Government working on offtake agreement for social housing scheme
The government of Bahrain is currently working with its advisers to see what level of state support is necessary to get private sector finance for a social housing project.
Sheikh Ahmed bin Mohammed al-Khalifa, the country’s finance minister, told MEED: “We are waiting to see the shape of the proposals from some of the groups interested in developing the project to help us see what we need to do to support the scheme.”
|Source: Bahrain Central Informatics Organisation, 2008 figures|
Typically, the projects that are most attractive to private finance are structured with a guarantee from a government agency to make periodic payments to the private sector developer in an offtake agreement. “We are still studying how to make this attractive to the private sector,” says Sheikh Ahmed.
He adds the first phase of the scheme, which involves developing about 5,000 social housing units, will be a pilot to help formalise the structure used to develop further housing projects.
A government source in Bahrain says that at a meeting in February, around 12 to 15 consortiums were identified as being interested in developing the project. Bahrain is planning to issue a tender for the first phase of its housing project by the end of this month (MEED 19:2:10).
The scheme was launched by the Economic Development Board (EDB), as part of its plans to address a housing shortage in the country. The EDB wants to see 20,000 low-cost homes constructed in the next 10 years in several phases.
Three locations are being considered for the first phase, Al-Buhari east of Riffa area, an area of reclaimed land known as North Bahrain Newtown and Al-Lawzi. The land will be given to the winning consortium for free.
The Housing Ministry is being advised by Ernst & Young, the UK’s Mott MacDonald and law firm Freshfields Bruckhaus Deringer.
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