Bringing project finance will be a key factor for success in the Middle East’s projects market in 2021, according to GlobalData’s MEED. The company reviewed the region’s $3.4 trillion pipeline of future projects and found that the biggest challenge for companies in the Middle East projects industry since 2015 has been finding new work, with 2020 being the nadir of a five-year slowdown.

Richard Thompson, Editorial Director of GlobalData’s MEED, comments: “Project contract awards hit an all-time low in 2020, as governments focused on battling the COVID-19 health crisis and providing financial support for the economy. As we enter the final quarter of 2020 without a vaccine, further lockdowns and disruption are still on the cards. However, we are unlikely to see a repeat of the total economic shutdown in March and April.”

While the region’s pipeline of planned future projects is vast, at around $3.4 trillion, the majority of this value is still at the early stage of design or feasibility study. With government finances under stress as a result of COVID-19, many projects on the drawing board will be delayed, reduced or cancelled.

New opportunities in 2020 and 2021 will come largely from the $280bn of projects currently undergoing tendering, although not all of them will proceed as planned. Saudi Arabia and the UAE are the two biggest markets, accounting for over 40% of projects being tendered. While oil and gas, transport and power projects make up over 70% of the value by sector.

Thompson adds: “The biggest challenge is financing. The World Bank estimates that there is a $100bn shortfall in the funding needed to deliver the region’s infrastructure requirements. Governments can raise debt more efficiently that anyone else and they are doing so, as well as drawing on their reserves. However, they must manage rising debt and deficits.

“Any company able to bring in financing to a project, whether through export credit guarantees, or direct finance through public private partnerships (PPP) will be well placed to win new work in 2021.”