The Middle East and North Africa (Mena) region will see fewer public-private partnership (PPP) transactions in the transport sector.
Because of the large risks and high costs involved, there will be fewer transport PPPs as well as other non-power infrastructure-related transactions in the future, says Adil Marghub, manager of infrastructure and energy for the Mena region at the International Finance Corporation (IFC).
Despite efforts to increase private-sector participation, the region has seen several planned PPP transactions stall in recent months, including the New Aqaba Port in Jordan, the Saudi Landbridge and more recently, the $3bn Mafraq-Ghweifat highway in Abu Dhabi (MEED 12:5:11).
The GCC currently accounts for 80 per cent of private infrastructure investments in the Mena region, although it has just 10 per cent of the region’s population. The Mena region is currently underinvesting in infrastructure and logistics with an annual funding gap of between $70bn-$100bn, according to Nasser Saidi, chief economist at Dubai International Financial Centre Authority.
“There are some PPP schemes in the regional power sector, but changes to tendering policies and processes, as well as the introduction of special PPP laws to mitigate the risks, are required to develop this participation,” says Saidi.
He also suggests establishing a Mena bank for reconstruction and development that will allow governments and the private sector to invest in projects within a clear legal framework.