Oman risks PPP confidence loss

31 August 2020
Bidders and investors face uncertainty as Papp is dissolved

Oman, the GCC's most promising market for public-private partnership (PPP) investments, has faced a potentially large setback in the past month.

The Public Authority for Privatisation & Partnership (Papp) has effectively been dissolved as part of a wider government restructuring announced on 18 August.

The newly reorganised Finance Ministry will comprise the legacy assets of Papp, but it remains unclear what the decision means for the authority’s planned projects and ongoing tenders.

Papp is understood to have had a pipeline of 49 projects in the education, healthcare, logistics and utilities sectors to be delivered with private sector participation. 

As of May 2020, one project was in the negotiation and award stage, four in the offer stage and nine in the feasibility study stage. Initial studies were under way for 35 other projects.

The authority’s portfolio included the Salalah-Thumrait truck road scheme, school projects in Seeb and an industrial waste treatment facility in Sohar.

The timing of Muscat’s decision to dissolve Papp risks complicating the ease of doing business in Oman and reducing private sector interest in the market

Oman established Papp on 1 July 2019 through a royal decree, when it absorbed the assets, allocations and employees of the Omani Authority for Partnership for Development and the privatisation department of the Directorate General of Investments at the Finance Ministry.

Papp was required to seek Finance Ministry approval before launching any project, but was instructed to take the lead in preparing, evaluating, negotiating and awarding tenders for PPP projects with relevant ministries.

The sultanate’s long-awaited PPP Law was also launched in July last year, empowering the Papp. Accompanying regulations for the law were issued this April.

Investor confidence

Despite its newness, Papp's clear agenda and procurement process had started to renew investor confidence in Oman’s appetite for PPP developments.

The timing of Muscat’s decision to dissolve Papp therefore risks complicating the ease of doing business in Oman and reducing private sector interest in the market.

Bidders and investors will likely view Papp’s dissolution and Muscat’s legislative moves with caution in the months ahead, or at least until there is better visibility about the future of Papp's legacy pipeline.

Oman’s Finance Ministry must work to retain the impact of Papp’s good work in the months ahead.

Regional governments refocus on public-private partnerships



 

> Algeria: PPP framework fails to modernise
> Bahrain: Manama ramps up its PPP plans
> Egypt: Mixed results for Egyptian PPPs
> Iraq: Crises and protests curb Iraq PPPs
> Jordan: Construction sector eyes PPP opportunities
> Kuwait: Corner turned on water and power schemes
> Lebanon: PPPs offer route to recovery
> Morocco: Rabat reforms legislation to spur PPPs
> Oman: Muscat risks PPP confidence loss
> Saudi Arabia: Riyadh refocuses PPP plans
> Tunisia: PPP plans draw broad support
> UAE: PPPs expected to take off in UAE
> Other GCC: Gulf state bolsters legislation to drive PPPs

 

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