ED­I­TOR’S PICK

The de­ci­sion to ini­ti­ate a wide-rang­ing school con­struc­tion pro­gramme high­lights the grow­ing Saudi em­pha­sis on de­liv­er­ing the so­cial in­fra­struc­ture as­sets, ac­cord­ing to re­cent re­port by BMI Re­search

Construction BusinessNews Middle East - - Contents -

In line with a stated com­mit­ment to grow­ing the King­dom's knowl­edge­based in­dus­tries, the Saudi gov­ern­ment has an­nounced plans to build and op­er­ate a to­tal of 1,600 schools across the coun­try in part­ner­ship with pri­vate sec­tor lrms. The phase of the ini­tia­tive in­volves build­ing 60 schools in Mecca and Jed­dah. The lrst phase will de­liver a mix of kinder­garten and pri­mary, in­ter­me­di­ate, and sec­ondary schools for boys and girls.

Saudi King Sal­man bin Ab­du­laziz Al Saud, the Coun­cil of Eco­nomic Af­fairs and Devel­op­ment and the Min­istry of Fi­nance, have ap­proved the project. Ac­cord­ing to the re­cent re­port by BMI Re­search, in this vein, there is a scope for the on­go­ing pri­ori­ti­sa­tion of so­cial in­fra­struc­ture to drive an in­crease in the share of so­cial in­fra­struc­ture projects in the coun­try's over­all project pipe­line in the years to come, which, ac­cord­ing to its Key Projects Data­base, ac­count for a mere 7.5% of the to­tal.

Fur­ther­more, in a coun­try where over 80% of ed­u­ca­tion in­fra­struc­ture is funded by the state, the de­ci­sion to ten­der the ini­tia­tive on a Pub­lic Pri­vate Part­ner­ship (PPP) ba­sis un­der­scores Saudi gov­ern­ment's de­sire to at­tract pri­vate cap­i­tal and ex­per­tise into the sec­tor - par­tic­u­larly to lessen the lnan­cial bur­den on the state.

Hav­ing said that, the re­port main­tains the view that the PPP ini­tia­tive will fall short of gov­ern­ment ex­pec­ta­tions in meet­ing its am­bi­tious tar­gets in the ed­u­ca­tion sphere, as its ef­fec­tive­ness con­strained by the King­dom's lack of an over­ar­ch­ing and con­sis­tent le­gal frame­work gov­ern­ing the var­i­ous stages of im­ple­ment­ing PPP projects.

More­over, the gov­ern­ment has yet to es­tab­lish a des­ig­nated PPP agency as with other mar­kets men­tioned above, which fur­ther clouds the con­tract ap­proval process and drives ad­di­tional reg­u­la­tory un­cer­tainty in the mar­ket­place. The Saudi ed­u­ca­tion push will oc­cur in the wider con­text of the King­dom's eco­nomic di­ver­sil­ca­tion agenda as em­bod­ied by the coun­try's '6ision 20 0' agenda, which aims to di­ver­sify Saudi Ara­bia's eco­nomic base away from oil and into knowl­edge-based in­dus­tries like tech­nol­ogy and tourism.

As such, in ad­di­tion to the afore­men­tioned plan to con­struct 1600 schools, there has been an uptick in project an­nounce­ments aim­ing to move the Saudi econ­omy up the in­tel­lec­tual value chain. Most prom­i­nent among these is NEOM, a planned $500bn in­de­pen­dent spe­cial busi­ness and in­dus­trial zone. The 26,500sqkm spe­cial zone will be in the North West of the coun­try and will ex­tend across the Egyp­tian and Jor­da­nian bor­ders. The zone will fo­cus on var­i­ous in­clud­ing en­ergy and wa­ter, food, biotech­nol­ogy, ad­vanced man­u­fac­tur­ing, and en­ter­tain­ment. NEOM will be fully au­to­mated and will be com­pletely pow­ered by wind and so­lar en­ergy.

The scheme will be sup­ported by Saudi Ara­bia and the coun­try's Pub­lic In­vest­ment Fund, and lo­cal as well as in­ter­na­tional in­vestors. NEOM is viewed as em­blem­atic of broader Saudi eco­nomic di­ver­sil­ca­tion ef­forts ex­ceed­ingly am­bi­tious, but un­likely to be re­alised in their de­sired form due to op­er­a­tional and reg­u­la­tory hur­dles that have plagued the de­liv­ery of sim­i­lar Saudi mega-projects in the past.

More re­cently, and more rep­re­sen­ta­tive of a re­al­is­tic project, it was re­ported in Fe­bru­ary that Us-based Google is con­sid­er­ing a part­ner­ship with Saudi Aramco to form a tech­nol­ogy hub in Saudi Ara­bia, which would in­volve the con­struc­tion of data cen­tres and af­ford the op­por­tu­nity for Saudi cit­i­zens to bol­ster their tech­no­log­i­cal ex­per­tise.

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