Saudi Arabia hires Bechtel to run infrastructure projects office

US firm will run new office tasked with reducing inefficiencies and trimming costs on major projects

(AFP/Getty Images)

(AFP/Getty Images)

Saudi Arabia has appointed US-based Bechtel Corp, one of the world's largest industrial contractors, to run a new oversight office tasked with reducing inefficiencies and trimming costs on state infrastructure projects.

Bechtel will help the Saudi government set up and run its new National Project Management Organization (NPMO), known in Arabic as Mashroat, it said in a press release without elaborating on the size of the contract.

The firm has worked on mega-projects in the Islamic kingdom for some 70 years, including airports and the sprawling Jubail and Ras al-Khair industrial cities. It is currently developing two of six lines on the $20 billion Riyadh Metro project.

The Saudi cabinet created the NPMO office last year as part of a broad government effort to overhaul the economy and close a gaping budget deficit, as sustained low oil prices have taken a toll on the kingdom's finances.

Projects throughout Saudi Arabia slowed to a halt last year as the government delayed payments to contractors for their work, in some cases for more than a year.

Officials told Reuters in late December that the government had paid 100 billion riyals to the private sector over the previous two months, and pledged to pay future debts within 60 days of receiving the invoice.

At least $13.3 billion of government projects are at risk of being cancelled in Saudi Arabia this year because of fiscal pressures and shifting government priorities, according to a study by consultants Faithful+Gould.

The total value of project awards for 2017 is forecast at $27 billion, and could rise to $32 billion if the Mecca Metro project, which was originally expected to be awarded in 2016, goes through this year.

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