Creating new perspectives since 2009

Saudi in dispute over billions of dollars in unpaid bills 

April 6, 2021 at 3:10 pm

The corporate headquarters of Bechtel Corp. is shown April 18, 2003 in San Francisco, California [David Paul Morris/Getty Images]

Saudi Arabia reportedly owes billions of dollars to some of the largest construction companies in the world in unpaid bills for work completed on the Riyadh metro project, which is key to Crown Prince Mohammed bin Salman’s plan to modernise the Kingdom.

Several global firms, including the US-based Bechtel Corp, have said that they are pursuing billions of dollars in unpaid bills, according to five people familiar with the matter cited in Al Jazeera.

Bechtel is reportedly owed around $1 billion for the transport system according to four of the people. Companies working on the project — which also involves French, Spanish and Italian firms — are also said to be pursuing several billions of dollars in unpaid bills in total, two of the people said, with Bechtel owed the most.

The Royal Commission for Riyadh City, which oversees the project, said in a statement that payments to contractors “have been made in a timely manner” and “the aforementioned claims are being assessed as per a dispute resolution process stipulated within the contract.”

Officials in Riyadh are also reported saying that they are committed to paying on time and have taken significant steps to resolving the problem.

READ: Saudi government ‘fail to pay’ $4.7bn phone bills

A combination of an oil price slump since 2015 and the coronavirus pandemic is said to be the reason for the dispute over unpaid bills. Riyadh has been combatting a huge deficit in recent years and consecutive quarters of economic contraction.

Riyadh projected an overall economic contraction of 3.7 per cent last year and growth of 3.2 per cent in 2021.

Three of the people said that the overdue payments are also related in part to construction delays and cost overruns caused by the coronavirus pandemic, which trapped some workers outside the kingdom and made it difficult to continue the pace of work on the project.

Last year, the payment dispute took on diplomatic overtones when the American, French and Spanish embassies in Riyadh raised the matter in a letter to the Saudi government, two of the people are reported saying.

The Riyadh metro is key to Crown Prince Mohammed bin Salman’s plans to double the size of the city and turn it into an international business hub. It is among the largest projects of its type in the world, with six lines being built by three consortia, and is said to be about 90 per cent complete.

Last year prominent members of the Saudi royal family were sued by British entrepreneur Gary Arnold for their alleged failure to honour a deal that has left him facing imprisonment.