Power, oil & gas sectors account for 60% of SR84.9bn contracts

Power, oil & gas sectors account for 60% of SR84.9bn contracts
Updated 31 August 2014

Power, oil & gas sectors account for 60% of SR84.9bn contracts

Power, oil & gas sectors account for 60% of SR84.9bn contracts

Saudi Arabia recorded a significant upswing in the value of awarded contracts during the second quarter of 2014 as it reached SR84.9 billion. It marked a strong rebound from the previous quarter, a local bank says in its report.
The National Commercial Bank said in its Construction Contracts Index that the key sectors took hold of the majority of spending, as the power and oil & gas sectors accounted for approximately 60 percent of the value of awarded contracts. Those two sectors have also dominated the value of awarded contracts during the first half of 2014, accounting for 49 percent of contracts. The roads sector garnered a distant third, with 9 percent of the value of awarded contracts during the first half of 2014. Beyond the power and oil & gas sector during Q2,2014, the value of awarded contracts were nearly even across a majority of the remaining sectors.
The bank said total value of awarded contracts through H1, 2014 reached SR124.6 billion. The resurgence of awarded contracts during Q2, 2014 has put the pipeline of upcoming construction projects back on track. The Q2, 2014 value of awarded contracts surpassed Q2, 2013 by 60 percent when it reached SR53.6 billion. Furthermore, the value of awarded contracts during H1, 2014 surpassed that of H1, 2013 by 21 percent, which stood at SR102.7 billion.
The Construction Contracts Index (CCI) recovered from the first sub 200 points in 34 straight months that occurred in March, the NCB report said. The CCI gradually rose from 218.95 in April to 297.66 and 304.04 in May and June, respectively. Although the CCI dipped below 200 points during Q1, 2014, it ended 21 percent higher than the same period in Q2, 2013. The rally occurred as a result of a very strong performance in May, which witnessed approximately SR44.1 billion worth of awarded contracts. The CCI is expected to resume this positive trend throughout 2014.
The concentration of contracts within the oil and gas sector in the Jazan region allowed it to capture 33 percent of the overall share by region. Jazan was the recipient of numerous mega-project contracts as part of Saudi Aramco's development of the Jazan Refinery and Terminal project. The Eastern Province, which had a 15 percent share witnessed a sizeable petrochemical project that was awarded by SABIC. Riyadh had a significant residential real estate contract as part of the Cordoba project. The power sector accounted for numerous contracts throughout the Kingdom and in Makkah and Madinah in particular.
The SR19.6 billion in awarded contract during April was led by the power and oil & gas sectors. Numerous contracts were awarded by the Saudi Electricity Company (SEC) across the Kingdom as part of it strategic plan to increase power generation to further its reach into more households.
Alfanar was the largest recipient of contracts that were awarded to it by SEC as it won 7 contracts worth about SR3.2 billion of the total SR5.7 billion.
A single contract was awarded in the oil & gas sector in April in the amount of SR6.2 billion. Saudi Aramco awarded the contract to Dodsal for the development of the first phase of the Master Gas System Expansion (MGSE) in Madinah.
The residential real estate sector had three contracts worth SR1.5 billion that was awarded by the Ministry of Housing in April. The largest contract was awarded to Bin Jarallah Establishment for the development of infrastructure works in Khamis Mushait as part of the Saudi Housing Project. The SR1.3 billion contract is expected to be completed by the second quarter of 2017.
Within the education sector, approximately SR1.4 billion worth of contracts were awarded.
The NCB report said roads sector had approximately SR1.1 billion in awarded contracts.
For the second consecutive month in May, the oil & gas and power sectors led all other sectors in contract awards. The two sectors accounted for SR31.1 billion of the overall SR44.1 billion in value of awarded contracts. The oil & gas sector alone had six contracts worth approximately SR27.4 billion in May.
Approximately SR3.7 billion worth of contract were awarded in power sector.
The value of awarded contracts declined in June to reach SR21.3 billion. The power sector led all other sectors once again, as it accounted for SR7.2 billion worth of awarded contracts.
The government sector has approximately SR3.1 billion worth of awarded contract during June.