah Island.
The project includes several major structures, such as the E20 interchange featuring cast-in-place box girder and void slab bridges, and the E10 interchange with cast-in-place box girder bridges. It also includes I-girder bridges between Raha Beach West and Sas Al-Nakhl Island, as well as a causeway at Sas Al-Nakhl Island.
Further key elements include a cast-in-place balanced cantilever bridge between Sas Al-Nakhl Island and Al-Sammaliyyah Island, a tunnel between Al-Sammaliyyah Island and Bilrimaid Island, and a cut-and-cover (open) tunnel on Bilrimaid Island. The project is completed with another tunnel connecting Bilrimaid Island to Um-Yifeenah Island.
Abu Dhabi awarded three packages for phase one of the MIPP in 2024. The contract for package 1A was awarded to a joint venture of Turkish contractor Dogus Construction and UAE firm Gulf Contractors. Package 1B was awarded to a joint venture of Yas Projects (Alpha Dhabi Holding) and China Railway International Group. Beijing-headquartered China Harbour Engineering Company and the UAE’s Agility Engineering & Contracting Company won the contract for package 1C.
Phase one starts at the existing Saadiyat interchange, connecting the E12 to the MIPP, and ends at the recently constructed Um-Yifeenah highway.
It comprises a dual main road with a total length of 8km, including four traffic lanes in each direction, two interchanges, a tunnel and associated infrastructure works.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16858325/main.jpg -
Oman seeks adviser for gas-fired IPPs
15 May 2026
Oman’s Nama Power & Water Procurement Company (PWP) has issued a request for proposals for technical consultancy services for the development of new gas-fired independent power projects (IPPs) in the sultanate.
The state offtaker said the projects will have a total capacity of up to 2,800MW.
The bid submission deadline is 17 June.
While Oman is accelerating investment in renewable energy and battery storage, gas-fired thermal generation is expected to remain a core part of the country’s power mix over the coming decade.
The Misfah and Duqm combined-cycle gas turbine power plants are advancing towards construction following the appointment of China-headquartered Shandong Electric Power Construction No. 3 Company (Sepco 3) and South Korea’s Doosan Enerbility as contractors.
According to Nama PWP’s 2025 annual report, the Duqm IPP will have a total capacity of 877MW, including 555MW of early power capacity, which is scheduled to commence in Q2 2028.
The Misfah IPP will have a total capacity of 1,700MW, including 1,203MW of early power capacity, which is scheduled to commence in the same quarter.
Nama PWP has also recently awarded new power-purchase agreements (PPAs) to three IPPs to extend the operating life of existing gas-fired power plants beyond the expiry of their current contracts.
The new agreements for the 750MW Sohar 2 IPP and 750MW Barka 3 IPP will take effect on 1 April 2028 and run until 31 March 2043. The agreement for the 200MW Sur IPP will commence on 1 April 2029 and run until 31 March 2044.
The awards form part of Nama PWP’s 2028-29 procurement programme. The programme aims to secure firm generation capacity from existing assets whose current PPAs are due to expire during that period.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16857037/main4750.jpg -
Alghanim submits lowest offer for Kuwait oil refinery project
15 May 2026
Kuwait’s Alghanim International General Trading & Contracting has submitted the lowest bid for a contract to upgrade the country’s Mina Al-Ahmadi (MAA) refinery.
The client is state-owned downstream operator Kuwait National Petroleum Company (KNPC). The project scope covers upgrades to water transmission and storage infrastructure at the refinery.
The contract will be delivered under an engineering, procurement and construction (EPC) model. The tender was issued in October 2025 with an initial bid deadline of 4 January 2026, which was later extended several times. The most recent rescheduling moved the deadline from 19 April to 10 May.
Alghanim submitted a bid of KD37.0m ($120m), significantly lower than the other two bidders, both Kuwait-based: Heavy Engineering Industries & Shipbuilding Company (Heisco) at KD60.6m ($197m) and Gulf Spic General Trading & Contracting at KD63.9m ($207m).
The project is expected to take two years to complete and will expand water storage capacity at the facility by extending existing tanks or constructing new ones. The contractor will also develop associated infrastructure and upgrade systems that transport desalinated water to the refinery, including pipelines and related equipment.
In its 2024-25 annual report, KNPC said the project will help meet water demand for the facility’s refining and gas production units.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16852744/main.jpg -
Civil and piping work starts on Iraq field development
15 May 2026
Civil works and piping work have started for the project to develop a second central processing facility (CPF) at Iraq’s Ratawi oil and gas field, according to industry sources.
The project is part of the $27bn Gas Growth Integrated Project (GGIP), which is being developed by TotalEnergies along with its partners Basra Oil Company (BOC) and Qatar Energy.
Phase one of the GGIP is expected to be worth about $10bn.
Work is progressing on the project despite logistical problems related to the regional conflict that broke out after the US and Israel attacked Iran on 28 February.
