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Kuwait tops in PPP projects across region
October 14, 2017, 5:11 pm

Public-private partnership (PPP) projects that are being implemented or under planning in the Middle East and North Africa (MENA) region grew by 116 percent in value during the past 12 months, says a new report by Middle East Economic Digest (MEED).

The new report by MEED, the leading business intelligence publication in the region,  titled, ‘PPP in the Middle East & North Africa 2017’ shows that nearly 155 PPP projects worth a combined US$185 billion, are currently underway or being planned across the MENA region. Notably, these projects do not include those in the energy sector.

Despite nearly a year of sustained production cuts by OPEC, oil prices continue to be sluggish and still remain way below the more than $100 per barrel luster it enjoyed prior to mid-2014. This sharp fall in revenue for most oil-exporting countries in the MENA region meant that many projects previously funded by the public sector had to be scrapped, shelved or toned down. 

The MEED report looks at the region’s plans to involve the private sector and use PPP to deliver many of the government infrastructure and services projects that were facing a dubious future. The new projects facing a revival include in the transportation, housing and healthcare sectors.

Most of the PPP projects planned or underway in the region are in the Gulf Cooperation Council (GCC) states. With about $44.4 billion worth of PPP projects planned by the Kuwait Authority for Partnership Projects (KAPP), the main body for implementation of PPP projects in the country, Kuwait has by far the biggest PPP pipeline in the region.

Libya, with $36 billion worth of projects, the UAE with $27.6 billion, Bahrain with 20.6 billion and Saudi Arabia’s newly formed National Center for Privatization (NCP) delivering $17.5 billion worth projects, make up the top five countries in value of PPP projects. These five countries together accounted for nearly 80 percent of all planned PPP ventures in the region.

The transport sector, with almost $93 billion worth of projects has the biggest value of PPP projects, with rail and aviation accounting for the bulk of planned projects. Saudi Arabia has the biggest number of transport PPP projects planned in the region with the kingdom’s aviation sector in particular witnessing a rapid increase in activity, as the kingdom’s General Authority of Civil Aviation (GACA) seeks to deliver on its promise to privatize all of Saudi Arabia’s 27 airports by 2020.

Another sector that has attracted significant private sector interest is affordable housing. Kuwait, Saudi Arabia, Bahrain and the UAE are the major markets for PPP driven housing projects. Meanwhile, Kuwait, Saudi Arabia, Qatar and Egypt are also seeking the PPP path to deliver social infrastructure projects in the healthcare and education sectors.

Private sector financing to fund public sector projects and services is not a new concept; it has been in vogue since the mid-1990s in many countries in the MENA region. But the majority of those projects were limited to the utilities sector for Independent Power Plants (IPPs) and Independent Water and Power Plants (IWPPs), which have benefitted from assured purchases by the government at prices favorable to investors. Outside the energy sector, PPPs have had a checkered history of buy-in by private investors. 

The PPP path aims to encourage the private sector in designing, building, financing and operating public sector infrastructure and services. However, with nearly 60 percent of PPP projects still in the planning stage, and slated to be awarded only in the next five to six years, sustained political and popular support will be needed, says the report.

Overcoming legislative, financial and capacity hurdles will be key to delivering on the region’s PPP plans. “The transition from full government control to private-sector control requires a host of difficult changes to be implemented.... It requires new skills and technical capacity, and it requires not just a change in business models but also in political mindset,” commented MEED editorial director Richard Thompson.

PPP Projects Coverage by Country

Country           Number of PPP Projects*       Value of PPP Projects**

Bahrain                       9                                             $20.6bn

Egypt                            8                                             $1bn

Iran                              2                                             $14.3bn

Iraq                              2                                             $5.9bn

Jordan                         19                                            $1.6bn

Kuwait                         17                                            $44.4bn

Libya                            3                                           $36bn

Morocco                       9                                            $4.2bn

Oman                          11                                           $2bn

Qatar                            9                                            $0.9bn

Tunisia                        34                                            $9bn

Saudi Arabia               15                                            $17.5bn

UAE                             13                                            $27.6bn

* In planning and execution stage

* * not inclusive of all projects; indicative value based on data availability




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