Saudi Arabia has allowed major builder Saudi Binladin Group to resume bidding for state projects, a senior Binladin executive said on Thursday, in a decision that may ease financial pressure on the troubled firm and banks which lend to the group.
The company, one of the Middle East’s largest builders, has struggled since last September, when it was suspended from obtaining new government contracts after a crane toppled into Mecca’s Grand Mosque during a storm, killing 107 people.
It has now received a royal decree allowing it to bid for state contracts again, and a travel ban imposed on its top managers after the disaster has been lifted, the executive told Reuters, declining to be named under briefing rules.
He was confirming a report in the al-Watan newspaper, which in addition quoted a spokesman for the civil aviation authority as saying that Binladin would resume work at the multi-billion dollar King Abdulaziz International Airport project in Jeddah.
Bank shares rose sharply on the Saudi stock market on Thursday with National Commercial Bank, the largest listed lender, gaining 2.6 per cent.
Binladin has declined to describe its financial situation publicly but Gulf commercial bankers have said it is believed to owe a wide range of local and international banks a total of about $30 billion.
In addition to the bidding suspension, the company has been hit hard by a general slump in the construction industry as the government has cut spending in response to low oil prices, and bankers have worried that Binladin could have to restructure some of its debt.
The company, which last year had a total workforce of around 200,000 according to its LinkedIn page, has laid off tens of thousands of foreign workers in Saudi Arabia, and others have staged public protests after going unpaid for months.
Government officials dealing with Binladin could not be reached for comment on Thursday, and it was not clear whether authorities had absolved the company of any further liability for the Mecca crane disaster.
There are strong reasons for the government to ease the financial pressure on Binladin; it is involved in projects considered strategic for the economy, such as the Jeddah airport, and few other local firms have its capacity.
Also, Binladin’s financial problems could weaken the wider economy. Some of its suppliers have been hurt, and al-Watan reported on Monday that the company was expected to lay off 12,000 of 17,000 Saudis employed by Binladin in supervisory, administrative, engineering and management jobs.
That could be politically difficult for the government as it seeks to prevent an economic slowdown due to low oil prices from boosting unemployment.
Labour Minister Mufrej al-Haqbani said on Tuesday that the crisis surrounding Binladin would be resolved and that some of its workers would receive their unpaid salaries this month, while others would get the money later. He did not say how the company would obtain the money.