Middle East to award contracts worth $159bn
Project owners and contractors must explore other opportunities beyond traditional bank lending
Project owners and contractors are scrambling for project financing as new regulations come into force.
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$159bn worth of contracts will be awarded across the Middle East in 2013. Project owners and contractors are scrambling for project financing as the banking sector in the region adopts new regulations, including the Basel III code, and cuts back on long-term lending activity.
“Financing is a critical issue that must be addressed as the project sector continues to recover and grow,” said Edmund O’ Sullivan, Chairman, MEED Events. Project owners and contractors must explore other opportunities beyond traditional bank lending to ensure the realisation of the projects.
Bigger contracts are pending as Qatar enters the next critical phase of its preparations to host FIFA World Cup in 2022, and to bid for the Summer Olympics in 2020.
Before the 2008 financial crisis government infrastructure projects in the Gulf Cooperation Council (GCC) were financed mainly through syndicated loans led for foreign banks. At the height of the crisis, the availability of project finance dried up while at the same time propelling debt costs upwards.
Now with the Basel III accord and new banking regulations, multi-currency loans permit local banks to lend in local currencies, with new and tighter caps introduced in recent years. In addition to major regional banks, the gap in project financing is filled by credit agencies and the bond markets.
