21 July 2019

Search

18 May 2011
Print

Line in the sand

The cancellation of the Mafraq highway in Abu Dhabi reveals a turning point for PPPs in the Middle East

What was once a market full of promise, the Middle East PPP sector is quickly becoming known more for its delays and cancellations.

Following the suspension of Egypt’s programme until a new government is appointed in the autumn, Abu Dhabi’s Department of Transport confirmed reports last week that it is to look at "other options" for the $2.65bn highway PPP between Mafraq and Ghweifat after three years in procurement.

According to one lawyer in the region, the project was coming in at around 60% more expensive than expected and the transport ministry had failed to keep the Department of Finance aware of developments.

Saudi’s Medina Airport has also faced delays on bidding and banks are jittery about lending into Egypt, Bahrain and countries most at risk of political unrest.

"The volume of new PPP projects has been hit pretty hard by recent events," says Charles Hollis, director of the Middle East Association.

So where does all this leave the future of PPPs in the region?

"PPPs are in a kind of difficult place right now," says the lawyer.

"Everyone is looking to Egypt to be an extremely strong market but until the elections have happened and a new government has taken shape, that pipeline is uncertain."

With Egypt, Bahrain and possibly Abu Dhabi being grouped together, there is growing distinction between individual markets in the region.

While lending into certain countries may be difficult, there are no such concerns about Saudi, Kuwait, Qatar or the UAE.

"It boils down to the countries that can't afford the capital expenditure – Egypt, Bahrain…and the countries that can afford it like Abu Dhabi and Saudi but want to use the private sector to diversify the economy and achieve better delivery of services."

Indeed, where there is Abu Dhabi, there is also Kuwait.

Although there will be a pause while new governments bed down, Kuwait’s Partnerships Technical Bureau is being heralded for its robust pipeline of work.

Its current ambitions include hospitals, airports and metro projects.

"That will be the market in the short-term," says the source. "I think Dubai will be a brighter story [also]."

"It is too early to say yet whether [the Mafraq cancellation] is a long-term trend," says Hollis. "I doubt it as much needs to be done and some form of private sector financing will be required to do it all."

There is unlikely to be much positive news from the Gulf before the autumn but in the meantime there are plenty of reasons to remain confident beyond the borders of Egypt and Abu Dhabi.

THIS CONTENT IS COPYRIGHT PROTECTED

If you would like to share the information in this article, you may use the headline, link and introduction below:

Headline:
Line in the sand

Link:
https://www.partnershipsbulletin.com/blogs/line-in-the-sand

Introduction:
The cancellation of the Mafraq highway in Abu Dhabi reveals a turning point for PPPs in the Middle East

Copy to clipboard

If you would like to buy a subscription for more people to access our website, or are interested in being granted a licence to reproduce our content, please contact Amanda Nicholls:

+44 (0)20 8675 8030

subscriptions@partnershipsbulletin.com

Free preview

Register now to get un-restricted access to all sections of the website.

Want to see more first? Try our free preview...

Register now

Most Read

  1. Enough is enough
  2. The Regeneration Game
  3. The end of the affair
  4. Ill Winds
  5. Disruptive shifts
  6. On the brink
Close
Log in
Your email address and/or password were not recognised. Please check and try again.
Your subscription has now expired. To renew your subscription, please call our subscription team on +44 (0)20 8675 7770 or email subscriptions@partnershipsbulletin.com