Saudi Arabia’s mega projects helped fuel SR94.5 billion ($25.15 billion) in contracts being awarded in the first half of 2022, according to the latest report released by the US Saudi Business Council.
This represented an 88 percent year-on year rise.
The total value of projects awarded during the second quarter reached SR48.6 billion, while in the first quarter it stood at SR46 billion.
The awarding of contracts by Saudi Aramco as part of its oil field developments in the Eastern Province, and the Neom Green Hydrogen Company’s construction of facilities at Neom accounted for all the contracts during the second quarter, according to the report.
“The awarding of large infrastructure packages at Neom City’s ‘The Line’ during the (second) quarter accounted for the surge in value,” said USSBC in the report.
“The gradual shift in the rise of the private sector’s participation to develop the Kingdom’s non-oil economy is bearing fruit,” said Albara’a Alwazir, director of economic research at the US-Saudi Business Council.
He added: “The culmination of supportive macroeconomic conditions since the outbreak of COVID-19 will see the Kingdom’s GDP rise to an estimated 7.5 percent in 2022, the highest in 10 years.”
In the second quarter of 2022, 11 contracts worth SR9.7 billion were awarded in the oil and gas sector.
The value of projects awarded in Saudi Arabia plummeted to SR80 billion in 2020 due to the pandemic, but it rebounded to SR142 billion in 2021 and has been accelerating since.
The USSBC Contract Awards Index grew to 230 points in the second quarter of 2022, which means the Kingdom’s construction activity is expected to rise in the coming period.
“The CAI has remained above 200 points over the last three quarters and last dipped below this level during the third quarter of 2021,” the report added.
The report further noted that the transportation sector’s 14 contracts during the second quarter elevated its share of awarded contracts to reach SR22.3 billion, the highest quarterly tally in 9 years, when SR94.1 billion worth of awards were given in the third quarter of 2013.
The report further pointed out that the oil and gas sector grew SR6.6 billion or 218 percent year-on-year, but declined by SR5.4 billion or 36 percent quarter-on- quarter.
According to the report, the water sector witnessed a climb in awarded contracts during the second quarter, as it reached SR6.1 billion from 15 deals.
The majority of water contracts were awarded by the National Water Co., Saline Water Conversion Corp., Saudi Water Partnership Co., and the Ministry of Environment, Water and Agriculture.
The water sector grew by SR2.8 billion or 86 percent year-on year and by SR2.9 billion or 89 percent quarter-on-quarter.
The report pointed out that the Tabuk region captured the largest share of awarded contracts by region with SR21.2 billion or 44 percent of the total, driven by NEOM’s awarding of three large-scale infrastructure packages which include the initial development of ‘The Line,’ which accounted for SR17.6 billion.
The Riyadh region registered the second-highest tally as it attracted SR9.1 billion or a 19 percent contribution.
According to the report, the Riyadh region witnessed a diversified mix of awarded contracts from the civil, transportation, real estate, and health care sectors.
The Eastern Province contributed SR8.4 billion or 17 percent of the total contracts awarded in the Kingdom.