Bracewell’s Tom Swarbrick told Proximo that many GCC governments are looking past the conventional reasons for employing PPP and using it as part of the gradual and long-term broadening of their economies beyond reliance on the oil and gas space.
“In the past, many GCC social infrastructure projects have been funded directly by governments using oil revenues, which is fine if the oil prices are high. But if oil prices crash as they did when the Covid-19 pandemic began, that is a disincentive to investment,” said Swarbrick. “I think that the move to PPP is just a way to make sure that there is continuous, sustainable investment into sectors such as healthcare or education. Ultimately, the government still has to pay, but not as a big lump sum up front. There is also an element of risk transfer to the private sector partner.”
The use of the PPP model in GCC countries has historically been confined largely to the power, water and wastewater sectors. Increasingly, however, governments in the region are tendering out social infrastructure assets on a PPP basis.
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