Public-private ventures doubtful in Egypt

24 October 2011

Hosni Mubarak’s regime embraced public-private projects, but will the new government go the same way?

For many years, Egypt led the region in public-private partnerships (PPPs). Spurred by constrained public finances and a desperate need to improve its infrastructure, the ‘buy now, pay later’ aspect of the PPP was an attraction.

The country worked hard to promote a business-friendly environment and in 2006, the government established the PPP Central Unit to manage upcoming tenders. In May 2010, then president Hosni Mubarak enacted a new PPP law that aimed to codify, simplify and promote the development of PPP projects.

This changed in February, when popular protests led to the ousting of Mubarak from power. Immediately, Egypt’s PPP plans were put on hold. Reports from the PPP Central Unit indicated that inertia had set in as no government official wanted to be seen taking decisions.

Very little has been achieved since. It is therefore encouraging that the government appears to be pushing ahead with its latest PPP project: two hospital units in Alexandria.

This is undoubtedly a positive move for Egypt’s PPP sector, but it should not be overstated. The tender for the Alexandria university hospitals was launched several years ago. In that time, the bidders spent a lot of time and money preparing their bids and getting comfortable with the deal. The story may have been very different had the project been launched to the market in March.

So, while the progression of previously planned PPP projects in Egypt is important, it will be the development of projects for which tenders have not yet been issued that will demonstrate whether PPPs have a place in the new regime.

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