The UAE, Egypt and Kuwait have been identified as three of the main markets that are likely to offer more opportunities to major international contractors and financiers thanks to their adoption of the public-private partnership (PPP) model, according to analyst BMI Research.
The consultancy said that increased use of PPPs to fund infrastructure projects in the region will allow major companies with experience of delivering long term, privately-financed projects – such as the European construction multinationals Vinci and Ferrovial – greater chances to participate in the regional market.
The UAE is expected to generate more opportunities after Dubai passed its PPP law last November. Thus far, an automated car park project at Dubai Courts has been awarded, while the Roads and Transport Authority is evaluating bids from developers for the Union Oasis project, which will involve 15,000 square metres of space being built in towers above one of the city’s busiest metro stations.
But Egypt is currently leading the way in the Mena region.
The country was highlighted by BMI because the government’s financial constraints (it is facing a 10 per cent annual budget deficit for each of the next five years, according to BMI) have led it to embrace a “proven” PPP model. It currently has 39 projects in the pipeline with a combined value of US$38.7 billion.
“That so many PPP projects are in either the planning stage or are in tender reflects the fact that the Egyptian government has significantly ramped up its use of the PPP model in the past year as it prioritises infrastructure development,” said David Lee, an infrastructure analyst at BMI Research.
Andrew Greaves, head of law firm Addleshaw Goddard in the GCC, said that he could see why Egypt has been identified as a market with potential.
“There is a massive population crying out for infrastructure and public services. A huge spend is required to underpin that, and the government is going to be challenged in meeting the demand. So why not let the market bring the money, bring the expertise and invest in the region?”
Kuwait, meanwhile, has the second-best developed project pipeline. A government agency – the Partnerships Technical Bureau – is in place to oversee the process, and the number of PPP projects has increased from just one in 2013 to 17 today as a result.
Saudi Arabia has been identified as the market that perhaps provides to greatest long-term potential, but the development of a viable model is said to be at an “embryonic” stage.
“We expect it to take longer for PPPs to gain traction in Saudi Arabia because of the country’s unique business environment, which has traditionally relied upon a select group of large, entrenched, Saudi-based companies like the Bin Ladin Group and Saudi Oger to deliver infrastructure projects,” Mr Lee said.
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