A new dawn for Gulf PPPs: a letter from our dedicated Middle East reporter

The Gulf region is shaping up to be a global hotspot for PPPs.

Alicia Buller

A confluence of factors, including the need to recover costs from the Covid-19 pandemic, hedging against fluctuating crude prices, and the drive to diversify national economies away from oil, has set the stage for a GCC PPP rush.

As the region embarks on ambitious plans to privatise state-owned assets and build sustainable, knowledge-based economies, PPPs are a favourable tool for raising funding without raiding depleted national treasure chests.

The Gulf states, which prior to the pandemic were less open to the idea of external funding, are warming up to the benefits of the PPP model: the opportunity to benefit from world-class talent, international knowledge transfer, improved services, and, ultimately, deleveraged risk.

PPPs will become ever more important throughout a wide range of sectors in the Gulf region as countries continue to work towards national vision targets across a range of areas such as healthcare, education, public transport, public services, water, and renewable energy.

Net Zero projects in particular will remain a key focus for utilities procurers as the region seeks to transition its economy, and further growth is expected in solar PV procurements as the Gulf states seek offset world-topping carbon emissions levels.

With the total value of planned and unawarded projects in the GCC countries expected to reach $2trn, the opportunities for public-private collaboration from a range of global organisations in the region are both unprecedented and enormous.

The Dubai Department of Finance announced $6.81bn of new PPP projects in October 2021. This includes 29 projects across five strategic sectors, including water and energy.

The Abu Dhabi Investment Office also announced plans to procure $2.72bn under PPPs in 2020, including road lighting, education and petrochemicals.

Further afield in Saudi Arabia - the region’s most populous country and largest nation by size - privatisation is one of the founding policies of its Vision 2030 programme. The kingdom has earmarked 160 projects in 16 sectors in which it will sell state assets and strike PPP deals through to 2025.

The flush regional PPP pipeline is only set to swell in the coming years as Gulf states look to support their growing populations and encourage foreign investment as they seek to become world-class sustainable economies in their own right.

In an acknowledgement of this exciting global trend, Partnerships Bulletin has launched its first regular Middle East-focused newsletter. We hope you enjoy it and please don’t hesitate to get in touch to make sure you're receiving it, and to let us know what you’d like us to cover.