DUBAI: Saudi Arabia has the biggest slice of unawarded projects worth $250 billion across the entire Gulf Cooperation Council (GCC), according to a report released by MEED.
The projects that are yet to have their main construction contracts awarded, account for 39 percent of the GCC market. And the Kingdom hopes the projects will help provide a much-needed jumpstart to the economy.
The Kingdom’s energy sector accounts for 33 percent of the total, worth $82 billion, while the construction sector claims the second-biggest segment at 29 percent, with the transport sector third at 27 percent, according to information from the database MEED Projects.
After a year of uncertainty in 2016 as Riyadh formulated its response to lower oil prices, the 225-page Saudi Arabia 2017: Delivering Vision 2030 report said that 2017 will be the year the Kingdom starts to deliver on its promises.
With the blueprint drawn up for economic transformation in its Vision 2030 document, Riyadh is now setting about implementing the reforms to reposition the country, so it can contend in the low oil price era.
According to the report, one of the first major steps has been the establishment of the National Center for Privatization to plan and oversee the procurement of public-private partnerships (PPPs) and other private sector initiatives.
Four PPPs have already been awarded this year to develop airport projects at Yanbu, Taif, Qassim and Hail. Saudi Arabia wants to privatize the operations of all airports by 2020. Advisers have also been enlisted to develop plans to engage private investors in other sectors such as health care.
The Ministry of Health is currently seeking advisers to help it draft a framework to build about 3,000 mega and primary medical centers with the participation of the private sector.
Richard Thompson, MEED editorial director, said the report confirmed that despite the challenges over the past two years, caused by falling oil prices “Saudi Arabia continues to be the biggest and most important market in the region.”
He added: “Anybody serious about growing their business in the region needs to understand the fundamental changes taking place in the Kingdom… In particular, it is vital to understand how Riyadh will implement its plans to increase private sector participation in the implementation of its strategic plans.”
In early February, the Ministry of Energy, Industry and Mineral Resources announced it was establishing the Renewable Energy Project Development Office (Repdo) to head the National Renewable Energy Program (NREP). The same month, Repdo issued prequalification documents for the first 700 megawatts (MW) of solar schemes.
Saudi projects worth $250bn in the pipeline: Report
Saudi projects worth $250bn in the pipeline: Report
Iran sanctions shadow falls on smaller German banks
- Some German companies plan to press on with Iran dealings
- German exports to Iran rose 15.5 percent last year
Germany’s biggest lenders have shied away from business with Iran after past penalties for breaching US sanctions, but smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Donald Trump.
There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on the Islamic Republic in exchange for Tehran giving up its pursuit of nuclear weapons.
But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.
“We will continue to serve our clients,” for now, said Patrizia Melfi, a director at the “international competence center” (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.
The center, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand “rising sharply in the last few years, from firms listed on the Dax (Germany’s index of blue-chip firms), from all over Germany and from Switzerland,” she added.
German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost €2.6 billion ($3.0 billion) after 22-percent growth in 2016.
Such figures remain vanishingly small compared with Germany’s €111.5 billion in exports to the US — its top customer.
Nevertheless, the KCI will “wait and see what the sanctions look like” before turning away from Iran, Melfi said.
Already, firms dealing with Tehran must take great care not to fall foul of US restrictions.
Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.
What’s more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US.
One of the most important inputs for the business is “courage among our managers” given the high risks involved, Melfi said.
Germany’s two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.
DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
That left KCI to seek out the German branch of Iranian state-owned bank Melli in Hamburg.
Even that linkage could break if Iran’s biggest business bank appears on a US list of barred businesses as it has before.
Meanwhile, among Germany’s roughly 390 Sparkasse savings banks, business with the regime is mostly limited to producing documents linked to export contracts.
“We will be looking even more closely at those” in the future, a person familiar with the trade told AFP.
Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.
Also based in Hamburg, it for now remains “fully available to you with our products and services,” the bank assures clients on its website, although “business policy decisions by European banks may result in short term or medium term restrictions on payments.”
Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.
“Only the European Union’s sanctions regime will be decisive,” if and when it is changed, the institution told AFP.
Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.
German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance — and to make sure banks and their clients are “effectively protected against possible American sanctions.”
KCI’s Melfi said time is running out for EU governments to act.
“Many firms just want to stop anything with Iran, since they can’t calculate the risk of staying,” she noted.
On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna — at Iran’s request — without the US, to discuss how to save the agreement.