Saudis to shelve projects worth 'billions of dollars' as cheap oil bites - report
Saudi Arabia has reportedly canceled or restructured economic and infrastructure projects worth billions of dollars.
Reuters in a report quoted government sources as saying that the Saudi government had ordered ministries and organizations to review the projects to either scrap or make them more efficient.
The report added that most of the projects that had been targeted were those that had been devised during lavish government spending buoyed by crude oil prices above $100 per barrel.
However, they would no longer be cost-efficient with oil at below $55 per barrel.
Riyadh's Bureau of Capital and Operational Spending Rationalization is now assessing the projects that are under 25 percent complete, the sources told Reuters.
"Some projects could be retendered so they can be executed in partnership with the private sector, possibly through build-operate-transfer (BOT) contracts," one source familiar with the plan told the agency.
"Other projects could be suspended if they do not meet the current economic objectives," the source said.
The finances of Saudi Arabia, the world’s second largest crude producer after Russia and largest oil exporter, have been hit by a downturn in oil prices that were above $100 a barrel in 2014, but start to plunge to well below $40 in 2016.
The plunge in global oil prices prompted Riyadh to rein in public spending in a bid to save money. The kingdom’s economic measures are being led by Salman's son, Deputy Crown Prince Mohammad bin Salman Al Saud.
Earlier last year, the Riyadh regime cancelled financial perks for public sector employees and slashed salaries of ministers and members of the Consultative Assembly of Saudi Arabia, also known as the Shura Council.
It further froze major building projects and made unprecedented cuts to fuel and utilities subsidies.
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