The signing of the contract for the Duba power contract with Spains Initec shows that despite concerns over prospects of the kingdoms projects sector, the most important schemes will go ahead.
Following reports in early October that the Finance Ministry had told governments not to award any new contracts before the end of 2015, and recent news that Riyadh is preparing to set up a project management office to control spending on infrastructure, contractors were concerned that the kingdoms projects sector would come to a complete standstill. The signing of the Duba project shows that where there is real demand, projects will move forward.
It should be noted that the Duba project was in advanced negotiations by the beginning of October, and had it not been for delays would have been awarded earlier in the year, so the prospects for other projects which were slated for award in the fourth quarter of the year are still uncertain.
Regardless of the timing of award for other power schemes under negotiation, the signing of the Duba contract conveys Riyadh is aware of the need to deliver major utility projects meet rampant residential and industrial power demand.
A further important aspect of the Duba contract award is that it will signal commencement of the kingdoms largest renewable energy project to date. The Integrated solar combined cycle (ISCC) plant will contain a solar component of 50MW, far larger than what has been attempted in the kingdom to date. Following the failure of the King Abdullah City for Atomic and Renewable Energy (KA-Care) to get its ambitious renewable energy programme off the ground, the Duba project finally signals the start of utility-scale renewable energy for Saudi Arabia.