GCC’s USD500b infrastructure projects not affected on falling oil prices

21 Dec 2014

(MENAFN) According to a report by the World Bank, the massive spending on infrastructure projects planned by the Gulf Council Countries (GCC), which is expected to reach USD500 billion by 2020, is not expected to be affected by the continuous fall in oil prices, Arab News reported.

The report states that each country from the GCC has a plan to deal with the fall in oil prices, with Qatar planning to rely more on self-financing supported by its large fiscal surpluses to fund its projects as it continues to prepare for the hosting of the FIFA World Cup in 2022.

“We fund infrastructure projects by Qatar and we try to give the opportunity also to the private sector on some of the opportunities,” Economy Minister said on the sidelines of an investment event.

Relying on its fiscal surplus marks a change in Qatar’s policies as in previous massive projects, along with other countries, have relied on debts to fund its large-scale projects, like its Barzan gas scheme and Saudi’s Sadara chemicals complex, with most of their total costs, worth USD10 billion and USD20 billion respectively, being covered by debt.

Both Saudi Arabia and the UAE, who also have a large of fiscal surplus, have also said that they will fund their own major projects such as the Riyadh metro, with its estimated cost of USD22.5 billion, and the UAE’s first nuclear power plant, which will have a total cost of USD20 billion.

On the other hand, other countries like Oman and Bahrain, which do not have large surpluses to rely on, are planning to rely on loans to fund their projects such as the USD3.6 billion Liwa plastics plant in Oman and Aluminum Bahrain’s USD2.5 billion expansion, with gulf infrastructure loans totaling USD8.94 billion during the January-September period of this year, compared with USD16.12 billion during the same period in 2013.