Partnering for growth in Abu Dhabi

22 October 2020
Abu Dhabi Investment Office's head of infrastructure partnerships, Mohamed al-Dhaheri, discusses the PPP opportunities available in the UAE capital

From enlightening the brightest minds to meeting the water needs of the population, Abu Dhabi has a long history of collaboration and partnership with the private sector.

Public-private partnerships (PPPs) have been a key component in Abu Dhabi’s significant growth since the 1950s, making the emirate a major global destination for investment and business.

Abu Dhabi pioneered some of the first PPPs in the region, collaborating with Sorbonne University Abu Dhabi and Al-Ain University to elevate educational standards. Other notable projects stem from Abu Dhabi Water & Electricity Authority’s (Adwea) independent water and power producers (IWPPs) partnerships, which include the Taweelah and Shuweihat power plant schemes, as well as the independent sewage treatment plant ISTP2.

These important PPP projects are part of a pipeline that continues to significantly contribute to the growth of Abu Dhabi’s private sector. They create demand for expertise and skills and, as a result, increase employment opportunities – a huge boost at any time, and particularly during this time of global economic uncertainty. PPPs offer investment opportunities to local, regional and international private sector investors while enabling local financial institutions to contribute capital to bankable projects.

The benefits to the public sector include improved capital and operational efficiency. By their nature, PPP contract structures provide for a greater degree of risk transfer to the private sector, in particular performance-based risk. As a result, a greater number of public sector construction projects can be expected to be delivered on time, to budget and to the required quality thresholds. Private sector investment also brings with it new technologies, allows room for innovation and improves the efficiency of projects.

In individual sectors that have felt the effects of the current global pandemic more than others, the long-term contracts provide a boost to local industry and its supply chain. When compared to traditional forms of procurement and contracts in Abu Dhabi, PPPs have provided better long-term value for money and improved access to – and quality of – public sector assets and services.

PPPs offer investment opportunities to local, regional and international private sector investors while enabling local financial institutions to contribute capital to bankable projects

Abu Dhabi has a distinct advantage: in this part of the world, partnerships between the public and private sectors are embraced; this is not always the case elsewhere. Abu Dhabi’s PPP law was enacted in 2019 as part of the Abu Dhabi Government’s Ghadan 21 accelerator programme, which focuses on economy, knowledge and community development across the emirate. The initiative, designed to encourage private sector involvement and investment in major infrastructure projects, showcases the government’s commitment to facilitating such projects.

To further support investor participation, the Abu Dhabi Investment Office (Adio) has published the Partnership Projects Guidebook, which supports both public and private entities in delivering public infrastructure assets in a transparent and efficient manner. Through the guidebook, Adio seeks to increase private sector investment within the emirate.

Abu Dhabi’s PPP framework supports the growth of the private sector by increasing domestic and foreign private sector investment in infrastructure projects and the delivery of public services. The addition of foreign investment also creates new opportunities as major companies recognise that Abu Dhabi is not only a great place to do business, but also one that encourages and supports long-term business development.

PPP sustainability

Importantly, the framework also enhances financial sustainability and flexibility by spreading infrastructure investment costs over the lifetime of the asset.

One example of this is the recent contract awarded to Tatweer by the Abu Dhabi Department of Municipalities & Transport – Abu Dhabi City Municipality, to replace 43,000 streetlights in the capital with energy-efficient LED lights.

The use of energy-efficient street lighting is expected to save 900 million kWh of electricity over the contract period, valued at approximately AED264m ($71.87m) – a substantial sum.

The contract was the first street lighting replacement project to be delivered using this model in the UAE. It was also the first to be assisted by Adio using the new PPP framework. The project, a 12-year contract, supports the improvement of traffic safety on Abu Dhabi’s roads, while following the highest standards of sustainability for infrastructure projects.

The project itself is a realisation of the Abu Dhabi Government’s announcement earlier this year that it plans to procure infrastructure projects worth approximately AED10bn through PPPs. The education, transport and municipal sectors are among the many that will benefit.

Abu Dhabi’s PPP framework provides a setting in which the brightest minds from the public and private sectors can work together to execute successful projects that meet the needs of the emirate’s population. And it is proof that whatever global uncertainty there may be at present, Abu Dhabi remains open for business and ready to progress ideas and solutions. The time to build the future economy is now, and Adio is keen to partner with big thinkers to pave the way forward.


ABOUT THE AUTHOR

Mohamed al-Dhaheri is head of infrastructure partnerships at Abu Dhabi Investment Office (ADIO) 


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