Saudi Arabia: Inflation risk downplayed



Several of Saudi Arabia’s major cities – Jeddah, Riyadh and Mecca – and surrounding areas will benefit from plans to roll out public transport and construction projects over the next five years as part of a government drive to boost growth and address the Kingdom’s social needs.

The government’s decision to channel major investment into wide-ranging infrastructure ventures across Saudi Arabia’s three largest cities signals extensive opportunities for foreign and domestic bidders. However, news in recent months of key projects has been tempered by the annual IMF assessment of the Kingdom, published in August, which highlighted potential risks of high spending and rapid growth.

Most recently, Saudi Arabia announced plans to build a metro system estimated at $9.3bn in Jeddah, which will include three lines and 46 stations.

The city’s mayor, Hani Mohammed Aburas, told OBG that the transport project was now taking shape. “We are in the process of getting approval for our metro system,” he said. “We have proposed a 108-km network around the city. Once the budget is approved, construction can begin.”

Aburas was confident that given time, the public would adapt to the new mode of transport, telling OBG, “It will quickly become the most important traffic medium in the city for both Saudis and expatriates”.

News of the Jeddah project came just weeks after the government’s announcement in August that a $16.5bn plan to modernise public transport in the holy city of Makkah had been approved.

The Makkah project includes a 182-km metro system and bus network, with construction due to begin on the rail system in 2013. According to METenders, local construction firm Al Balad Al Ameen Company will team up with advisors Ernst & Young, Ashurst, and Parsons Brinckerhoff to develop procurement packages for the first phase of the project, including rail infrastructure, railway systems, rolling stock, depot and operations. More info