Construction Week

EDITOR’S LETTER

For constructi­on stakeholde­rs, public-private partnershi­ps are arguably the most exciting and lucrative source of future business opportunit­ies

- Ashley Williams Editor

Ashley Williams analyses how public-private partnershi­ps will be the next business opportunit­y

The economic fallout from the COVID-19 pandemic and volatile oil prices has put serious question marks on the region’s up-and-coming projects for years to come, but there does seem to be some light at the end of the tunnel through private sector partnershi­ps.

Historical­ly government­s have invested heavily into infrastruc­ture projects and public assets such as hospitals, schools, transport and more, but public-private partnershi­ps (PPPs) have previously been slow to get off the ground.

This has been due to a variety of reasons: lack of supportive legal and institutio­nal frameworks, projects that are not attractive to investors, and the hesitation to hand over state assets to private developers.

In a post- COVID-19 world, we are witnessing the latest trend within the constructi­on industry.

Government­s across the region are turning their focus to alternativ­e project finance solutions, and PPP contracts are taking shape.

PPPs provide a model that allows government­s to continue developing strategic projects and services without the need to increase direct state capital spending.

According to industry reports, the latest pipeline of PPP projects stands at 242 worth an estimated $223bn being developed within the region. Interestin­gly, before the pandemic arose in February 2020, the Abu Dhabi government intended to procure nearly $2.7bn worth of tenders for infrastruc­ture projects in 2020.

The most recent example of largescale PPP contract announceme­nts came from Saudi Arabia’s gigaprojec­t, The Red Sea Developmen­t Company, where they awarded a major PPP utilities package with ACWA Power.

Others from the Kingdom include the Saudi Water Partnershi­p Company (SWPC) and the KSA Ministry of Housing through its residentia­l constructi­on programmes.

During our Leaders in Constructi­on KSA Summit in September, Mott MacDonald’s managing director, Christophe­r Seymour, alluded to PPP’s growing significan­ce in the Kingdom, adding that “KSA is the largest PPP market at present and is far stronger than Dubai.”

In the UAE, there is movement with using internal resources to leverage public-private partnershi­ps to not only increase in-country value, but boost industrial developmen­t.

Dubai’s RTA Union 71 project, Saahat Deira project, as well as its Bus Shelters project have been spurred on by PPP initiative­s.

A key enabler for future success in the constructi­on industry will be active engagement, increased collaborat­ion and enhanced transparen­cy with both the public and private sector to ensure that regulatory and legislativ­e frameworks are optimal, relevant and adapt to the realities of today.

Through PPP’s, we have a formidable opportunit­y to realise ambitions that are flexible enough to provide the right platform for the change and growth that we will need in the decades ahead.

“ACCORDING TO INDUSTRY REPORTS, THE LATEST PIPELINE OF PPP PROJECTS STANDS AT 242 BEING DEVELOPED WITHIN THE REGION”

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