KSA puts financing plans for Riyadh Airport expansion on hold
Banking sources claim that plans have been put on hold as other projects prioritised
Saudi Arabia has put on hold financing plans potentially worth billions of dollars for the expansion of Riyadh’s airport, sources have said, indicating that the Kingdom could be reassessing strategic priorities as the coronavirus crisis continues to impact the country.
According to a report by Reuters, Riyadh Airports Company, the entity that manages and operates King Khalid International Airport in the Saudi capital, approached banks last year with a request for financing proposals for the planned airport expansion, which is reportedly worth several billions of dollars.
The plan to expand the airport is part of the country’s aim to diversify its economy, create jobs, and reduce its reliance on oil revenues, the report says, adding that three banking sources have said that the company has now put the process on hold.
“At this stage, it’s been cancelled,” said one of the sources. “In this environment I guess they have decided that it doesn’t necessarily make sense to borrow money to expand the airport right now,” said the source, speaking on condition of anonymity because the matter is private.
“It has been put on hold, postponed. They are prioritising projects based on budgetary needs,” a second source said.
The Saudi government has not responded to a request for comment, the report added.
In the aftermath of the coronavirus outbreak, Saudi Arabia has suspended international flights, with the General Authority of Civil Aviation (GACA) informing all airlines operating in the Kingdom’s airports that the suspension of international flights will be lifted completely and that Saudi airports will be fully operational only from March 31, 2021 onwards.
In 2017, the Kingdom had begun preparations to sell a minority stake in Riyadh Airport, which is the second biggest in the country, but by 2018, those plans had been suspended, sources told Reuters.
Saudi Arabia, the world’s largest oil exporter, saw its economy contract sharply in 2020 due to the combined impact of the coronavirus crisis and lower petroleum prices. It has announced plans to cut state spending in 2021 by about 7%.
However, earlier this week, the country also announced plans worth hundreds of billions of dollars to build a zero-carbon city at NEOM a 26,500sqkm high-tech development on the Red Sea, which is planned for completion in 2025.
