A game of patience
According to a panel of experts, Qatar’s public sector bodies are not yet ready to implement a sound PPP framework, which could potentially eliminate the potential for a raft of PPP-funded infrastructure in the country.
After acquiring the rights to host the FIFA World Cup in 2022, the Qatari government has been quick off the mark in drawing out plans for infrastructure. But several experts believe the place is not yet fit to utilise PPPs, mainly because of the public sector’s acquiescence to the idea.
Speaking at a panel debate in Qatar, Bouygues Construction Qatar chief executive, Christian Drummond said "the third ‘P’ in PPP is partnership and I think here in Qatar they don’t know yet what partnership is".
This is rather concerning for the several international players attempting to wet their beaks in the Middle East, which is fast-becoming a boom town for private infrastructure development. Some countries are on the rebound after political upheaval, while Qatar has the luxury of hosting one of the world’s most prominent sporting events.
But with this opportunity, many of the Arab states are yet to produce sound models with minimal risk and increased transparency – the latter, holding the Qataris back from introducing a flurry of projects.
Rod Stewart, managing director for infrastructure firm Atkins said the benefits of PPP deals lie in the collaboration between the public and private parties, so basically should something like this fall through, what hope do billion-dollar infrastructure pipelines, like Qatar’s have?
"My experience in the Middle East is that it is still a developing region in terms of maturity towards contractual risk-sharing," Stewart told Construction Week Online. "I don’t think there’s a financial driver towards PPP in the Middle East but I do think there is a need to properly allocate risk."
The World Cup aside, Qatar has a substantial infrastructure gap that it needs to fill over the short-to-medium term, which includes road and rail transport as well as social infrastructure. But as long as high-risk allocation exists, the delay from wishlist-to-pipeline-to-project will only continue.
So essentially, the comprimise from the public sector will involve it incorporating the ideas and empowering the private partners, while the private players need to remain patient with the potential of wealth available in the Middle East.
While the United Arab Emirates alongside the other GCC states have substantial liquid cash, through its oil reserves, there is no doubting the need to inject the private sector into its government-owned infrastructure.
"It happened in Dubai and it’s going to happen here, supply and demand is going to flip and at that time, clients will have to take note of how to mitigate risk to prevent hyper inflation," Stewart added. "The best way to do that is to enter into a more collaborative form of working."
Like most emerging markets however, PPPs in the Middle East will be taken more seriously once dealflow begins to materialise, rather like what Egypt is currently trying to do. The private sector then, may take the authorities of the Middle East more seriously once projects get underway, minimising risks and meeting the region’s soaring demand for infrastructure.