A good year for road contractors in the Gulf

15 August 2012

Nearly $9bn of road contracts are expected to be awarded this year

2012 is expected to be a strong year for road builders in the GCC, with regional projects tracker MEED Projects predicting $8.8bn of contract awards by the end of this year.

So far this year, the region has performed well with $3.4bn of contract awards made. The best performer so far has been Oman, which continues to invest in upgrading its road network. It has awarded $897m of contracts during the first half of this year and is expected to award a further $1.5bn of contracts by the end of the year, taking its total for 2012 to $2.4bn, with awards on major schemes such as the Batinah Expressway.

Saudi Arabia is expected to surpass that total with a strong second-half. During the first half of the year, it awarded $530m of contracts. During the second-half, it is expected to award a further $1.9bn, taking its total for the year to more than $2.4bn.

The awards planned for the rest of the year are not large and there are 46 contracts that are due to be tendered. The most significant is the estimated $169m contract for Mecca Municipality’s Fourth Ring Road Intersection with Medina Road, with the vast majority of the others valued at less than $100m.

It will be a challenge for Saudi Arabia to eclipse Oman this year. The kingdom has been slow to award contracts across all sectors this year. With deals that were due to be awarded in the first half of the year still outstanding, many of the contracts that it expects to award by the end of the year could be delayed.

The other market that is expected to have a strong second-half is the UAE. So far this year, it has awarded just $25m of road contracts, but by the end of this year it plans, to award $1.4bn, with $642m in the third quarter and $805m in the fourth. The bulk of the totals will come from the award of contracts on the Emirates Road scheme that will connect Abu Dhabi city with Dubai to the northeast, and the Mafraq to Ghuweifat highway that links Abu Dhabi city with the Saudi border to the southwest.

Kuwait is the only other market that is expected to award a large volume of road contracts this year. It plans to award $476m of road building contracts by the end of 2012.

Further forward, Qatar is expected to have a strong 2013. It is currently preparing to tender 10 major contracts as part of its expressway programme. If these construction packages are awarded next year as planned, then Doha is not only expected to keep not only contractors in Qatar busy, but also companies from around the region.

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