Dubai missed out on privatisation

06 September 2010

Public-private schemes are now being tendered on a regular basis as governments look to reduce risk

Public-private partnerships (PPPs) are rapidly gaining popularity in the Middle East. Until recently private finance initiatives tended to be limited to the utility sector in the form of independent power and water projects.

But today throughout the region new legislation has been or is being introduced to facilitate greater private sector involvement in funding public works.

PPP projects are now being tendered on a regular basis as governments press ahead with infrastructure development. In Saudi Arabia, the Medina airport project is being undertaken as a PPP; Abu Dhabi is developing the $2.7bn Mafraq-Ghweifat road as a private finance scheme; Bahrain is looking for investors to help it meet its social housing requirements; and Jordan is planning $30bn-worth of megaprojects that without private assistance it simply could not afford to execute.

Even Kuwait, which traditionally has resisted private finance schemes including in the utility sector, last year set up a body whose sole remit is to encourage private investment in public works and state assets. The Partnerships Technical Bureau (PTB) has been charged with overseeing some $28bn-worth of projects.

This surge in interest in PPPs has come in the wake of the global economic downturn. It is a natural response to the crisis, which exposed the dangers of governments overleveraging. Middle East governments are now rightly more cautious about signing off cheques worth billions of dollars.

As in the UK, where the idea of private finance initiatives was first developed, once introduced, PPPs will be here to stay.

Unfortunately, the concept came too late to the region for Dubai, which will continue to struggle with the consequences of its extravagance for many years to come.

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