Qatar considers PPP to fund projects

20 September 2015

Initial draft law prepared in 2013 but failed to take off

  • Pending budget deficit starting in 2016 provides impetus for all-encompassing PPP law
  • PPP already used in power and water projects

Qatar’s Economy and Commerce Ministry has recently received bids for advisory services on the development of a public-private partnership (PPP) regulatory framework and policy.

The firms that are understood to be bidding for the contract include KPMG, Ernst & Young, Deloitte, PWC and McKinsey.

A draft PPP law was prepared by UK-based law firm Clifford Chance in 2013 but the draft did not advance to get approval from the concerned governing bodies.

The likely onset of a budget deficit starting in 2016, due to low oil prices and the sustained spending for infrastructure projects, could have triggered the government’s renewed interest for an all-encompassing PPP regulatory framework.

Qatar is already using PPP structures in its power and water sectors but has yet to expand the model into other industries, preferring to use government fund for infrastructure projects.

Legal and consultancy firms have increasingly lobbied for the adoption of a PPP law in Qatar particularly for projects that can generate revenue such as schools, hospitals and even hotels. Extending the model to the transport sector is also seen as highly beneficial given the extensive funding required by these projects.

The Qatar integrated rail programme, which includes a national passenger and freight railway, the Doha metro, and a light rail network in Lusail, carries a budget of $35bn. The new airport, Hamad International, required more than $15bn, and an expansion plan that will take the passenger capacity from the current 20 million to 53 million a year will require investments of about $8bn, according to estimates by regional projects tracker MEED Projects.

So far, only Kuwait has a comprehensive PPP law of the six GCC states although the model has been used for procuring power and water projects across the region. Some sectors, including transport, have also been increasingly tapping limited private sector participation in the form of operations and maintenance (O&M) contracts. The first airport PPP in Saudi Arabia, the Prince Mohammad bin Abdulaziz airport in Medina, entered operations in June, and the prequalified investors and developers for the second airport PPP in the kingdom is expected by end September.

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