Built to inform

Sign up for the daily newsletters

No, Thank you

Al-Khodari cancels $25m contract with Saudi transport ministry

Loss-hit contractor requests deal's termination after concerns raised over cost of resources required to build two-lane highway

Al-Khodari has cancelled a road project [representational image].
ITP / Mohammed Mahjoub / AFP / Getty Images
Al-Khodari has cancelled a road project [representational image].

Saudi Arabian construction contractor Abdullah Abdul Mohsin Al-Khodari Sons & Co has terminated its road-building contract with the kingdom’s Ministry of Transport citing lack of adequate resources to deliver the project.

The cash-strapped company asked the government to terminate its $24.6m (SAR92.4m) infrastructure agreement for a two-lane road through Al Wadiah, Najran, and Sharorah in the south of the kingdom. 

Al-Khodari said it was concerned by the cost of resources the project would require, and confirmed that the transport ministry's cancellation would lead to a financial impairment cost of $9m (SAR33.8m).

In a missive to Saudi bourse Tadawul in February 2019, the contractor said its cumulative losses had reached $295.2m (SAR1.1bn) – or 198.5% of its capital.

Payment delays and an increase in the Saudisation rate for large contracting companies were cited as key factors impairing Al-Khodari.

A restructuring activity is under way at the contracting outfit. 

Most popular

Awards

Construction industry conversations around digitisation must evolve
The Middle East construction industry’s approach to tech must evolve and focus on how can

Conferences

CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 753
Nov 09, 2019