Value of Saudi contracts rises to SR 52.2 bn in Q1
Jeddah: Arab News The value of awarded contracts in Saudi Arabia during the first quarter of 2012 continued unperturbed, signaling a strong start in awarded contracts for the year, according to a report by the National Commercial Bank (NCB) released yesterday.
This reflects a significant shift away from the typical lull that occurs during the first half of the year.
The sectors that were highlighted in the Kingdom's 2012 budget as areas of focus, such as education, roads, healthcare and urban development, contributed to the fast start as a result of considerable injections by the government to deploy its capital expenditures.
Those sectors alone accounted for more than SR15 billion or 30 percent of the total value of awarded contracts.
Anchor sectors, such as the petrochemical, power and industrial sectors accounted for more than SR23 billion or 44 percent of the total value of awarded contracts, according to the NCB report.
The SR52.2 billion in awarded contracts during Q1 reflects a slight increase compared to Q1, 2011 where approximately SR49.7 billion in construction contracts were awarded.
"While we expect the construction sector to continue its significant contribution to the Kingdom's economy, the performance of the sector during Q1, 2012 illustrates that 2012 will continue to sustain the construction boom," the NCB said in its report.
The Construction Contracts Index (CCI) rebounded from January's 312.45 points by gradually increasing to 329.07 and 349.03 during February and March, respectively. The CCI was sustained by the first quarter's strong performance coupled with an impressive run of numerous mega projects that were awarded at the conclusion of 2011. Furthermore, the CCI recorded a 86 percent boost during Q1, 2012 compared to Q1, 2011. This is noteworthy given 2011's extraordinary output of awarded construction contracts.
The geographic breakdown of awarded contracts revealed that the Eastern Province commanded the largest share with an overwhelming 36 percent of the total value of awards. Mega projects in the petrochemical and industrial sectors contributed to Eastern Province's commanding share. The Makkah region's 22 percent share was mainly attributed to the government's emphasis on urban development in Jeddah as well as the continued focus on developing affordable housing options for its citizens. The Riyadh region benefited from increased infrastructure related improvements lending to numerous awarded contracts in the power and road sectors. Those contracts allowed the Riyadh region to capture an 15 percent share, the report added.
Approximately SR11.9 billion worth of contracts were awarded during January. The power sector garnered nearly SR4.6 billion or 39 percent worth of contracts during the month as the Saudi Electricity Company (SEC) signed numerous contracts with many contractors across the Kingdom. The majority of these contracts involved setting up power transmission lines, gas powered generating units and transformers. A contract was awarded by SEC to Al-toukhi Company for Industry & Trading in the amount of SR680 million in the Riyadh region. The contract call for the construction of an oil/gas power plant and supporting power generation to the areas of Wadi Al-dawasir, Sharura and Najran. The contract is expected to be completed within 24 months.
Another contract in the power sector was awarded by SEC to National Contracting Company for the construction of two power plants in the Tabuk region. The SR480 million contract award calls for the first plant to be constructed with 120MW worth of capacity. The second plant is expected to generate a capacity of 180MW. Both plants are expected to be completed by the third quarter of 2013.
The transportation sector witnessed sizable contracts that were awarded by Saudi Arabian Railways (SRO) to develop the North-south Railway project. The first contract was awarded to Al-rashid Trading & Contracting in the amount of SR1.57 billion to establish five passenger stations in Majmaa, Qassim, Hail, Aljouf and Qurayat. The project is expected to be completed within 24 months. The second contract was awarded to Yabi Markazi Company for the operation and maintenance to locomotives, carriages and the railway track.