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Khodari says Saudi budget to raise costs by $11.8m

Saudi's budget, which comprises spending cuts and subsidy overhauls, will increase Al Khodari's operational costs over the next five years

Al Khodari has previously filed $18m in claims for its worker levy.
Al Khodari has previously filed $18m in claims for its worker levy.

Saudi contractor Abdullah Abdul Mohsin Al Khodari and Sons claimed the Kingdom's increased energy and electricity prices will raise its operational costs for outstanding projects over the next five years. 

Last week Saudi Arabia announced a 2016 budget comprising spending cuts, subsidy overhauls, and taxation, in order to meet its financial targets.

Al Khodari claimed these changes would increase its costs by $11.81m (SAR44.3m) between 2016 and 2020. 

In a bourse statement to Tadawul, the contractor said its operational costs will increase by $5.8m (SAR22.1m) in 2016, "which may possibly be of a significant impact on the net profit of the said financial year".

Its cost increase projections stand at $3.3m  (SAR12.4m) in 2017, $2.2m (SAR8.5m) in 2018, $239,747 (SAR900,000) in 2019, and $106,554 (SAR400,000) in 2020.  

The 2016 budget, released by the Kingdom's finance ministry on 28 December, includes what are being viewed as politically-sensitive reforms which authorities have historically shied away from.

Al Khodari reported a loss of $3.81m (SAR14.3m) in the three months to 30 September, 2015, compared to a profit of $3.99m (SAR15m) for the same period in 2014.

In November 2015, the contractor submitted claims worth $17.6m (SAR66m) with regard to foreign workers's permit fee, reportedly in a bid to recoup a part of the fines it has been levied.
 

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Construction Week - Issue 747
Aug 03, 2019