The suspension of Saudi Arabia’s biggest construction name from bidding for new projects has triggered speculation over where Saudi Binladin Group (SBG) will look for new work.
Terry Smith, chief executive of the Riyadh-based consultancy firm Bluewater Global Advisors, told The National that the kingdom’s construction market has been dominated by SBG and its main competitor Saudi Oger for the past decade.
However, the news that SBG has been suspended from bidding for projects following the collapse of a crawler crane at the Grand Mosque expansion project in Mecca “clears the path as both giants are sitting on the bench”.
Mr Smith added: “The incident that took place is very unfortunate, no matter where it is.”
With SBG out of the picture and Saudi Oger hampered by a string of investments in telecoms businesses across Europe – not all of which have paid off – there will be more opportunities for regional and global contracting giants, Mr Smith added.
“This gets it spread out a little more”.
During King Salman’s visit to the US to meet Barack Obama this month, a US-Saudi Investment Forum took place featuring 150 senior Saudi government and industry figures and about 800 US business leaders.
“I think you’ll see new consortia and new JVs with American components coming here to bring their technologies and skills,” Mr Smith said. “Once it’s open to the Americans, needless to say the UK is interested and Europe is already here. Some of the other Spanish and Italian consortia will come over to participate in the plethora of business here.”
Neither SBG or Saudi Oger secured a place on the three consortia that were appointed to build the $23 billion, six-line Riyadh Metro project two years ago, which instead went to groups led by US, Italian and Spanish contracting giants partnering with smaller Saudi contractors.
The €2.3bn (Dh9.49bn) Mecca Metro contract awarded in July also went to a Spanish-led consortium.
Mr Smith said that SBG may now look to other markets like the UAE and Egypt to secure new business.
“They have reach and they have potential. If you were not well received at home and you wanted to stay in this industry you would go to markets where there is business.”
Colin Timmons, general manager of the UAE-based Al Fara’a General Contracting, said that if SBG were to attempt to push into the UAE market, it would not find it to be an easy prospect.
“It’s certainly not something we would fear. The market is already difficult here. One more Saudi contractor probably won’t impact.
“They’d be coming into a market with a surplus of hungry contractors – certainly in Dubai.”
According to a recent report by Ventures Onsite for The Big 5 construction trade show, Saudi Arabia remains the GCC’s biggest construction market. Of the $193.65bn of contract awards expected this year, 44 per cent are expected to be made in the kingdom.
However, it is a difficult market for contractors to break into. Securing visas and Saudisation requirements are frequently touted as barriers to entry.
During a recent interview, Mark Andrews, Middle East managing director of contractor Laing O’Rourke, said that it was looking at expansion into other GCC markets like Oman but added that “it would have to be something special” for it to create a base in Saudi Arabia.
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