Saudi Oger remains the biggest casualty from Saudi Arabia’s construction downturn that has plagued the kingdom over the past two years.

The contractor has not only slashed thousands of workers and employees, but the existence of the company continues to be threatened as reports emerge that the contractor could soon be a non-operational company.

The company is yet to make payments towards clearing its estimated SR13bn ($3.5bn) of debt, with banks still unsure how much, if any, money the firm received from the government when Riyadh released long-overdue payments to contractors late last year.

It is not clear if any of the banks had agreed to the debt standstill proposal with three local lenders - Alawwal Bank, Banque Saudi Fransi and Saudi British Bank (Sabb) - already taking full provisions on their exposure to the company. 

The future of the company has become a major talking point in the kingdom, but little to no details have emerged, with the company itself remaining silent.

Saudi Arabia does not have a clear bankruptcy law, but this does not stop the company from halting it activity as it looks at ways to either clear its debt, which is highly unlikely, or wrap up its operations. Bankers admit it is difficult to see how the company can continue.

The current value of ongoing work being carried out by Oger is $1.3bn, compared with $5.2bn this time last year. Clients will be wondering whether the contractor will be able to deliver on its existing commitments with the ongoing uncertainty likely to impact the market’s confidence.

The recent decline in the contractor’s fortunes started in late 2015 when a backlog of payments, declining contract awards and mounting debt put the company in a position of no recourse.

Other contractors faced similar issues, but even Jeddah-based Saudi Binladin Group, which was barred from government work following the crane crash in Mecca in 2015, has recovered.

If Saudi Oger was to fall it would be the biggest in the kingdom since the 2008 financial crash. In the meantime, the future of the company remains unclear with media reports and rumours continuing drive negative sentiments that have dominated Saudi Arabia’s construction sector since the fall of oil prices in late 2014.

The industry will be hoping for the Oger saga to end soon as it hopes for the start of a recovery later this year.