Partnerships for transformation

Using public–private partnerships in the GCC

Published: 05.08.2012
by Karim Aly, George Atalla, Mirian Itani

With Gulf Cooperation Council (GCC)1 countries set to spend over half a trillion U.S. dollars on development projects, public–private partnerships (PPPs) offer a potentially useful financing and development mechanism. These development plans seek to increase private-sector participation and to encourage a shift away from GCC economies’ dependence on natural resources. Although they do not work for all sectors, PPPs can ensure efficiency, speed, transparency, and economic impact in the delivery of services or vital infrastructure. To derive the full benefit from PPPs, the GCC states have to take a different approach to that used by either industrialized nations or developing countries. They will also need to ensure that their legal, governance, and supervisory frameworks are fit for the purpose of overseeing this complex and long-term mechanism.

GCC countries need to adopt a rigorous methodology for PPPs by drafting a detailed multisector road map that will pick out PPP-appropriate sectors and projects. The road map also gauges the readiness of the private sector to act as the private partner and implement the project. Each GCC country will have to take five sequential steps to draw up its multisector PPP road map: sector selection, sector analysis, project compilation, national project prioritization, and time line development.

Governments should follow the road map with an examination of whether a PPP is correct for a specific project based on its affordability, whether lenders will provide financing, and, most important, whether the project offers value for money. The government also needs to be able to monitor PPPs, including handling project execution and procurement. Finally, the government must consider the consequences of the PPP for the budget and government accounting.

1 The GCC consists of Bahrain, Kuwait, Oman, Qatar, SaudiArabia, and the United Arab Emirates.

 


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