meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi demand-supply imbalance needs action

26 January 2024

Some $879bn-worth of giga projects are planned in Saudi Arabia, of which about $50bn has been awarded to date, according to regional projects tracker MEED Projects.

The data shows that 2023 was a record year for projects in Saudi Arabia. 

However, the extensive scope of work associated with these projects has exposed the challenges of scaling up the local construction supply chain fast enough to meet the surge in demand.

With projects launching in quick succession, suppliers, contractors and subcontractors are struggling to keep up with the influx of new work into the market.

Riad Bsaibes, president and CEO of Amana Investments, says this shortage of resources is a critical issue, stating, “There is currently a bottleneck in the entire supply chain, from human capital and materials to subcontractors and general contractors.”

Moreover, the construction sector faces significant execution risks.

While some projects are subject to delays, efforts to accelerate others are exerting pressure on timelines and budgets. 

Highlighting the disparity, Bsaibes notes, “This mismatch is leading to delays as schedules stretch out and costs rise above original tender amounts. This creates risks for contractors if they cannot deliver projects on schedule or within the costs estimated during the tendering process.”

Career investment

The launch of Saudi Arabia's Vision 2030 has spurred an era of growth and investment. The surge in construction projects aligns with the kingdom's goals, positively impacting employment opportunities. 

Yet recruiting top local and expatriate talent across large-scale projects is becoming a challenge in Saudi Arabia, according to Bsaibes.

He acknowledges that attracting and retaining skilled workers is getting more difficult with time, stating: “This is particularly challenging due to the scale of expansion, coupled with the pressure of Saudi Arabia’s nationalisation policies that encourage contractors to recruit qualified Saudi nationals.”

As well as focusing on hiring practices, companies must also commit to nurturing and enhancing skills over time.

Continuous upskilling is crucial in the construction industry, where new technologies, techniques and regulations frequently emerge, requiring employees to adapt and stay relevant.

Bsaibes advocates a strategic approach to talent management that involves upskilling the existing workforce before hiring new talent.

He recommends a hands-on approach to learning and improving skills.

“A core part of skills development at Amana includes on-the-job training for all employees,” he adds.

“Skills development must extend to developing competency in cutting-edge technologies such as building information modelling (BIM), modular construction and other digital tools. This long-term effort should be a key priority for firms.

“Continuous learning and development are very important throughout an employee’s career, starting from their initial entry into the construction workforce.”

Bsaibes further highlights the significance of internships in providing candidates with practical experience before taking on permanent positions. 

This approach aims to facilitate a smoother onboarding process for individuals entering the workforce, ensuring they are well-prepared for new roles.

“Companies should invest in the professional development of their employees,” he says. “This could include training programmes, workshops and educational initiatives aimed at enhancing the skills, knowledge and capabilities of the workforce.”

Credit challenge

Access to credit is another major issue in the construction sector. A strong financial profile enhances borrowing capacity and facilitates the smooth execution of projects by ensuring a steady flow of financial resources.

Addressing credit concerns is, therefore, essential for construction firms. 

Bsaibes recommends adhering to a strategic financial approach, opting to retain significant cash reserves instead of incurring debt.

“This approach not only facilitates self-financing for projects when necessary, but also serves as collateral for the letters of guarantee frequently demanded in construction contracts. 

“Moreover, it provides the company with the flexibility to navigate through any payment delays without succumbing to financial distress.

“Amana has a strong balance sheet and well-established banking relationships,” he adds. “Banks view Amana as low risk due to its solid cash reserves and strong track record of on-time payments across different regions/currencies.”

In contrast, Bsaibes points out that many other contractors struggle due to insufficient cash flow management and weaker balance sheets. 

“Maintaining high cash levels on its balance sheet is a fundamental goal for Amana.”

Strong working capital allows the contractor to be selective in bidding for projects, avoiding low-margin work while still securing sizable contracts.

“Additionally, we have a positive history with lenders, which allows Amana to support its operations and capitalise on growth opportunities.”

Incentivising growth

Clearly, there is a need for industry-wide improvements.

Bsaibes says the most impactful change would be longer-term transparency across developers’ project pipelines. 

“This approach contrasts with the unpredictable, stop-start demand cycles currently prevalent in the industry. 

“It involves providing the supply chain with visibility into funding-backed plans over a three to five-year period. Such transparency is crucial for better resource planning and timely project delivery,” he adds.

Bsaibes also emphasises the importance of incentivising suppliers, subcontractors and contractors to scale up their capacity. “This will help them grow in a coordinated manner through financial/regulatory support from the government.”

