RIYADH – The magnitude of contracts within the construction sector continues to illustrate the Kingdom's appetite for heavy capital expenditures as approximately SR49.1 billion worth of contracts were awarded during the first quarter of 2013, according to the NCB Construction Contracts Award Index Q1 2013. The focus on improving the Kingdom's physical and social infra-structure as was planned by the government in its 2013 budget was evident as approximately SR11.7 billion worth of contracts were awarded for physical infrastructure projects. Sectors within the social infrastructure category, such as healthcare, residential real estate and education, contributed approximately SR28 billion of the overall value of awarded contracts. Anchor sectors, such as oil & gas, petro-chemical and industrial had relatively modest contract values as they accounted for nearly SR7.5 billion. The state of the construction sector appears to reflect its robustness that it has exhibited over the last couple of years even though there was a slight dip in the value of awarded contracts from SR52.2 billion during Q1'12 to SR49.1 billion during Q1'13. All signs point towards the continued growth within the construction sector as the value of awarded contracts were sustained by non-anchor sectors during Q1'13. The mega-projects that will be awarded within the anchor sectors will further catapult the ongoing con-struction boom during 2013. The Construction Contracts Index (CCI) pushed higher following a successful 2012 to reach 288.33 points by the end of March. The CCI ended at 279.99 points during January and reached its highest level of the quarter during February to climb to 298.16 points. The CCI retracted during Q1'13 compared to Q1'12, which reached 349.03 points. However, the CCI should rebound as more mega-projects are ex-pected to be awarded, which will gradually escalate the CCI to higher levels. Given the nature of the awarded contracts, which were significantly skewed toward infrastructure related projects, the Riyadh and Makkah regions captured significant shares of the value of awarded contracts by region with 44% and 27%, respectively. Significant mega-projects in the residential real estate and healthcare sectors were a major reason for Riyadh's dominance. The residential real estate sector also played a significant role in the Makkah region along with the roads sector. The Eastern Province, which accumulated approximately 17% of the share by region was mainly attributed to the petrochemical, industrial and education sectors. The education sector comprised a significant por-tion of awarded contracts for each of the three areas of Madinah, Asir and Hail. January had the highest value of awarded contracts during Q1'13, reaching approximately SR21 billion. The healthcare and petrochemical sectors led the way as they captured nearly 58% and 10%, respectively. There was a single mega-project contract within the healthcare sector worth SR12.6 billion. The contract was awarded by the Ministry of Interior to ABV Rock Group for the development of the King Abdullah bin Abdulaziz Project's Riyadh security forces medical complex. The complex will have a total built-up area for the medical facilities of 400,000 sqm on 1.3 million sqm of land. There will be three hospital buildings, academic and clinical center, research center, office buildings, service stations, residential villas, apartments and car parking. The project is expected to be completed by the third quarter of 2017. The petrochemical sector had two contracts worth approximately SR2.1 billion. The significant contract, worth SR1.9 billion was awarded by the joint venture of Saudi Kayan/Saudi Aramco/Dow Chemicals to Daelim. Daelim will be responsible for building an n-Butanol plant in the acrylic complex at the Jubail Industrial City. The plant is expected to produce 330,000 metric tones a year of n-Butanol. The pro-ject is expected to be completed by the fourth quarter of 2014. Approximately SR1.4 billion worth of contracts were signed in the power sector, as the Saudi Electricity Company (SEC) awarded all the contracts. All of the contracts were awarded to local contractors, namely Middle East Engineering & De-velopment, National Contracting Company and Saudi Ser-vices for Electro Mechanical (SSEM). The scope of the contracts involved the construction of 380kV overhead lines in addition to underground cable work across various areas in the Kingdom. Within the education sector, approximately SR1.4 billion worth of contracts were awarded. The projects were all awarded by the Ministry of Higher Education across various areas in the Kingdom. The most notable contract involved the implementation of the third part of construction of the teaching staff housing at Al Imam Mohammed Bin Saud Islamic University in Riyadh. The awarded contract is worth SR603 million. The oil & gas sector had approximately SR1.1 billion worth of contracts that were awarded. The notable contract was awarded by Saudi Aramco Lubricating Oil Refining Company (Luberef) to Sulzer Chemtech in the amount of approxi-mately SR750 million. As part of the contract, Sulzer Chemtech will upgrade the vacuum distillation unit at the Yanbu refinery. The project is expected to be completed by the