(MENAFN- Qatar News Agency) The value of awarded contracts increased modestly in Saudi Arabia during the third quarter of 2015 to SR60.9 billion and maintained the same level that was recorded in the previous quarter.
The value of awarded contracts in July slumped to SR3.2 billion, which was the lowest monthly level registered up till September of 2015, according to the NCB Construction Contracts Index Third Quarter 2015 released last week.
The report said key sectors suffered from a lack of mega-projects in July, which was the major reason behind the sharp decline. However, led by the oil and gas, residential, and water sectors, the value of awarded contracts picked up in August and September, recording SR25.1billion and SR32.6 billion, respectively, according to the Saudi daily (Arab News).
The oil and gas sector alone accounted for 75% of Q3, 2015 value of awards. The residential real estate sector garnered a distant second, with 10% of the value of awarded contracts, followed by the power sector, which contributed SR2.7 billion during the third quarter. The water and government sectors recorded SR1.8 billion and SR1.5 billion worth of contracts awarded, respectively.
Through the first three quarters of 2015, the value of awarded contracts reached SR177.8 billion, increasing by 12% from the same period a year ago. On an annual basis, the value of awarded contracts increased by 78% in Q3, 2015 in comparison to SR34.2 billion that was awarded during Q3, 2014. With oil prices expected to stay in the $40-$60 a barrel range for the foreseeable future, the general project outlook is a subdued one, as the Kingdom of Saudi Arabia looks to manage its budget deficit by cutting costs, issuing bonds and introducing fiscal reform. However, the SR60.9 billion in awarded contracts during Q3, 2015 still points to relative stability in the construction industry.
The Construction Contracts Index (CCI) has maintained a relatively healthy level on the back of strong performance during the first three quarters of 2015. The CCI dropped from 285.14 points recorded in June 2015 to 218.81 points in July, followed by 226.28 points in August, but rose again to 293.89 points in September.
The CCI is currently hovering within the 200-300 points range since the beginning of the year, which is expected to assume a moderating trend throughout the coming quarters.
On a regional basis, the NCB report said Eastern Province accounted for the largest share, which had 60% of the overall value of awarded contracts. The Eastern Province was the recipient of numerous megaproject contracts as part of Saudi Aramco's development of Al-Fhadli Gas Program worth SR24.0 billion.
Riyadh region captured 7% share, and witnessed a sizable power plant being awarded by Saudi Electricity Company (SEC), amounting to SR1.2 billion. There are other several projects in the water, industrial, and education sectors that were awarded in the remaining regions.
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