Saudi contracts peak in 2013

The value of awarded government contracts in Saudi Arabia climbed to an all-time high of nearly SAR 293.4 billion (Dh290 billion) in 2013 and almost two thirds were awarded in the second half, the Gulf Kingdom’s largest bank said on Monday.

National Commercial Bank (NCB) said its construction contracts index (CCI) ended 2013 at 465.03 points after sharply fluctuating through the year, having dipped to 225.68 points in May before rocketing to 494.09 points in September.

Releasing its quarterly construction report, NCB said the value of awarded contracts slackened to SAR41.7 billion (40.5 billion) in the fourth quarter of 2013 following what it described as an exceptional third quarter.

“The year 2013 concluded at SAR293.4 billion, marking an all-time high in terms of awarded contracts by value,” said the report, sent to Zawya.

“Furthermore, 2013 surpassed 2012’s performance by 25% and also eclipsed the previous high of SAR 270.3 billion (268 billion) during 2011 by 9%.”

A breakdown showed “anchor” sectors accounted for the bulk of the awarded contracts through 2013, with the value standing at SAR 92 billion (Dh91 billion) in the transport sector, SAR 48 billion (Dh47.3 billion) in power, SAR 40 billion (Dh39.5 billion) in real estate, SAR19 billion (Dh18.6 billion) in industry and SAR18 billion (Dh17.6 billion) in petrochemicals.

NCB said the surge in contracts value in 2013 was mainly due to the government’s continued expansion of capital expenditures.

It showed the majority of the value of awarded contracts occurred during the second half of 2013, accounting for nearly 65% of the total awards.

It said the private sector played a larger role in the development of projects as nearly 2,330 contracts worth SAR157 billion (Dh155.4 billion) were awarded by the government to the private sector.

NCB said its CCI ended 2013 at 465.03 points after a volatile year, which saw the index dip down to 225.68 points in May and all the way up to 494.09 in September.

The CCI was relatively stable during the fourth quarter as it reached 465.34 points in October followed by 470.25 points in November, it said.

“The magnitude of spending in the construction sector has allowed the CCI to float above the 200 point mark for 32 consecutive months, dating back to May 2011.”

The report said Saudi Arabia’s construction sector, the largest in the Middle East, continues to benefit from extraordinary spending on a massive scale as the government pursues its push towards meeting rapidly growing demand for services by its citizens. “This long-term challenge has necessitated heavy expenditures across all sectors of the economy.

“The total value of awarded contracts of SAR293.4 billion clearly indicates that the government has and will continue the trend of placing significant injections into its capital expenditures,” the report added.

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