Another area of improvement is the digitisation of government processes, although Bsaibes notes that progress is already being made.

Bsaibes also calls for changes in Saudi Arabia’s regulatory environment.

The continued maturation of Saudi Arabia’s evolving regulatory framework will reduce the complexities faced by international firms. Yet, greater alignment with global construction norms will stimulate competition and investment in the kingdom’s expanding market.

According to Bsaibes, transitioning contract law closer to international standards, such as those outlined by the standards organisation International Federation of Consulting Engineers (FIDIC), would significantly mitigate risks for new market entrants. Presently, the reliance on sharia law introduces an element of unpredictability into obligations, he says.

To achieve this, he recommends adopting contract laws aligned with common law systems, such as the UK’s, to provide foreign suppliers and partners with a clearer understanding of their obligations.

Bsaibes concludes that while the continued evolution of Saudi Arabia’s regulatory environment will take time, gradual alignment with international construction norms will ultimately ease risks and costs for both local and global industry players.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11449096/main4309.jpeg
Sarah Rizvi

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

Click here to register
Exclusive from Meed
Related Articles
  • Chinese contractor wins Morocco solar plant deal

    10 August 2026

    China Harbour Engineering Company (CHEC), a subsidiary of China Communications Construction Company (CCCC), has won a contract to build a solar photovoltaic (PV) power plant in Fez in northern Morocco.

    Known as GreenPower Morocco 4 (GPM4), the project is being developed by Moroccan company GPM Holding through its utility-scale solar subsidiary GPM Parks.

    The project covers engineering design, equipment procurement and installation, construction of an operation and maintenance building, grid connection and commissioning. It also includes upgrades to the associated substation.

    According to CHEC, the completed plant will supply electricity to the local grid, although it did not disclose the project’s capacity or contract value. 

    The project is being developed under Law 13-09, which provides Morocco’s framework for private renewable energy generation.

    According to its website, GPM Holding is also developing another solar PV project called GreenPower Morocco 2 (GPM2). This follows the completion of its first solar project, the 34MW project (GPM1) commissioned in Tangier in 2024. 

    GPM1 was developed by Green Power Morocco, a special purpose vehicle owned by GPM Holding and UAE-based Amea Power. The $30m project covers 75 hectares and includes 91,000 PV panels. It is expected to generate about 66,149MWh a year.

    The project has a 25-year power purchase agreement in place with Amendis, a subsidiary of Veolia Morocco. PowerChina was the main engineering, procurement and construction (EPC) contractor.

    Chinese contractors have previously been involved in other projects in Morocco’s renewable energy sector.

    Shandong Electric Power Construction Company (Sepco 3), a subsidiary of PowerChina, was part of the EPC consortium for the 200MW Noor 2 concentrated solar plants and 150MW Noor 3 concentrated solar power projects at the Noor Ouarzazate complex.

    New contract awards have been limited in Morocco in 2026, although six solar PV plants are now in the execution stage under phases one and two of the 305MW Noor Atlas solar PV programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18263680/main.jpg
    Mark Dowdall
  • Aramco puts out fire at Jizan refinery after Houthi strike

    10 August 2026

    Saudi Aramco said it had extinguished a fire that broke out at its Jizan refinery on Saudi Arabia’s Red Sea coast after the facility was hit in drone strikes by Yemen-based Houthi rebels on 9 August.

    The kingdom’s Ministry of Energy said the fire occurred at an Aramco refinery facility in Jizan and that emergency authorities had completed the necessary procedures to deal with the incident.

    The energy ministry did not say what started the fire, saying only that the incident caused no injuries.

    The Houthi rebels later claimed responsibility for the attack.

    The province of Jizan lies close to Saudi Arabia’s border with Yemen and has repeatedly been targeted by the Houthis in attacks on the kingdom’s energy infrastructure.

    The strike on the Jizan refinery was the second attack on the facility by the Houthis in as many weeks. Aramco shut the refinery on 27 July following a similar drone strike, which, according to media reports, damaged the integrated gasification combined-cycle unit and tank farm at the complex.

    On a call with investors to discuss Aramco’s second-quarter results, CEO Amin Nasser said recent attacks on the company’s facilities in the world’s top oil-exporting country had caused some disruption to production, but that he was confident operations could be restored quickly. He said the attacks had had no material operational or financial impact.

    Jizan refinery complex

    Saudi Aramco’s sprawling Jizan refinery complex entered operations in 2021.

