This document discusses challenges and opportunities for developing transportation public-private partnerships (PPPs) in the Middle East. It outlines the social, economic, and political context, compares the PPP sector to other regions, and emphasizes the need for integrated transportation strategies. The document also examines selecting suitable PPP candidates, industry-specific issues for roads and rails, as well as lessons from port and airport projects. Common challenges include procurement inefficiencies, barriers to competition, and a lack of government commitment and expertise in the PPP model. While energy PPPs have found success in the region, transportation PPPs have been mixed, with more established models in airports and ports but linear assets like roads and rail posing greater risks.

1. Understanding challenges of
developing transportation PPPs
in the Middle East
Dr Rupert Booth
FIET, FCMA, PMP, CEng
974 7021 7320
Rupert.Booth@atkinsglobal.com

2. Agenda
• Social, political & economic context
• PPP Sector & Regional Comparisons
• Integrated Transport Strategy: laying the foundation
• Programming: setting priorities
• Selecting candidates for PPP
• Rail-specific and Road-specific issues
• Ports and airports
• Common PPP process problems
• Transportation summary

3. Middle East social and political context
Demands never greater… But so are limits on supply…
Growing populations need: Availability of funds:
● Employment needs ● Banking contraction
● Infrastructure Country risk:
Support GDP growth after recent ● Low demand
economic shocks ● Change of law
Source: PPIAF (2009)

4. Funds flowing elsewhere…
Source: PPIAF Database (MENA excludes GCC)

5. PPP sector comparisons
Power, Water • Airports
● IWPP model – Hajj terminal (BTO) Road & Rail
established – Queen Alia terminal ● Mafraq-Ghweifat ($3bn)
● 44 projects planned • Waste-water
● Saudi Landbridge ($7bn)
Social Housing – Jordon, Egypt, Kuwait
● General concerns:
(BOT)
● Saudi ($130b) – Demand risk
• Healthcare/
Education – Multi-modal linkages
– Management
Contracts, e.g. Abu
Dhabi (185 schools,
major clinics)

6. Transportation: Need for integrated strategy
Example of Abu Dhabi Surface Transport Master-Plan:
Objectives Strategies
Economic Growth Congestion Infrastructure
Management Components
Economic
Diversification Accessibility of the Plan
Health, Safety and
Spatial Change Security
Mobility Pedestrian Realm Portfolio
Environmental Improvement sorted by
Implications Freight Management tranche
Economic Implications Low Carbon
Social and Cultural Environmental
Implications Protection Master
Schedule

7. Project Portfolio Management (PPM)
Portfolio
Strategic Program- Project
Management
Planning -ming Scoping
Activities
Create PPM will lower
Reflect the Qualify
Purpose vision
Programme
Projects risk, e.g.
to deliver
demand risk, in
chosen projects
Portfolio Develop
Define
Refine the Projects &
Activities Review
Strategies
Prioritized
Programmes
Business
Cases
Appraisal Strategic Programme Project

8. Selecting candidates for PPP
Possible Objectives Identify for each Candidate
Public sector wishes to retain some • Objectives
control over certain assets but also – Economic, social and
seeks: environmental
• Risk transfer • Level and type of public support and
fiscal impact
• Process excellence
• Distribution of benefits between
• Transparency stakeholders
• Private sector skills • Risks to benefits:
• Maintaining public debt ratios – Economic, social and
environmental
• Boost to economy
– Financial
• Economic efficiency • Performance indicators linked to
But there must be: objectives
• Proposed corrective actions
• Bank-ability
• Contract-ability

9. Road versus Rail contrast
Road Railways
• Control over design, • Infrastructure is a part of a
construction, maintenance, wider network
operation & revenue • Multiple operators requires
collection.
system operator
• Facilities are generally • Scheduling:
standalone
• Between operators
• Few uncongested
alternatives • For maintenance
• Competing facilities can
• No system operator
increase traffic risk
• External oversight of safety &
tariffs

10. Rail: Disaggregated view
Range of:
• Risks
• Services
• Opportunities for
private finance
 Adopt a slice and
dice approach
Source: Indian Railways (Nov 2012), Experiences with PPP in Rail Projects

11. Lessons from India…
Source: Indian Railways (Nov 2012), Experiences with PPP in Rail Projects

12. Sector-specific issues: Road
Need to ensure measurability of performance:
• Align project Key Performance Indicators (KPIs) with public goals
• Include provision to modify KPIs over contract
• Examine practicality of data collection
• Mandate Asset Management Plans (AMPs) to supplement KPIs
• Focus on outcomes rather than outputs
• Focus on service performance rather than asset condition
• Apply incentives
• Encourage Asset Management culture in interactions
• Include KPIs for Design and Construction
Source: Adapted from International Technology Scanning Program (2011), KPIs in PPPs

13. Alternative project approaches…
Five-way Assessment
Business Construct- Funding Delivery Revenues
ion
New Build Finance Bulk Fee
Existing Refurbish (Investment User Tariffs
…
Refinance)
Other Factors:
 Scope of work  Design Risk
 Asset Handover  Asset Handover
 Asset Renewal  Subsidies
Source: Delmon (2010), Understanding Options for Public-Private Partnerships in Infrastructure

14. … reflected in range of PPP options
Source: Delmon (2010), Understanding Options for Public-Private Partnerships in Infrastructure

15. Port Projects… sailing forth
) Investors by
nation:
16% China
11% UAE
10% Denmark
7% Philippines
7% Brazil
6% Singapore
Source: IFC (2011) Handshake

16. Airport glide path
Objectives Programme
• Improving economic • Establishing a legal framework
performance and level of • Defining a Contract acceptable to
service by involving an highly bidders and lenders
experienced Airport operator
• Defining a regulatory scheme over
• Funding infrastructure needs by the concession period
private investments (releasing
funds for other Government • Preparing a concept design or
priorities) including it in bid
• Proposing tax exemption scheme
• Transferring airport project
development risk to a private • Designing Public Authority
party remuneration scheme
• Improving airport profitability • Selecting team of advisors
Source: ADP (2009), PPP in Airport Infrastructure Business

17. Common PPP challenges
Barriers to Competition
● Unknown, uneven pipeline
● Uneven commitments across jurisdictions
● Size of bid costs
Procurement inefficiencies
● Stop/start process leading to inefficient resourcing
● Excessive information requirements
● Inconsistent tender processes
● Delayed decisions
Underlying causes
● Skill and expertise of Government team
● Governments; commitment to PPP model
Source: KPMG 2010 report ‘PPP Procurement’ for Infrastructure Australia

18. Transportation summary
PPP successful in the Middle East , e.g. energy
Transport PPPs successful worldwide, including roads
and rail, i.e. linear assets
Transport PPPs in Middle East mixed:
● airports and port operation successful
● linear assets less so
Future effort:
● Political cooperation on linear assets, GCC Rail
● Demand risk allocation
● Institutional knowledge management