When international project finance schemes were in their infancy in the early 1990s, Saudi Arabia was always one of those markets referred to as “back burner material” by bankers. The reasons were numerous: the government and its powerful parastatals wanted to retain control of infrastructure; the legal and regulatory systems were insufficiently developed; local banks were usually flush with cash; and, perhaps most importantly, there was the sensitive question of the guarantees required to draw in investors and lenders.
The Saudi leadership has watched and waited carefully as neighbouring markets such as Abu Dhabi, Oman and Qatar have laid down project finance templates and sucked in tens of billions of overseas dollars. They have gradually reformed the economy and slowly expanded its private sector, but have baulked several times at committing to private finance, such as when a build-own-operate (BOO) contract covering a 1750MW steam power plant for Saudi Consolidated Electric Company in the West was discarded in favour of a more traditional engineering, procurement and construction (EPC) contract.
