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Tue 5 Apr 2016 01:40 PM

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Payments 'on the way' to troubled Saudi contractors, says senior official

Deputy crown prince Mohammed bin Salman says Saudi Oger and Binladin Group will be paid arrears soon

Payments 'on the way' to troubled Saudi contractors, says senior official
Deputy Crown Prince Mohammed bin Salman of Saudi Arabia. (Getty Images)

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman has said that government arrears owed to two of the kingdom’s largest contractors, Saudi Binladin Group and Saudi Oger, will be paid soon.

In an interview with Bloomberg, Prince Mohammed said: “A number of companies have already been paid and the rest is on its way,” in answer to a question as to whether the two firms would be paid.

Binladin has historically worked on some of the kingdom’s most prestigious projects, building up a workforce of 200,000 as it prospered from government contracts on the back of the oil boom.

But a slowdown in government spending has contributed to complaints from workers this year that they are not being paid, while the firm was reported to have laid off 15,000 staff in 2015. It is estimated by Reuters that Binladin is around $30 billion in debt.

Saudi Oger has been similarly hit by the cuts in spending, and is the subject of an investigation by the Labour Ministry into delayed salary payments.

“The problem with Saudi Oger is different to one we have here in Saudi,” Prince Mohammed told Bloomberg. “We have paid them many instalments, but they have debt in and out of Saudi.

“So as soon as money is transferred to their bank accounts, the bank withdraws it. Saudi Oger can’t cover their own labour costs.

“That’s not our problem, that’s Saudi Oger’s. The contract between us and Saudi Oger, we will honour it. But if the bank withdraws our instalments and Saudi Oger can’t pay a thing to its own contractors and workers, that’s their own problem. They can take them to court.”

Prince Mohammed also said that the reason for the delayed payments was a series of decrees and decisions over the course of the last six years that enabled Saudi ministries to commit to more than $1 trillion in spending.

“To this day, no contractual agreements were made by these entities,” he said, “However, these entities still had the power to sign on more than $1 trillion. If passed, this would have been a catastrophe. So we froze them in 2015 and abolished three quarters of them that had no contractual commitment.

“The remaining quarter are things that have contractual agreements and things that we need to move forward on. We’ve started to restructure the process of handling them which is what caused this confusion in the past. But no doubt we are committed to any contractual agreements made by the Saudi government. But there was a grave danger and we were able to avert it.”

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