Saudi Government Accused of Favoritism in Awarding Major Contract

The state-owned Saudi National Water Co. reportedly plans to spend $38 billion on water projects over the next 16 years. As the world’s largest producer of desalinated water, the Saudi government sure spends a lot of money on water projects. There are, however, some questions over how this money is being spent and the lack of necessary oversight in the process for awarding major government contracts.

On November 21, al-Riyadh daily reported that China’s SEPCO3 complained to several Saudi government departments, including the National Anti-Corruption Commission and the General Audit Bureau, after they lost competition for a contract to build a power plant in Yanbu. The company chief sent an angry letter to the Minister of Water and Electricity saying that the contract was awarded to a local company that lacks experience to build the project, which would cost SR11 billion and supply Madinah with water and electricity

SPECO3 chief wrote in his letter to the minister: “I met with you in your office on 14/11/2012 and the meeting was attended by the representative of the Chinese Embassy. You said you would award the project to a local company despite the fact it does not meet the requirements of the bid, did not submit complete documents and did not have enough experience,” Saudi Gazette reported.

The Ministry of Water and Electricity has rejected the assertion that it has favored a local company, the newspaper reported. In a statement issued earlier this week, the ministry said the contract was awarded to the local company because SEPCO3’s tender was SR700 million higher in terms of capital, saying “All information Sepco Electric mentioned in its letter did not have a shred of truth and was mere fabrications.”