UAE project awards hit $10b in Q1 as diversification drive picks up steam

Saudi Arabia, the UAE, and Qatar jointly accounted for 84.1% of GCC projects


Issac John

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The UAE is the second-largest projects market in the GCC. - KT file
The UAE is the second-largest projects market in the GCC. - KT file

Published: Fri 28 Apr 2023, 2:22 PM

Last updated: Mon 1 May 2023, 2:09 PM

Project awards in the UAE more than doubled in the first quarter of 2023 to reach $10 billion, underscoring the fast-track economic diversification drive undertaken by the nation and the brightening prospects of the oil and non-oil sectors.

The UAE is the second-largest projects market in the GCC as Saudi Arabia topped the region during the first quarter. The UAE, which has 11 initiatives as part of its industrial strategy “Operation 300bn” covering various sectors, is currently on track to boost its industrial sector’s contribution to the GDP to Dh300 billion by 2031 from Dh133 billion at present.

Saudi project awards recorded 17.9 per cent growth during the quarter to reach $13.3 billion compared to $11.3 billion last year, according to Kamco Invest data released on Thursday.

Saudi Arabia’s growth in contracts during the quarter was mainly fuelled by Saudi Aramco’s bumper profits during FY-2022, which ballooned to $161.1 billion. Aramco’s capex is expected to grow 20 per cent during 2023 as the energy giant undertakes its mission to build its long-term oil and gas production potential.

Saudi Arabia, the UAE, and Qatar jointly accounted for 84.1 per cent of the overall projects in the GCC, Kamco data shows.

The GCC project awards expanded during the first three months of the year despite global economic challenges such as the financial sector turmoil, elevated inflation, and the ongoing Ukraine-Russia conflict, Kamco said. The boom in project awards has been partly fuelled by the determination of the GCC countries to diversify their economies away from hydrocarbons, it said.

The total value of GCC contracts awarded increased by 54.7 per cent Y-o-Y during Q1 to $29.9 billion as compared to $19.3 billion last year spearheaded by the Saudi market, which alone accounted for 44.6 per cent of the contracts awarded in the region. This was the second-highest quarterly project award since the start of 2022, stated the report.

Except for Bahrain, which remains the smallest project market in the region, all GCC markets witnessed Y-o-Y project awards growth during Q1 2023. Kuwait’s contract awards reached $1.8 billion compared to $407 million last year, recording the highest percentage contract awards growth in the region during the quarter with the government streamlining 164 programs and projects for its national industrial strategy with $100 billion earmarked for development through public-private partnerships.

Across the GCC, the chemical sector witnessed the biggest increase in the value of projects awarded during the year recording a $4.7 billion y-o-y increase in new contract awards to hit $5.7 billion during Q1, Kamco Invest report said.

GCC countries have backed and invested in projects in the industrial sector such as aluminum, steel, and other industrial equipment manufacturing projects. Saudi Arabia plans to invest $453.2 billion in its National Industrial Development & Logistics Program by 2030.

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