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| 23 January, 2017

Saudi infrastructure freeze may be easing as Jeddah projects announced

Construction labourers work at the site of the development project of King Abdullah Road in Riyadh February 5, 2013.
REUTERS/Fahad Shadeed

Construction labourers work at the site of the development project of King Abdullah Road in Riyadh February 5, 2013. REUTERS/Fahad Shadeed

REUTERS/Fahad Shadeed

Projects are open to participation of the private sector

DUBAI, Jan 23 (Reuters) - Saudi Arabian authorities have announced three public transport projects in the port city of Jeddah, a sign that a freeze on new infrastructure work in the kingdom may be easing as the government slows its austerity drive.

The projects are a tram line along Jeddah's northern corniche, a marine taxi service and a bridge linking two of the city's neighbourhoods, the Saudi Gazette reported on Monday, quoting an official statement.

The projects are open to participation of the private sector, the statement said, reflecting a new effort by the government to save money by persuading private investors to share the financial burden of building infrastructure.

The statement did not give a value for the projects or reveal other details.

Few new projects were announced in the kingdom last year as the government, its finances strained by low oil prices, clamped down on spending.

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This year, oil prices are about $10 a barrel higher than last year's average and with the government's deficit projected to narrow, the 2017 state budget is slightly less austere. Spending on infrastructure and transport is slated to rise 39 percent from last year's actual level.

Prince Khaled al-Faisal, governor of the Mecca region, stressed in the statement that public transport projects in the area were crucial to meet the government's goal of sharply increasing the number of foreign pilgrims visiting Mecca.

A study by consultants Faithful+Gould, released last week, estimated project awards by the government would total $27 billion this year, compared with about $20 billion last year and $35.5 billion in 2015.

This year's total could hit $32 billion if a project to build a metro system in the city of Mecca, which was originally expected to be awarded in 2016, goes through this year, the consultants said.

At the same time, at least $13.3 billion of other Saudi state projects are at risk of being cancelled this year as the government responds to financial pressures and changing priorities, the study added.

(Reporting by Andrew Torchia Editing by Jeremy Gaunt) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))