Consultancy tenders signal return of Saudi market

18 July 2016

Work starts on first PPP projects

Saudi Arabia is beginning to issue financial advisory tenders for privately financed infrastructure projects, starting in the water sector.

Preparations for public private partnership (PPP) projects, being carried in isolated sectors such as health and aviation, all but stopped in the first half of 2016.

The kingdom focused on preparing the Vision 2030 and the five-year National Transformation Plan (NTP) which envisages a much larger role for private investment, to reduce pressure on government finances. The NTP also includes at least five PPP projects by 2020.

But this strategic reboot slowed infrastructure tenders and awards sharply, as projects returned to the study stage to be considered for PPP.

Riyadh wants to mobilise as much private finance as possible to support its infrastructure spend. Only truly essential, yet unbankable projects are expected to rely completely on the public purse.

The recent consultancy tenders, and consultants expect more tenders and awards over the summer, suggest that development and construction tenders will follow by the end of the year. This indicates a surprisingly rapid pace of work in Riyadh.

Consultants will also be engaged to select the first round of projects to be implemented outside the utilities sector.

These will be a key test for the future success of Saudi Arabia’s PPP programme. It is important that the projects are bankable, attract good levels of interest from credible developers, and are carried out without major problems.

A few successful projects would build confidence in both the private and public sectors, and ensure an active, competitive PPP programme in the medium-term.

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