Covid-19 spurs region’s PPP programmes

31 August 2020
Impact of the Covid-19 pandemic and plunging oil prices provides further impetus for the region’s PPP schemes

Commentary
Richard Thompson
Editorial director

The fiscal legacy of Covid-19 is that the region can no longer afford to finance all of the infrastructure projects and public services required to meet the needs of its growing population and expanding industrial base.

A change in approach is required in the way that government projects are financed. And right at the top of the agenda are public-private partnerships (PPP).

On paper, using PPP to lever in the financial and technical capabilities of the private sector to design, build, finance and operate public services is a ready-made solution. 

But PPP has had a challenging history in the region. Outside of the electricity and water sectors, PPP has largely failed to gain traction despite government efforts over the past 10 years.

In markets such as Egypt, Kuwait and Oman, dedicated bureaus have been set up to plan and deliver PPP programmes, but they have been undermined  by a lack of institutional capacity and commercial track record, as well as, in some cases, political disagreements.

Covid-19 has changed the calculus. There is now more alignment to deliver successful PPPs and the coming years will see a rapid acceleration of PPP projects across the Middle East and North Africa.

As countries seek to tap private investment capital, governments are moving hastily to prepare PPP legislation and regulatory frameworks, while drawing up significant pipelines of projects to take to the market.

The need to make progress will see governments focus on offering commercially attractive projects that balance risk allocation and reward between the public sector project sponsor and the private sector developers.

But governments must beware. In their haste for progress, they must ensure that they are getting the best value from any deals.

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> Algeria: PPP framework fails to modernise
> Bahrain: Manama ramps up its PPP plans
> Egypt: Mixed results for Egyptian PPPs
> Iraq: Crises and protests curb Iraq PPPs
> Jordan: Construction sector eyes PPP opportunities
> Kuwait: Corner turned on water and power schemes
> Lebanon: PPPs offer route to recovery
> Morocco: Rabat reforms legislation to spur PPPs
> Oman: Muscat risks PPP confidence loss
> Saudi Arabia: Riyadh refocuses PPP plans
> Tunisia: PPP plans draw broad support
> UAE: PPPs expected to take off in UAE
> Other GCC: Gulf state bolsters legislation to drive PPPs

 

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