A majority of these, 61% are in the GCC region, the latest issue of ‘Meed Business Review’ shows.
In terms of mega projects (contracts valued at $1 billion or above), there are about $75 billion of deals scheduled to be let in the GCC and Egypt this year.
The power, oil and transport sectors will drive mega projects spending this year, accounting for 83% of the total value. Major awards expected include contracts on the Mohamed bin Rashid al-Maktoum Solar Park in Dubai and upgrades at the Ruwais Refinery in the UAE.
“It is no secret that 2017 will continue to be a tough year for the region, but the gradual rise in the oil price will see the projects’ market begin to regain some vigour. Governments still plan to invest in the much-needed infrastructure and are looking at alternate ways to fund schemes,” ‘Meed Business Review’ said.
Between 2018 and the start of 2020, there is a pipeline of more than $500 billion of contracts slated for award in the GCC and Egypt. Not all will be let over the period, but the value of awards is expected to pick up, especially as Dubai and Qatar head towards hosting their respective global events of Expo 2020 and the 2022 FIFA World Cup.
According to Meed Business Review, the GCC has been predominantly driven by major infrastructure projects in the past 15 years. These schemes have created jobs, fuelled immigration, expanded economies and changed the landscape of many cities in the region.
But some mega projects in the past few years have been dogged by delays, cancellations and cost overruns. Postponements of tender deadlines or awards have also become a common problem for major infrastructure upgrades.
Mega projects may drive economies, but they are the result of long-term masterplans drawn up by governments. The most recent to be launched is Riyadh’s Vision 2030 and the National Transformation Programme, released in late April 2016 in response to low oil prices and its fiscal deficit. The plan calls for a significant programme of infrastructure upgrades.
In 2016, the value of major contract awards in the kingdom fell by about 52% to $25.1 billion, compared with $52.1 billion of deals let in 2015.
This year, Saudi Arabia is expected to award about $43 billion of deals, a 73% uplift on 2016, but still lower than the 2015 figure, ‘Meed Business Review’ said.