Saudi Arabia invites Turkish companies for $60.5B road projects

In a significant move to bolster bilateral economic ties, Saudi Arabia has invited Turkish companies to participate in a $60.5 billion road project over five years. This development follows a renewed warmth in relations between Türkiye and Saudi Arabia, spurred by President Recep Tayyip Erdogan’s Gulf tour in 2023.

In her column, Sabah newspaper columnist Dilek Gungor reports on the potential for increased collaboration, highlighting statements from the head of the Turkish Contractors Association (TMB) Erdal Eren, who emphasized the Saudis’ interest in leveraging Turkish expertise through strategic partnerships.

The Saudis want to benefit from our experience by forming partnerships.

Erdal Eren

Renewed Türkiye-Saudi ties spur economic collaboration

After a three-year hiatus, relations between Türkiye and Saudi Arabia have improved following Erdogan’s Gulf tour, resulting in increased trade and investment.

Recently, Saudi Rural Affairs and Housing Minister Majid bin Abdullah Al Hogail visited Türkiye with 23 road contractors and recycling firms. Organized by TMB, Turkish and Saudi companies held discussions on potential partnerships.

Build-operate-transfer model in focus

Gungor highlighted that Minister Al Hogail and his delegation will conduct site visits, including inspections of the Northern Marmara Highway, the Yavuz Sultan Selim Bridge, and the Istanbul Environment Management Industry and Trade Company (ISTAC), one of the leading environmental management companies in Türkiye.

Eren explained that Saudi Arabia plans to execute the $60.5 billion road project swiftly.

The Saudi Minister emphasized the urgency of these projects. They will also use the build-operate-transfer model for solid waste recycling projects and are inviting Turkish contractors to participate

Erdal Eren

Eren mentioned that during the period of suspended relations between Türkiye and Saudi Arabia, the Saudis collaborated with Chinese and Korean contractors but faced issues with quality and timely completion.

LIMAK secures tunnel project

Eren also described Crown Prince Mohammed Bin Salman’s ambitious economic and cultural transformation initiatives, saying that Saudi Arabia is preparing for a post-oil era with a $1.4 trillion Vision 2030 plan that includes massive projects.

Saudi Arabia has allocated $500 billion for the NEOM project, $500 billion for the King Salman Energy Park, $1 billion for King Salman Park, and $8 billion for the Expo. They will build airports in 20 cities and have various tourism-themed projects in different cities. In a city with a 2,000-meter mountain, they plan to build a ski resort. Limak Holding has won the tender for a tunnel project under the mountain.

Additionally, they plan to connect an old oil platform to the mainland with steel bridges to create the world’s largest children’s amusement park. They are also embarking on projects that will change the country’s climate.

Erdal Eren

Legal challenges for foreign partnerships

Addressing questions about Saudi interest in Türkiye’s large infrastructure projects, Eren explained that before President Erdoğan’s Gulf Tour, ministries had shown interest in road, airport, bridge, and hospital projects. However, Eren said this interest waned because foreign investors require international arbitration clauses in contracts.

He noted that although this mechanism exists in Türkiye, the arbitration decision must be approved by the Supreme Court, which deters foreign investors from participating in such projects.