Abdulelah Aleidan, senior director of infrastructure advisory and head of transport at the National Centre for Privatisation and PPPs (NCP), has said that Saudi Arabia is undergoing a “once-in-a-lifetime” transformation.
Speaking during the recent Partnerships Bulletin webinar on the kingdom, he added that it “has a lot to develop in a short space of time” - and PPPs can help to expedite that delivery.
Christopher Cross, partner at law firm Herbert Smith Freehills, agreed that change is at the heart of what Saudi Arabia is about at the moment: “It’s totally different from five years ago and will be different five years from now,” he said.
Aleidan said key priorities are economic diversification, cultural and social development, and ensuring sustainability and growth.
“The kingdom wants to enhance non-oil revenue and that goes hand-in-hand with promoting private sector participation. We want to create a vibrant, resilient and competitive Saudi Arabia,” Aleidan explained.
The NCP expert stressed that PPP plays a crucial role for Saudi Arabia’s Vision 2030 – bringing expertise and innovation to the kingdom, as well as greater efficiency, job creation and better services.
Dr Khalid Bekka, senior vice president and managing director for the Middle East at engineering firm HDR, told delegates that there is tremendous “latent demand” in Saudi Arabia.
“There are some 30 cities that need public transport as they have none at all,” he said. “Some of these will go through the PPP process. These rural areas sometimes need entire updates or new social infrastructures.”
Aleidan acknowledged that the kingdom is looking to rectify this - and at some speed: Saudi Arabia’s pipeline not only consists of 200 approved projects (plus a further 300 waiting for approval) but those deals are spread across 16 sectors, “which is unique and shows that the kingdom is serious about PPP”.
He said priority sectors include transport, healthcare and schools, as well more traditional sectors such as energy and water.
Dorian Reece, partner & global airport lead at consultancy Deloitte, agreed that the kingdom is seeing major changes and the drive from government is providing the catalyst for private investment and PPPs.
“The government’s top-down strategy is enabling certain sectors to drive change,” he said. “There is a need to update a lot of aged infrastructure, and the private sector is a key enabler for commercialisation. We are seeing very mature institutional investors coming in and wanting to get ahead of the pipeline.”
Reece pointed to the aviation sector as one which is undergoing a significant transformation.
Meanwhile, Terry Wong, executive director for regional and urban mobility at Saudi’s billion-dollar smart city NEOM, said PPP will be one of the programme’s key funding methodologies.
“There will be a full pipeline of projects that will welcome external investment in order to meet the necessary timelines and the quality levels. We need innovative tech, design, operations [and] maintenance across so many sectors,” Wong said.
Graham Thomson, CEO of PPP document software company Affinitext, and who recently relocated to Saudi Arabia, agreed that the sheer scale of the kingdom's project pipeline requires PPP involvement as a necessity. “The volume is vast in every way… it’s actually happening.”
However, Thomson also warned that this scale will bring with it some challenges. He explained that the kingdom’s multitude of concurrent projects means getting the focus and time of decision-makers “can be hard”, because there are so many priorities and they are often shifting very quickly.
NCP’s Aleidan agreed with Thomson that PPP will be important from the point of view of bringing in expertise to deal with all the competing infrastructure demands that the government is creating. He highlighted that his government’s priority is to implement rigorous and effective risk management.
“There are so many things we haven’t done in Saudi Arabia before,” he said. “That’s why we need international expertise and innovation. There are a lot of projects going on and we need to be very agile in terms of our delivery.
“There’s a dynamic that the kingdom wants to get to: better services, better quality, and in a timely manner. In many ways, we want the government to move towards a regulatory role, not an operator.”
Cross said he has seen positive changes within the kingdom’s capacity building aptitude.
“It’s taken a while for the processes and approval structures to be shared – not just in the NCP but in all areas. The acceleration in the last few years is primarily a result of that new rigour,” he said.
“The work that’s going on now is a reflection of the changes in the broader society in Saudi Arabia.”
Cross noted that as the kingdom’s projects grow in size, access to funding will become more challenging. He pointed out that Saudi Arabia should move to facilitate better market access for international banks, who are not as privy to the PPP process as local banks.
Aleidan noted that the kingdom’s ambitious vision comes from the top.
“When you enable everyone in the chain to make the changes it is very powerful,” he said. “We are really seeing these changes - the projects are being built and they are being built on time. It’s different to how it was before.”
The webinar was sponsored by Affinitext, Deloitte and Herbert Smith Freehills. To watch it back, click here.