Manama is at a crossroads. Financing for its first public-private partnership (PPP) sewage treatment plant at Muharraq is about to close and a new project is planned for a site at Tubli. The second project was originally launched as an independent power project, but the Public Works Ministry is reconsidering those plans.
Unlike its oil-rich neighbours, Bahrain has a very real incentive to pursue a PPP policy. With limited public resources, the PPP structure offers the opportunity to pay for the assets over time and incorporates private-sector expertise.
For its current population of about 1.26 million, Bahrain should have more than 416,000 cubic metres a day (cm/d) in wastewater treatment capacity. It only has about 221,000 cm/d, plus the capacity from the new Muharraq project when it is commissioned. By 2020, its population will need about 500,000 cm/d of wastewater treatment capacity.
Despite a $10bn grant from the GCC, its public finances will not stretch to the extent that enough wastewater treatment capacity can be commissioned in addition to all the other infrastructure developments needed using public money alone.
The Muharraq deal has shown that it is possible to finance such a project in a difficult economic climate and in the immediate aftermath of social unrest, so long as a strong export credit agency is on board. Bahrain should take comfort from this and think carefully before returning to a public procurement strategy.