Saudi pays $10.7bn to pri­vate sec­tor

Kuwait Times - - BUSINESS -

DUBAI: Saudi Ara­bia’s gov­ern­ment has made pay­ments of 40 bil­lion riyals ($10.7 bil­lion) that it owed to pri­vate sec­tor com­pa­nies, the king­dom’s Arab News news­pa­per quoted a se­nior con­struc­tion in­dus­try ex­ec­u­tive as say­ing. With its oil rev­enues slashed by low crude prices, the gov­ern­ment of the world’s largest oil ex­porter has cut spend­ing sharply this year and re­duced or sus­pended pay­ments owed to con­struc­tion firms, med­i­cal es­tab­lish­ments and even some of the for­eign con­sul­tants who helped to de­sign its eco­nomic re­forms. The pay­ment de­lays have tight­ened liq­uid­ity in the bank­ing sys­tem and caused se­vere fi­nan­cial prob­lems for some com­pa­nies, par­tic­u­larly those in the con­struc­tion in­dus­try. In re­cent weeks, top of­fi­cials have in­di­cated that all or most of the de­layed pay­ments would soon be made.

Con­struc­tion firms have re­ceived 40 bil­lion riyals in the past two weeks, rep­re­sent­ing 25 per­cent of money owed to them by var­i­ous gov­ern­ment agen­cies, Fa­had Al-Ham­madi, chief of the Na­tional Con­trac­tors’ Com­mit­tee at the Coun­cil of Saudi Cham­bers, a busi­ness as­so­ci­a­tion, was quoted as say­ing by Arab News yes­ter­day. “The Saudi gov­ern­ment is ex­pected to pay up to 80 per­cent of the to­tal dues to con­trac­tors dur­ing the re­main­ing few weeks of this year by dis­burs­ing an­other 100 bil­lion riyals,” he told the news­pa­per. “More than 80 per­cent of the back-logged pay­ments will be re­leased within the next few days or weeks.” Pro­vid­ing fur­ther proof that de­layed gov­ern­ment pay­ments are start­ing to flow, Fawwaz Al-Kho­dari, chief ex­ec­u­tive of ma­jor lo­cal builder Ab­dul­lah Ab­dul Mohsin al-Kho­dari and Sons, told Al Ara­biya tele­vi­sion yes­ter­day that 10 to 15 per­cent of the 500 mil­lion riyals it was owed by the gov­ern­ment had been paid. He told Al Ara­biya he was op­ti­mistic the com­pany would re­ceive 40 to 45 per­cent of the to­tal out­stand­ing dues by the end of the year in the best case sce­nario.

The com­pany, which builds hous­ing and in­fras­truc­ture, last month re­ported a wider third-quar­ter net loss. The gov­ern­ment set aside 100 bil­lion riyals to pay debts that it owed to pri­vate sec­tor com­pa­nies af­ter the pay­ment de­lays, which lasted months, Reuters re­ported on Nov. 11, cit­ing an of­fi­cial doc­u­ment. Au­thor­i­ties have not dis­closed the to­tal size of the un­paid bills. Most con­struc­tion projects sus­pended as a re­sult of low oil prices will even­tu­ally be re­vived and im­ple­mented in order of pri­or­ity, Ham­madi also told the news­pa­per.

Arab News said some con­struc­tion firms from Ger­many, Turkey, Spain and In­dia, con­tacted by Arab News on Satur­day, had con­firmed they were be­ing paid their dues.

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