MENA records 116% jump in value of PPP projects over past 12 months

October 11, 2017

The Middle East and North Africa (MENA) region witnessed a 116 per cent jump in the value of projects planned or underway using public private partnerships (PPP) over the past 12 months, according to a new research from MEED.

MEED, in its latest report ‘PPP in the Middle East & North Africa 2017’ said that about 151 PPP projects are currently planned or underway across the region outside the energy sector with a combined value of about US$185bn.

According to MEED’s report, there are 11 PPP projects in Oman which are in planning and execution stage with a total value of around US$2bn.

The report looks at the region’s plans to use PPP to deliver government infrastructure and services such as railways, airports, housing and healthcare that traditionally have been delivered directly by government agencies.

The fall in oil prices since 2014 is restricting the capacity of governments to fund new infrastructure projects and finance ministries are increasingly seeking to engage the private sector in designing, building, financing and operating public sector infrastructure and services, the report said. But it warns that significant legislative, capacity and political barriers remain to be overcome if the region is to deliver its PPP plans.

“The rise of PPP over the past few years is one of the most strategically significant shifts in the business landscape of the Middle East since the nationalisation of the oil industry in the early 1970s,” MEED’s editorial director Richard Thompson said.

“But it is not easy,” he said. “The transition from full government control to private-sector control requires a host of difficult changes to be implemented covering everything from the way entire industries are regulated, to how much things cost over, to who has decision making authority. It requires new skills and technical capacity.”

According to the report, the PPP pipeline will grow further in the next two to three years as governments seek to increase private sector participation to complete mega-projects, especially in the transportation sector.

It said most of the PPP projects planned are in the GCC nations. With about US$42.9bn worth of PPP projects planned, Saudi Arabia has by far the biggest pipeline of PPP projects and has recently created a dedicated unit, the National Centre for Privatisation (NCP) to deliver the programme. Kuwait and the UAE are also moving forward with their PPP project pipeline, while Oman and Qatar are planning to launch PPP legislation in the second half of 2017.