Saudi Prince speaks on construction payment delays
A restructuring process is underway to streamline contractual agreements and avoid future errors, Saudi deputy crown prince Mohammed bin Salman reportedly said
Delays in government payments to contractors in Saudi Arabia were spurred by a major restructuring process being imeplemented by the Kingdom.
Saudi deputy crown prince Mohammed bin Salman reportedly said the activity is a part of the government's initiative to streamline its operations.
Prince Mohammed said "there is no doubt" the issue of delayed payments – likely to discourage investors eyeing Saudi Arabia – "will be dealt with".
He continued: "What causes this commotion is that we were trying to avoid a bigger danger.
"We tried to compile all decrees over the last few years and we found that ministries could commit to more than $1 trillion based on these decrees.
"There were also decisions approved six years ago and to this day, no contractual agreements were made by these entities.
"However, these entities still had the power to sign on more than $1 trillion. If passed, this would have been a catastrophe," he continued, according to Bloomberg.
Prince Mohammed said some of those entities were 'frozen' in 2015, and abolished three-quarters, which had no contractual commitments.
"The remaining quarter are things that have contractual agreements and things that we need to move forward on," he continued.
"We’ve started to restructure the process of handling them which is what caused this confusion in the past.
"But no doubt we are committed to any contractual agreements made by the Saudi government. But there was a grave danger and we were able to avert it."
A number of companies, the prince added, have already been paid, with remaining payments on the way, the report stated.