Royal reprieve for Binladin Group as Saudi prepares escape from oil

Saudi Arabia is letting the giant contractor Saudi Binladin Group (SBG) bid for state projects again after banning it in September last year when a large crane toppled at Mecca’s Grand Mosque, killing 107 people.

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, who is driving a new economic plan to diversify away from oil (Mazen AlDarrab/Wikimedia Commons)

The reprieve will be very welcome news for the builder, which is hurting from the effects of a slow-down in Saudi Arabia due to the low oil price, and from the freeze imposed by the government, which is its main client.

The royal family may feel an increased need for SBG’s help after Deputy Crown Prince Mohammed bin Salman (pictured), the 31-year-old driving a bold economic modernisation plan, last month announced a suite of measures to designed to end the kingdom’s reliance on oil by 2020 through leveraging private investment.

Revealed today, the decision comes after foreign employees of SBG burned company buses outside its Mecca headquarters on 30 April in protest over news of mass layoffs.

An unnamed SBG executive told Reuters today that the royal decree lifted a travel ban imposed on SBG’s top managers following the crane collapse.

SBG can also resume work at the multi-billion dollar King Abdulaziz International Airport project in Jeddah, Reuters reported, adding that Gulf commercial bankers have said the stricken company is believed to owe local and international banks a total of about $30bn.

It was not clear whether Saudi authorities had absolved the company of liability for the crane disaster.

In Mecca demonstrations turned violent last week after an article in the Al-Watan newspaper quoted an unnamed SBG source as saying the company would sack 77,000 foreign workers and issue exit visas. This led many workers, who complained of having not been paid for months, to worry that they would be deported without wages.

News also circulated that 12,000 Saudi managerial staff would be laid off, a highly unusual move given the expense and legal difficulty of dismissing Saudi nationals. The total workforce of the company is about 200,000.

SBG, founded by the father of Osama bin Laden, has been crucial to the Saudi government in delivering major building schemes because few local contractors can match its capacity.

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