Aug 24, 2022
Saudi Arabia Nears Deal to Settle Billion-Dollar Metro Dispute
, Bloomberg News
(Bloomberg) -- Saudi Arabia is set to pay contractors billions of dollars to resolve a dispute over the Riyadh metro, people familiar with the matter said, taking the long-delayed project one step closer to completion.
Two out of three consortia, which include Bechtel Group Inc. and Alstom SA, have already reached an agreement for the disputed payments, the people said, asking not to be identified as the information is private. The third group, which includes Italy’s Webuild SpA, is expected to sign a deal soon, they said.
Contractors working on the project were pursuing several billions of dollars in payments in total, with Bechtel asking for around $1 billion, Bloomberg has reported.
An agreement would mark a turning point in a dispute that has dragged on for years and hampered government efforts to upgrade the traffic-clogged Saudi capital. It would also help ease lingering concerns about the kingdom’s attitude toward contractor payments.
Withheld Payments
Authorities withheld tens of billions of dollars owed to construction firms and suppliers during after the 2015 oil slump to help rein in a ballooning budget deficit. But with the price of crude rebounding this year, Saudi Arabia is now set to record its first budget surplus in nearly a decade.
Saudi Arabia awarded contracts worth about $22 billion in 2013 to develop the metro system, which includes roughly 175 kilometers of rail track. The project was originally due to be completed in 2019.
Representatives for Bechtel and Alstom didn’t immediately respond to requests for comment. The Royal Commission for Riyadh City, which oversees the project, also didn’t respond.
Saudi Arabia’s Unpaid Tab With Metro Builders Runs Into Billions
Other companies involved in the project include Spain’s Fomento de Construcciones & Contratas SA and the UK’s WS Atkins Ltd.
Completing the Riyadh metro is an important part of Crown Prince Mohammed bin Salman’s plans to double the size of the city and turn it into an international business hub, while cutting emissions.
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