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Government’s CAPEX forecasted to rise by 9.4% by 2023-end
The Saudi government’s capital expenditure (CAPEX) and sovereign Public Investment Fund’s (PIF) giga projects will boost the cement sector’s demand in the short and long term, Riyadh-based financial consultancy AlJazira Capital said in a report.
In addition, the move will offset the impact of dwindling housing construction demand.
The government’s CAPEX increased by 22 percent to 143.5 billion Saudi riyals ($38 billion) in 2022, driven by a jump of 52 percent in oil income, the report said.
The Ministry of Finance expects the government’s CAPEX to increase by 9.4 percent to SAR157 billion ($42 billion) by 2023-end. The government’s CAPEX has already increased by 75 percent year-on-year in the first quarter of 2023 to SAR26 billion $6.9 billion).
As part of the Shareek investment plan in March, designed to assist significant Saudi enterprises in increasing the economic output of the kingdom’s private sector, the government plans to invest $51 billion among eight Saudi companies.
According to AlJazira Capital, the PIF and Royal Commissions’ Vision 2030 initiatives will be the primary force behind cement demand.
Construction contracts worth $24.4 billion were awarded in 2022, with the total amount awarded close to $46 billion, just 5.3 percent of the $867 billion estimated value of giga projects.
Red Sea, King Salman Park, and Diriyah Gate are more advanced projects that are a source of high demand, while NEOM, which makes up around 57.6 percent of the overall value ($500 billion), is still in its early stages.
“We expect to see the reflection of those projects on cement demand starting from 2023 and to grow higher in 2024,” the consultancy stated. |
