Dubai to test the ambition of the PPP model

15 June 2017

As liquidity remains constrained, the emirate is turning to the private sector to take on major projects

The liquidity available for new projects may be constrained, but Dubai’s ambitions are not.

For the short-to-medium term, the emirate was quick to tap into project funding support from export credit agencies, notably from the UK. Longer term, the emirate set its sights on the public-private partnership (PPP) model and in 2015 passed legislation governing the use of any future PPPs.

More tentative steps on the road to PPP were taken last year, when Dubai Courts appointed Park Line for the $80m contract to convert a portion of the car park at the emirate’s main court complex.

Now in 2017, Dubai’s PPP future is becoming a little clearer. Another major PPP deal is close to being signed. The Roads & Transport Authority (RTA) is preparing to award the PPP contract for Union Oasis, the emirate’s first transit-oriented development (TOD).

More schemes have also been earmarked for delivery using the PPP model. Dubai Municipality is planning to develop the AED12.5bn ($3.4bn) Dubai deep sewer tunnels project under a PPP model, with sources close to the scheme saying the Netherlands’ KPMG is providing advice on how to structure the project.

Other big schemes are also expected to use the PPP model. The RTA is likely to build its estimated $817m Mohammed bin Rashid Stadium as a PPP as the Department of Finance (DoF) is reluctant to fund the project. The UK’s Deloitte was appointed last year to carry out feasibility studies on the 60,000-seat stadium in the Al-Awir area.

Although limited in size, through the court car parks scheme, Dubai has shown the PPP model can work in the emirate. It will now have to test whether the PPP model can also match its ambitions when it comes to large-scale projects and greater potential risks.

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