    Aramco undertook the estimated $16bn-plus project in late 2010. The scheme consists of a refinery with an output capacity of 400,000 barrels a day (b/d), a major marine terminal and a 4GW combined-cycle power plant in Baish, in Saudi Arabia’s southwestern Jizan region.

    The Jizan refinery covers an area of 12 square kilometres. The complex processes Arabian Heavy and Arabian Medium crude grades to produce 80 million b/d of gasoline, 250 million b/d of diesel and more than 1 million tonnes a year of petrochemical products such as benzene and paraxylene.

    A multiple-pier marine terminal supports the supply of crude oil from oil fields located mainly in the kingdom’s Eastern Province to the refinery, as well as the export of surplus refined products to overseas markets. The terminal has been designed to accommodate very large crude carriers.

    A 4,000MW combined-cycle power plant uses approximately 90,000 b/d of vacuum residue from the refinery to generate electricity, hydrogen and water for the refinery, while conveying excess power to the national grid.

    The hydrocracker unit comprises two parallel trains with a combined capacity of 54,500 b/d. The diesel hydrotreater plant comprises two trains, each with a capacity of 87,500 b/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262347/main.jpg
    Indrajit Sen
  • Shamal picks Dutco for Dubai Zoo site homes

    10 August 2026

    Dubai-based Shamal Holding has awarded local contractor Dutco Construction the main construction works contract for a low-rise residential project on the site of the former Dubai Zoo in Jumeirah 1.

    The project will comprise 90 low-rise homes and is designed as a residential leasing community that will remain under Shamal’s ownership, with all homes offered for premium leasing.

    The development will retain mature trees from the former zoo and is planned around shared courtyards, landscaped open spaces and a central park. Residents will have access to a clubhouse, wellness area, children’s play area, family pool, lounge and gym.

    The architect is DXB Lab. The local H&H is the development manager for the project.

    Dutco has previously worked with Shamal on infrastructure elements of the Dubai Harbour and Dubai Harbour Marinas developments.

    Shamal’s wider real estate portfolio includes the Naia Island, Dubai Harbour and Nad Al-Sheba Gardens developments. The company also holds hospitality and leisure assets, including partnerships with Jumeirah, Hilton and Baccarat, and operates attractions such as Skydive Dubai and Deep Dive Dubai.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262386/main.png
    Colin Foreman
  • WEBINAR: Mena Oil & Gas Projects Market 2026-27

    10 August 2026

    Webinar: Mena Oil & Gas Projects Market 2026-27 
    Thursday 27 August 2026 | 11:00 AM GST  |  Register now

    Agenda:

    • Summary of the Mena oil, gas and petrochemicals projects market 
    • Overview of major megaprojects, including project programmes
    • Analysis of active contracts and spending to date
    • Review of top contracts by work already awarded
    • Long-term capital expenditure outlays and forecasts
    • Key contracts expected to be tendered and awarded over the next 18 months
    • Leading clients, contractors and market participants
    • Spending by segment: oil, gas and petrochemicals (upstream, downstream, onshore and offshore) 
    • Audience Q&A 

    Hosted by: Indrajit Sen, MEED’s oil & gas editor

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18260597/main.gif
    Indrajit Sen
  • Spanish firm renews Yanbu desalination O&M contract

    10 August 2026

    Spain’s Aqualia has announced it has renewed a contract to operate and maintain three floating desalination plants in Yanbu on Saudi Arabia’s Red Sea coast.

    The contract was awarded by the National Shipping Company of Saudi Arabia (Bahri) and will run until 14 September 2028, with an option to extend for a further two years.

    The three reverse osmosis (RO) plants are mounted on barges and have a combined production capacity of 150,000 cubic metres a day (cm/d). Each plant has a capacity of 50,000 cm/d.

    The three plants were originally deployed at Al-Shuqaiq and are designed to be relocated along Saudi Arabia’s coastline according to water demand. The barges are currently located at Yanbu.

    The $255m floating desalination project was commissioned for the Saudi Water Authority in 2022, with Bahri as the developer and UAE-based Metitio as the main contractor.

    Bahri is publicly listed on the Saudi Exchange but has significant government ownership, with the Public Investment Fund (PIF) holding 22.5% and Saudi Aramco Development Company owning 20% of the company.

    Aqualia is providing operation and maintenance services in Saudi Arabia through its joint venture Haji Abdullah Alireza Integrated Services Company (Haaisco), in which it holds a 51% stake.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18259350/main.jpg
    Mark Dowdall