fourth quarter of 2014. The value of awarded contracts dipped slightly in February to reach approximately SR20.3 billion. The residential real estate and education sectors accounted for nearly 40% and 20% of the total value of awarded contracts, respectively. The residential real estate sector had three awarded con-tracts worth SR8.1 billion. There were two significant con-tracts that were both awarded to Azmeel Contracting & Con-struction Company. The first contract was awarded by Emaar Properties for phase two of the Jeddah Gate “Abraj Al Hilal” project in Jeddah in the amount of SR4.9 billion. The development will consist of 326 apartments in three towers. Additional amenities include 525 parking spots, swimming pool, fitness center, business center, children's daycare center and other associated facilities. The project is expected to be completed by the first quarter of 2016. The second contract was awarded to Azmeel Contracting and Construction Company by Rayadah Investment Company, which involved the construction of 106 villas, 96 apart-ment units and related facilities such as a sports club, mosques, and schools. The SR3.2 billion Riyadh Informa-tion Technology & Communication complex (ITCC) project will have a total of 445,373 sqm of built-up construction, and is expected to be completed by the first quarter of 2016. The education sector witnessed a continued surge in spending by the Ministry of Higher Education as approximately SR4 billion worth of contracts were awarded in February. The majority of these contracts included the construction of new colleges, faculty building and infrastructure works across numerous universities in the Kingdom. The roads sector was the recipient of significant expendi-tures by the Ministry of Municipality and Rural Affairs along with the Ministry of Transport whereby approximately SR2.1 billion worth of contracts were awarded. The major-ity of these contracts involved the development and en-hancement of both, rural roads and expressways across the Kingdom. Two notable contracts were awarded to the Saudi Binladin Group worth SR1.9 billion. The two contracts in-volve the development of Makkah's second ring road and the third phase of the third ring road. As part of the two pro-jects, 1,868 homes will be demolished and homeowners are expected to be compensated nearly SR11.2 billion. The two projects are expected to be completed within 36 months. Approximately two contracts worth SR2.1 billion were awarded within the water sector. Both contracts were awarded by the National Water Company (NWC) to Aziz Company. The two contracts each involved the construction of four steel reservoirs and valves as part of the Makkah Reservoirs I and II project. Both project are expected to be completed by the fourth quarter of 2015. Within the Industrial sector, a contract was awarded by Maaden to Hanwha Engineering and Construction Company for the construction of a gravity-CIL (Carbon In Leach) proc-essing plant that will have a capacity of two million tons of ore per annum. The SR1 billion project is expected to be completed by the fourth quarter of 2014. A contract in the commercial real estate sector was awarded by the Jabal Omar Development Company to Saudi Tabreed in the amount of SR560 million. Saudi Tabreed will develop and build the first two phases of the district cooling plant, which will have a capacity of 55,000 refrigeration tons. There was a relatively noticeable dip in the value of con-tracts awards during March, as SR7.2 billion worth of con-tract were awarded. The power and industrial sectors ac-counted for the largest portion of contracts awards by value during March with 24% and 21% shares, respectively. The SEC and the Royal Commission for Jubail & Yanbu (RCJY) awarded approximately SR1.7 billion worth of contracts. Two contracts were awarded by SEC for the construction and installation of a conversion station and for the manufac-turing, importing and installation of a 300 km double circuit in Riyadh. These two contracts amounted to approximately SR763 million riyals and are expected to be completed within 30 months. The RCJY awarded two contracts to SSEM and Al Babtain Contracting Company in the amount of SR970 million for the installation of two 1,500 MW electricity power plants in Ras Al-Khair. Both projects are expected to be completed within 38 months. The industrial sector had two contracts worth approximately SR1.5 billion. The notable contract, which was awarded by Maaden to Azmeel Contracting & Construction Company pertained to the EPC of a new housing project for Maaden's employees as part of the first phase of the Mutrafiah Hous-ing Project at Jubail Industrial City. The SR1 billion project calls for the construction of 800 villas, the first of which will be available for occupancy by the fourth quarter of 2014. The Mutrafiah housing Project will include a total of 3,600 villas once the full project is completed. The roads sector had numerous contracts that were awarded by the Ministry of Municipal and Rural Affairs that amounted to approximately SR1.4 billion. The majority of these contracts were awarded to local contractors and were mainly aimed at improving road conditions in addition to ex-tending roadway linkages across the Kingdom. – SG
