This document summarizes a presentation on public-private partnerships (PPPs) in the Middle East and North Africa (MENA) region. It provides examples of successful PPP projects in countries like Saudi Arabia, Bahrain, and the UAE. It also outlines some challenges to implementing PPPs in MENA countries, such as a lack of centralized PPP units and long-term planning. Key success factors for enhancing PPP delivery include developing viable bankable projects, establishing PPP laws and dedicated units, and educating decision-makers and the public. PPP laws from countries like Egypt and Kuwait that establish transparent procurement processes and define public and private sector risks are highlighted as international best practices.

1. OECD – Fifth Meeting of the Working Group
on Investment Zones in Iraq
Session 2
MENA Regional PPPs - Lessons for Iraq
28 April 2013

2. PFI and PPP structures
PPP Structure commonly shown as..
Public Authority
Debt funding
~80-90%
Contractor A
Design
Contractor B
Build
Special purpose
vehicle
Operator C
Lifecycle
Operator D
Hard FM
Equity funding
~10-20%
Operator E
Soft FM
Operation & Maintenance Contracts
Page 2
For presentation purposes: no reliance
Operator F
Energy
Management

3. PPP Risk transfer to the private sector
Public Sector
Private Sector
Risk transfer from public
sector to private sector
EPC
Design-Bid-Build
Design-Build
Build-TransferOperate
Build-OperateTransfer
DBOM
DBFOM
BOO
Outsourcing
Privatization
Key:
Page 3
Public Sector Risk
Private Sector
Risk
For presentation purposes: no reliance

4. Successful PPP’s in the MENA Region
Project cost/
concession period
Debt:
Equity
(%)
Debt
Margins
(bps)
Sponsor(s)
Banks
Financial
Close
TAV Airports Holding, Saudi Oger,
Al Rajhi groups
Arab National Bank, National Commercial
Bank, SABB and SMBC
July 2012
ACWA Power, Samsung C&T ,
MENA Infrastructure Fund, SEC
BSF, NCB, Standard Chartered, HSBC,
Samba, SABB, ANB, SMBC and KfW plus
equity bridge providers
Dec 2011
Medinah Airport
Expansion
(KSA)
• US$ 1.2 b
• 25 years
Qurrayah IPP
(Saudi Arabia)
• US$ 3.0 b
• 20 years
74:26
Muharraq
Wastewater STP
(Bahrain)
• US$ 328m
• 29 years
85:15
220 – 275
Samsung Engineering, Invest AD,
United Utilities
Credit Agricole CIB, Natixis, Sumitomo
Mitsui Banking Corp.
July 2011
PP11 IPP
(Saudi Arabia)
• US$ 2.1 b
• 20 years
75:25
250 – 340
GDF Suez, Al Jomaih Group, Sojitz,
SEC
Credit Agricole, Standard Chartered, EDC,
KfW, Societe Generale, Intesa, CIC,
Alinma Bank, NCB, BSF and Samba
June 2010
Shuweihat II
IWPP
(Abu Dhabi)
• US$ 2.7 b
• 25 years
79:21
260
GDF Suez, Marubeni, ADWEA
Bank of Tokyo Mitsubishi UFJ, Sumitomo
Mitsui Banking Corp., KfW BankenGruppe
plus 10 others
Oct 2009
Paris-Sorbonne
University
(Abu Dhabi)
• US$ 412m
• 28 years
85:15
200 - 275
Mubadala
Calyon, Bank of Tokyo Mitsubishi UFJ,
SMBC, Royal Bank of Scotland, BNP
Paribas, First Gulf Bank
Dec 2008
175
Aeroport de Paris Management
(AdPM), J&P Overseas, J&P Avax,
Abu Dhabi Investment Company
(ADIC), Engineering and
Development Group, Noor Financial
Investments
Crédit Agricole Group , Europe Arab
Bank, Natixis, Islamic Development Bank,
IFC
Nov 2007
Mubadala
Bank of Tokyo-Mitsubishi UFJ , First Gulf
Bank , Crédit Agricole Group , Royal
Bank of Scotland , SMBC and BNP
Paribas
Nov 2009
60:40
Queen Alia
Airport
(Jordan)
• US$795m
• 26 years
47:53
Zayed University
(Abu University)
• US$1.0 b
• 10 years
83: 10
with 7%
Mez
-
-
290 – 395
Source: IJ Online – Inspiratia - MEED
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For presentation purposes: no reliance

5. Effectiveness of PPP
Concession granted
Planning
Feasibility
Procurement
Construction
Operation
Commercial Close
Financial Close
Comments:
Advocacy:
Advocacy



• Visioning for the Project
• Monitoring of the Concession
Decision Making:
Decision
Making



• Agreement to take into transaction phase
based in market testing
• Selection of appropriate SPV
• Intervention when output specifications not
delivered
Solid Business Case:
Solid
Business
Case
Page 5




For presentation purposes: no reliance
• Determining the basis for private sector
participation
• Engaging market for best price against service
delivered (i.e. Value for Money)
• Delivery on outline case

