Special Report: Construction - The Gulf looks to tap private finance

25 January 2011

Public-private partnerships (PPPs) have been used to great effect in the Gulf power and water sector during the past 15 years

By engaging with international firms, utilities have been able to access the latest technology and expertise, and offload some of the cost of executing projects.

Despite the obvious advantages of working with the private sector, few other industries have followed suit. But this looks set to change in the years ahead.

In the wake of the global financial crisis, governments are showing increasing interest in alternative finance models. PPPs are now being planned in the education, healthcare and transport sectors. But it will require a major scheme to be successfully completed before the GCC fully embraces the concept. This final piece of the jigsaw is taking time to fall into place, however.

The UAE’s pioneering Mafraq-Ghweifat road project was expected to herald a wave of PPP infrastructure deals across the region, but the scheme has been slow to move forward. As a groundbreaking project, the details are proving difficult to hammer out. Bids were submitted more than a year ago, yet contracts have still not been signed. Other schemes too have faced similar delays.

But since this is a new procurement model for the Gulf, it is perhaps reassuring that governments are lingering over the small print to ensure the deal is right for them and their partners.

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