U.S.-based Bechtel Corp. and other international firms are pursuing billions of dollars in unpaid bills from Saudi Arabia’s government for work done on the Riyadh metro project, according to five people familiar with the matter.
Bechtel is owed around $1 billion for the transport system, a cornerstone of the government’s efforts to upgrade the traffic-clogged Saudi capital, according to four of the people. Companies working on the project — which also involves French, Spanish and Italian firms — are pursuing several billions of dollars in unpaid bills in total, two of the people said, with Bechtel owed the most.
The overdue payments are related in part to construction delays and cost overruns caused by the coronavirus pandemic, which trapped some workers outside the kingdom and made it difficult to continue the pace of work on the project, three of the people said. The payments dispute took on diplomatic overtones last year when the American, French and Spanish embassies in Riyadh raised the matter in a letter to the Saudi government, two of the people said.
Government contractors have complained for years about overdue payments since a 2015 oil price slump led authorities to withhold tens of billions of dollars to help rein in a ballooning budget deficit. While that decision helped to keep a lid on state spending, it dented the confidence of a private sector that relies heavily on government contracts.
Officials say they’re committed to paying on time and have taken significant steps to resolve the problem. But the crash in crude prices last year appears to have led to similar delays for some companies, though the problem is less systemic than before.
Bechtel didn’t respond to a request for comment. The Royal Commission for Riyadh City, which oversees the project, said in a statement that payments to contractors “have been made in a timely manner” and “the aforementioned claims are being assessed as per a dispute resolution process stipulated within the contract.”
Other companies involved in the project include Spain’s Fomento de Construcciones & Contratas SA, the U.K.’s WS Atkins Ltd. and Italy’s Salini Impregilo SpA, which has been rebranded as Webuild.
The Riyadh metro is key to Crown Prince Mohammed bin Salman’s plans to double the size of the city and turn it into an international business hub. It’s among the largest projects of its type in the world, with six lines being built by three consortia, and is about 90% complete, two people familiar with the matter said.