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Market |
Construction |
Report Type |
Market Research |
Country |
Saudi Arabia |
Published |
17 February 2010 |
Number of Pages |
78 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Developing infrastructure continues to be a top priority for Saudi Arabia. Government funded investment complemented by a number of public private partnerships is fuelling real growth in the industry. We are forecasting the construction industry to grow by 5.89% year-on-year (y-o-y) in 2010 to reach a nominal value of SAR82.64bn (US$22.07bn).
This represents increased growth on 2009 estimates, which we have also revised upwards to better reflect the level of activity recorded over the past year. However, 2010 is anticipated to return higher growth due to the number of contracts which will get under way during the year. A number of large-scale utilities projects were tendered out in the second half of 2009 and are due in the first half of 2010. As work begins on these projects, they will provide a boost to the overall construction industry value.
In Q110 a consortium led by Japan’s Marubeni and including Kansai Electric and Saudi Masader, submitted the lowest bid for the PP11 2,000 megawatt (MW) Riyadh power plant. The contract, worth an estimated US$3.2bn is due to be signed in March 2010, with financial close due in May 2010. The 2,400MW-2,800MW Rabigh Power Plant expansion contract was close to being awarded at the end of 2009, with three bids submitted from Doosan Heavy Industries, Hyundai Heavy Industries and Alstom. The bids ranged between US$3.95bn and US$4.34bn, it is not clear when the contract will be awarded. The third largest contract expected to be awarded in 2010 is the Ras Al Zour water and power plant. The contract, which was originally awarded as an independent water and power project (IWPP_, but has been retendered as an Engineering, Procurement and Construction (EPC) contract. The deadline for bids is March 2010.
Transport projects are also gathering steam, although not in quite as high volumes as utilities projects. The biggest contract due to be awarded in 2010 is for the second phase of the Haramain High Speed Railway, which will link Jeddah with Mecca and Medina. Five companies have submitted bids for the project, with the deadline due to close on January 31 2010. As well as big plans for the rail sector, the country’s airports are undergoing an overhaul. Most recently, the General Authority for Civil Aviation (GACA) approved plans to expand King Khaled International Airport. It was also reported in Q110 that the contract to expand Prince Mohammed Bin Abdulaziz International Airport in Medina would be awarded in October 2010. Further along the process is the Red Sea Gateway Terminal at Jeddah Islamic Port which will be launched in October 2010 following investment of US$510mn. All of these projects present further upside risks to our forecasts for 2010 and indeed further along our forecast period.
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