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Saudi Arabia Eyes $2.7 Billion in Contracts for Red Sea Project

red sea development saudi

(Bloomberg) — The company behind a major tourism destination on Saudi Arabia’s Red Sea coast that will include an archipelago of more than 90 islands as well as desert and mountain scenery hopes to award up to 10 billion riyals ($2.7 billion) in construction contracts by the end of 2020.

“Between now and the end of the year, we hope to award another two to three billion riyals in contracts, and onto next year, it will probably be six or seven billion more as we move further into the construction of the destination,” John Pagano, chief executive of The Red Sea Development Co., told Bloomberg TV in an interview Friday in Riyadh.

Read also: Saudi Arabia’s Red Sea Development Seeks to Raise $3.5 Billion

The firm, backed by Saudi Arabia’s sovereign wealth fund, awarded over 1 billion riyals in contracts this year, he said, for enabling works.

The Red Sea Project, which was first announced in 2017, covers 28,000 square kilometers (11,000 square miles) — an area about the size of Belgium — and will target regional and international luxury travelers. It is part of Saudi Arabia’s plans to transform the economy and cut its reliance on oil. The government on Saturday opened applications for online tourist visas, allowing citizens of 49 countries to have access to the kingdom. Saudi Arabia’s tourism industry has mainly been driven by visitors coming for religious reasons.

The first phase of the project is expected to be completed by 2022, and will include hotels and a commercial airport.

Pagano said the company plans to raise over 10 billion riyals in commercial debt to help fund it. “We’re currently in the market, principally with the domestic banks who have the appetite and interest to support this project,” he said. The equity will be funded by the sovereign wealth fund.

Bloomberg News reported in August that the firm was in talks with local banks for a 13 billion-riyal loan that may have a 15-year tenor. The company hopes to complete a deal by the end of the year, people with knowledge of the matter said at the time.

–With assistance from Giovanni Prati.

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