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|18 October, 2018

Interview: Saudi industry body seeks to tackle stalled construction projects

The Saudi Contractors Authority is pushing for stronger governance

Image used for illustrative purpose.

Image used for illustrative purpose.

REUTERS/Reuters Staff

18 October 2018
A Saudi contractors' body created last year to end anarchy in the local construction sector has moved to tackle the persistent problem of stalled projects, the body's chief said on Tuesday.

The Saudi Contractors Authority (SCA) has made proposals to the government to revive stalled projects and prevent execution delays, including the selection process for choosing contractors, SCA chairman Osama Al-Afaliq said.

In emailed answers, Afaliq told Thomson Reuters Projects he favours creating stronger construction entities by merging small contractors with larger foreign companies.

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"There are many stalled or delayed projects in the kingdom for various complicated reasons and this is one of the main reasons that we created SCA... we need to re-organise the kingdom's contracting sector which is a very complex industry that comprises too many players and partners," he said.

"We now want to make sure that each project is well studied from the engineering perspective, has a clear mechanism and is fully supervised and managed... I believe this will ensure the success of the project and prevent it from faltering."

Afaliq could not immediately provide figures on stalled projects, but according an article published in January by Saudi-based Almowaten.net online news website, citing a report by the Control and Investigation Board, a government watchdog, there are around 2,000 stalled government projects and 600 delayed public projects in the kingdom.

Afaliq said the SCA had proposed to the government the creation of a joint unit comprising "specialists" in project management and finance to study each stalled project and suggest solutions to restart it.

"This unit can work out a roadmap for each project and select the right contractor to complete the project... the unit can also work to prevent further project delays."

Afaliq said the SCA, which has been authorised by the government as an umbrella for the Gulf country's nearly 140,000 contractors, is working on a strategy to "revive" the contracting sector, adding that the industry comprises nearly 136 types of activities covering construction, maintenance and operation.

He said the strategy is being devised in coordination with public establishments and relevant market players, adding that it includes a "clear vision for the future."

"We will implement this strategy in collaboration with all partners... our vision for the contracting sector is that it will reach an advanced state of transparency and governance... this will largely contribute to enhancing and developing the sector."

Asked about the contracting companies in the world's dominant oil exporter, he said nearly 97 of them are small units which lack organisation, rating and funds.

He said the SCA intends to have all these firms registered and rated, adding that he favours mergers in the construction sector to create stronger entities.

"But mergers must not be just for the sake of merger because merger is a good solution for companies which have shortages in certain fields," he said.

"For example, I support the merger between a company with limited human resources and that with a strong financial base as this will create a capable entity in the market....mergers must aim for the creation of strong, capable and efficient entities. I also advocate mergers between the Saudi and foreign contractors... this is one of SCA's main objectives as per government instructions."

(Reporting by Nadim Kawaach; Editing by Shane McGinley)

(shane.mcginley@refinitiv.com)

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