PHOTO
23 May 2016
JEDDAH: The momentum of the slow pace activities that witnessed toward the end of 2015 has continued further into the first quarter of 2016, as the total value of awarded contracts amounted to SR27.9 billion, recording a significant decrease of 39 percent from the previous quarter, according to NCB Construction Contracts Index for the first quarter of 2016 released on Sunday.
The decline in oil revenues has already led the government to cut infrastructure spending brought about by fiscal restructuring. While many of the projects already awarded are likely to proceed, they may be scaled down or rescheduled execution over an extended period. How- ever, the government will continue to spend on social and physical infrastructure projects, but the level of spending will inevitably be rationalized over the medium term as spending needs are affected negatively by lower oil revenues.
The NCB report said main contributing sectors in Q1, 2016 were oil & gas, which has accounted for 47 percent of the total value of awarded contracts to reach SR13 billion, followed by hospitality at SR5.9 billion (21 percent), and residential real estate SR4.6 billion (16 percent). The other sectors accounted for smaller shares of the remaining value of awarded contracts.
The SR27.9 billion in awarded contracts during Q1, 2016 marks a 51 percent decline compared to Q1, 2015 that amassed SR57.3 billion. This represents a substantial drop and is indicative of an increasingly tough economic conditions as the construction industry comes to terms with the sever impact of ongoing low oil prices. It is the sharpest quarterly decline in the value of awarded con tracts since 2009.
The Construction Contracts Index (CCI) dropped significantly to end the quarter at 179.0 points, and exhibited unstable movements since the start of the year. It is marked as the first time to score lower than 200.0 points since Q1, 2014.
The geographical analysis of awarded contracts shows that the Eastern province received the largest share with 51 percent of the total value of awards. They covered mega projects associated with oil & gas, power, and residential real estate sectors. The Madinah region came second with a 13 percent share, which was mainly attributed to projects awarded by private companies in the hospitality sector, besides the continued focus on improving the infrastructure of the power sector. The Northern region had an 11 percent share of the awarded contracts, mainly due to a significant contract by Saudi Aramco, as part of the shale gas development.
JEDDAH: The momentum of the slow pace activities that witnessed toward the end of 2015 has continued further into the first quarter of 2016, as the total value of awarded contracts amounted to SR27.9 billion, recording a significant decrease of 39 percent from the previous quarter, according to NCB Construction Contracts Index for the first quarter of 2016 released on Sunday.
The decline in oil revenues has already led the government to cut infrastructure spending brought about by fiscal restructuring. While many of the projects already awarded are likely to proceed, they may be scaled down or rescheduled execution over an extended period. How- ever, the government will continue to spend on social and physical infrastructure projects, but the level of spending will inevitably be rationalized over the medium term as spending needs are affected negatively by lower oil revenues.
The NCB report said main contributing sectors in Q1, 2016 were oil & gas, which has accounted for 47 percent of the total value of awarded contracts to reach SR13 billion, followed by hospitality at SR5.9 billion (21 percent), and residential real estate SR4.6 billion (16 percent). The other sectors accounted for smaller shares of the remaining value of awarded contracts.
The SR27.9 billion in awarded contracts during Q1, 2016 marks a 51 percent decline compared to Q1, 2015 that amassed SR57.3 billion. This represents a substantial drop and is indicative of an increasingly tough economic conditions as the construction industry comes to terms with the sever impact of ongoing low oil prices. It is the sharpest quarterly decline in the value of awarded con tracts since 2009.
The Construction Contracts Index (CCI) dropped significantly to end the quarter at 179.0 points, and exhibited unstable movements since the start of the year. It is marked as the first time to score lower than 200.0 points since Q1, 2014.
The geographical analysis of awarded contracts shows that the Eastern province received the largest share with 51 percent of the total value of awards. They covered mega projects associated with oil & gas, power, and residential real estate sectors. The Madinah region came second with a 13 percent share, which was mainly attributed to projects awarded by private companies in the hospitality sector, besides the continued focus on improving the infrastructure of the power sector. The Northern region had an 11 percent share of the awarded contracts, mainly due to a significant contract by Saudi Aramco, as part of the shale gas development.
© Arab News 2016