While early works are ongoing, equipment needed for later stages of the project is being delayed as it was due to be transported to the project site using ships that would have travelled through the Strait of Hormuz.
Shipping through the Strait is still severely disrupted due to the regional conflict.
In September, Turkiye’s Enka signed a contract to develop the second CPF at Iraq’s Ratawi field as part of the second phase of the field’s development.
Enka did not give a value for the contract, but it is believed to be worth more than $1bn.
In November, US-based KBR was selected by Enka to provide detailed design services for the project.
Enka’s contract covers the engineering, procurement, supply, construction and commissioning of the CPF for the project known as the Associated Gas Upstream Project Phase 2 (AGUP2).
The aim of the AGUP2 project is to process oil and associated gas from the Ratawi oil field to increase production capacity to 210,000 barrels a day of oil and 154 million standard cubic feet a day of gas.
GGIP masterplan
The GGIP programme is being led by TotalEnergies, the operator, which holds a 45% stake.
Basra Oil Company and QatarEnergy hold 30% and 25% stakes, respectively. The consortium formalised the investment agreement with the Iraqi government in September 2021.
The four projects that comprise the GGIP are:
- The Common Seawater Supply Project (CSSP)
- The Ratawi gas processing complex
- A 1GW solar power project for Iraq’s electricity ministry
- A field development project at Ratawi, known as the Associated Gas Upstream Project (AGUP)
The CSSP is designed to support oil production in Iraq’s southern oil and gas fields – mainly Zubair, Rumaila, Majnoon, West Qurna and Ratawi – by delivering treated seawater for injection, a method used to boost crude recovery rates and improve long-term reservoir performance.
China Petroleum Engineering & Construction Corporation (CPECC) won a $1.61bn contract in May to execute EPC work for the gas processing complex at the Ratawi field development.
CPECC’s project team based in its Dubai office is performing detailed engineering work on the project.
In August last year, TotalEnergies awarded China Energy Engineering International Group the engineering, procurement and construction (EPC) contract for the 1GW solar project at the Ratawi field. A month later, QatarEnergy signed an agreement with TotalEnergies to acquire a 50% interest in the project.
The 1GW Ratawi solar scheme will be developed in phases, with each phase coming online between 2025 and 2027. It will have the capacity to provide electricity to about 350,000 homes in Iraq’s Basra region.
The project, consisting of 2 million bifacial solar panels mounted on single-axis trackers, will include the design, procurement, construction and commissioning of the photovoltaic power station site and 132kV booster station.
Separately, in June, TotalEnergies awarded China Petroleum Pipeline Engineering an EPC contract worth $294m to build a pipeline as part of a package known as the Ratawi Gas Midstream Pipeline.
Also, TotalEnergies awarded UK-based consultant Wood Group a pair of engineering framework agreements in April, worth a combined $11m, under the GGIP scheme.
The agreements have a three-year term under which Wood will support TotalEnergies in advancing the AGUP.
One of the aims of the AGUP is to debottleneck and upgrade existing facilities to increase production capacity to 120,000 b/d of oil on completion of the first phase, according to a statement by Wood.
READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDFGlobal energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.
Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
> REGIONAL LNG: War undermines business case for Middle East LNG> CAPITAL MARKETS: Damage avoidance frames debt issuance> MARKET FOCUS: Conflict tests UAE diversificationTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/16852654/main.png -
Abu Dhabi selects Yas Island site for $1.7bn Sphere venue
14 May 2026
Abu Dhabi’s Department of Culture & Tourism (DCT Abu Dhabi) and US-based Sphere Entertainment have selected Yas Island as the location for the $1.7bn Sphere Abu Dhabi project.
The venue will be built on a plot between Yas Mall and SeaWorld Abu Dhabi, close to Yas Island’s theme parks and attractions. Construction is expected to be completed by the end of 2029. Dubai-listed Alec is understood to be the selected contractor and has been working on the project’s pre-construction phase.
The project will be the first Sphere venue outside the US. It is expected to echo the scale of Sphere Las Vegas, with a capacity of up to 20,000 depending on configuration.
DCT Abu Dhabi said it will coordinate enabling and infrastructure works with Abu Dhabi entities, including the Department of Municipalities & Transport and its Integrated Transport Centre, the Department of Energy, Taqa, Etihad Rail and Aldar. The scope includes road enhancements, site access and site-wide infrastructure integrated with surrounding Yas Island assets.
Sphere Abu Dhabi is the latest addition to Abu Dhabi’s integrated tourism and destination-development pipeline on Yas Island, alongside major attractions and the Disney theme park resort that was announced in 2025.
DCT and Sphere Entertainment finalised an agreement last year related to the construction, development and operation of the Sphere entertainment venue in Abu Dhabi. According to the agreement, Sphere Entertainment granted DCT the exclusive rights to build and operate the Sphere Abu Dhabi entertainment venue.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16837302/main.gif