6. Current strategies in various countries in the region
Jordan
 Transport, however attempted
using PPP on renewable
projects
 Privatisation law in 2000
followed up by PPP regulations
in 2008
 Pipeline: water, transport
Qatar
 PPP framework under development
 Healthcare, education, housing, IWPP
 Pipeline: Education, healthcare,
housing, IWPP
Bahrain
 IPP/IWPP/ waste water
 Privatization committee
 Pipeline: Social housing
Libya
 All infrastructure sectors
 PPP model being considered by
new government
 Pipeline: Transport, healthcare,
education, power, refineries
Egypt
 Delivered projects in social,
utilities, transport
 Decree No. 238 of 2011 Egypt’s
PPP Law
 Pipeline: Healthcare, Ports
Page 6
Kuwait
 IWPP, social and transport
 PPP Law, PTB
 Pipeline: Many PTB projects
on hold
Saudi Arabia
 No central PPP Unit
(Municipalities)
 Projects closed in waste water and
aviation
 Pipeline: IWPP, transport, city
development
For presentation purposes: no reliance
UAE
 IPP/IWPP, Social,
transport
Abu Dhabi
 No PPP
Legislative
framework
 No defined pipeline
Dubai
 PPP legislation in
process
 Pipeline: Transport
Oman
 Power and water (IPP/IWPP)
 Regulation comment
 Pipeline: Education, healthcare,
housing

7. Global Examples
Canada

PPP model supported at
both federal and provincial
levels

33 operational PPPs

Pipeline projects focus is
transport
USA

Total of 34 states
(including Puerto
Rico) possessing
dedicated P3
legislation

All Sectors,, however
key sectors include
transport (e.g.
Chicago Midway
Airport), social
accommodation, and
renewables
Nigeria

Closed deal on
highway PPP

PPP pipeline focused
on transport and
power (e.g. Lagos
Airport)
Page 7
UK
Spain

Mature PPP market with significant recent
volumes of secondary market sales

Pipeline projects in transport
South Africa

PPP Unit created in
2000

Potential PPP
projects in
healthcare, waste
and water
management to
improve agricultural
sector


India

Political will for PPP
and private sector
participation is strong

1,965 total PPP
projects up to 2011

Opportunities in
transport sector
For presentation purposes: no reliance
PF2 being rolled out
Lack of clear pipeline of future projects,
however rail and nuclear appear to be
signature projects being carried
forward
Australia

Mature PPP market

Pipeline projects in
education and
transport aligned to
the commodity
industry

8. Partnership strategies for successful implementation of PPP
Fund raising
incentives
•
•
•
•
•
•
Subsidies e.g. interest accrued on loans
Investment grants for construction
Coordinating with financial institutions to provide medium/long term financing (i.e.
refi-risk, subsidise accrued interest etc)
Examples include Egypt Authorities covering changes in base rate but not margins
•
Where necessary, authority expropriate land for use by the private investor
Provision of infrastructure ready sites with plots enabled through connections to
the utilities grid
Examples include Dubai and Bahrain free zones
Organization
and legal
framework
•
•
•
•
Significant relaxation of regulatory impediments and restrictions
Investment in public sector procurement authorities
Transparent and consistent tendering process
Examples include Kuwait’ Law 2007 with Dubai also drafting a PPP law
Central PPP
Unit
•
•
•
•
Captures lessons learnt for future projects
Consistent assessment and benchmarking of projects by Higher Committee
Fair and transparent approach to procurement
Examples include Kuwait’s Partnerships Technical Bureau (PTB)
Government
equity stake in
the SPV
•
•
•
Ultimate form of risk sharing
Enables control of the project through regular government intervention
Examples include Omani IWPP transactions and latest Treasury advice from UK
Expropriation
of private land
Page 8
For presentation purposes: no reliance

9. Challenges in MENA countries
• PPPs have been implemented on an ad hoc basis expect in the Power and
Utilities sector
• Only 2 countries have established PPP units (Egypt and Kuwait)
• Limited forward looking planning for the implementation of projects has
resulted in too many projects being considered as PPPs and abandoned for a
variety of reasons:
•
•
Initial launch of a mega project rather than a project which is ”bite
size”
•
Not involving all the stakeholders from the outset
•
Very rosy business case impeding bankability
•
Lack of availability of funding from local sources as well as long
term financing
•
Page 9
Lack of understanding of PPPs
Preference for legacy delivery models
For presentation purposes: no reliance

10. Key success factors to enhance PPP delivery
Market
creation
(e.g.
subsidies,
grants,
guarantees)
PPP Law
such as
Egypt and
Kuwait
Page 10
Education
(politicians
decision
makers and
public at
large)
Viable
projects
which are
bankable
Identifiable
pipeline of
projects
For presentation purposes: no reliance
Public
Sector drive
the process
and not the
private
sector
Risk balance
between
private and
public
sector, e.g.
demand risk

11. PPP Laws and process some best practices
• Based on international precedents (PFI, PF and PPP)
• Open, Fair and Transparent Process (competition yields best outcome)
• Step-in Rights (Government and funders)
• Default Obligations (debt repayment)
• Role of the Public Sector (accepting certain risks)
• Independent Certifier
• Arbitration
• Partnership is a 2 way street (win-win)
Page 11
For presentation purposes: no reliance

12. Kuwait PPP law and guidelines highlights
• Developed by the World Bank based on international practices and
precedents
• Dedicated single PPP unit
• Structure: Higher Committee, Partnerships Technical Bureau, Public
Entity (decision making)
• Published Guidebook and pipeline
• Joint Stock Company and Initial Public Offering (spreading the wealth)
Page 12
For presentation purposes: no reliance

13. Questions?
Page 13
For presentation purposes: no reliance