Saudi Arabia is considering the option to finance nearly two-thirds of the $23.2bn Riyadh Metro scheme as the kingdom looks to preserve depleting cash reserves caused by lower oil prices, according to sources familiar with the matter.

Riyadh has so far paid $5bn to the contractors in cash for the work done on the public transport scheme and it may opt to finance the rest through a mix of bank and export credit agency (ECA) funding, the sources said, asking not to be identified as the information is private. Riyadh may end up getting $14.5bn in funding for all three main packages as it is considering an at least 80:20 debt-to-equity ratio for the remaining $18.2bn of the total estimated cost, the sources added.

The kingdom’s Finance Ministry and Arriyadh Development Authority (ADA), the civic body responsible for the metro project and other public transport infrastructure in Riyadh, has met with some of the international banks to explore the possibility of funding. The banks, including Germany’s Deutsche Bank and the UK’s HSBC, have made their pitches for an advisory role and possibly arrange the transition for the government. The talks are at initial stages and the government may decide against the deal, but so far both the Finance Ministry and ADA are interested in the financing option for the mass transit scheme, the first of its kind in the kingdom, the source explained.

Spokespersons for HSBC and Deutsche Bank declined to comment. An external communications consultant for ADA declined to immediately comment. Officials at ADA could not be reached for comment. A spokesman for the Finance Ministry could not be reached for comment.

The three Riyadh Metro packages were awarded to separate consortiums in 2013, with 2018 set as the target completion date for all lines at the time. In March, Alwalid Alekrish, director of construction development projects and project director of the Riyadh Metro at ADA, confirmed a 12-month delay and said the 176-kilometre rail scheme will now be completed in 2019.

The Riyadh Metro is being paid for “directly from ring-fenced government funds and as such there is no specific debt or borrowings” plans for the project, he said at the time. This implies the metro scheme was largely unaffected by the government spending cuts on the back of a slide in oil prices.

The government last year capped the award of new projects and started reviewing its spending plans for ongoing schemes as crude fell from a mid-2014 peak of more than $110bn a barrel to its current $50 a barrel level, denting government revenues from the sale of hydrocarbons. Since August last year, Riyadh has been selling local currency bonds to banks and financial institutions to meet expenditures. The kingdom, which is expected to post a budget deficit of $86bn this year, has tapped the international debt markets in recent months. It closed a $10bn loan in April and is in talks with banks to help it sell its debut sovereign bond to raise as much as $15bn in coming weeks and months.

Riyadh has awarded deals for the construction of six lines in three main packages. Line 3 is being constructed by the Arriyadh New Mobility team, which has a contract value of $5.94bn. The package for lines 1 and 2, with a total contract value of $9.29bn, is being developed by the BACS consortium, and the $7.82bn contract for lines 4, 5 and 6 is being completed by the FAST consortium, according to regional project tracker MEED Projects.

ADA also released the tender documents for the operation and maintenance (O&M) contract for the Riyadh Metro in April. Prequalified firms, which are understood to include SMRT (Singapore), Serco (UK), Korail (South Korea), RATP (France), Keolis (France), Ansaldo / Hitachi (Italy/Japan) and QDVC (Qatar), have until mid-October to submit bids.

It is likely ADA will select two or three O&M firms to operate and maintain the six lines, a source familiar with the project told MEED.