Partnership project contracts between GCC public and private sectors awarded in the infrastructure sector during the last 10 years is worth more than $628 billion, Kuwait-based KFH Research Ltd., a subsidiary of Kuwait Finance House, said Saturday. The report noted acceleration in the pace of partnership projects between the public and private sectors during the last 10 years in the GCC region, as a result of the prosperity of infrastructure projects and increased government spending associated with such projects. The UAE and Saudi Arabia represent the largest markets for partnership models between the two sectors, particularly in the energy and water projects compared to a lesser extent in Kuwait, added the report. An increase is expected in the partnership contracts between the two sectors in the region during the coming period due to the recovery in the project finance market and the clients' understanding of this partnership concept. Since last September, over 50 contracts for the partnership between the two sectors were signed in the Gulf region. These projects require investments of more than $60 billion. Kuwait government proposed some 32 projects in various sectors requiring investments worth $28 billion, it added. Long-term projections showed an increase of government investment on infrastructure projects in the Gulf countries and the desire of most governments to adopt economic reforms in order to promote partnership projects. In total, the GCC has concluded just over 100 PPP-type agreements, of which half can be classified as management contracts. Often seen as a first step towards privatization, management contracts have been used extensively in the transportation sector with the overwhelming majority being awarded on regional port projects. The two biggest markets for PPPs have been the UAE and Saudi Arabia on account of the considerable private investment in new private power and desalination capacity. As of September 2010, the UAE had signed off an estimated $20 billion worth of PPPs (private partnership model), with some $7 billion accounted for by Abu Dhabi's utility sector. In Saudi Arabia, power and desalination's share of the PPP market was even higher, making up over 90 percent of the $16.4 billion total. In contrast, Kuwait had the lowest level of PPP transactions, having concluded just one major scheme, the estimated $400 million Sulaibiya wastewater project. In terms of PPP deals concluded, Saudi Arabia has the highest number at 45. Perhaps the most striking aspect of the renewed activity has been the sudden enthusiasm of both Kuwait and Dubai for the PPP model. Following its establishment in Kuwait in 2008, government-owned Partnerships Technical Bureau (PTB) rolled out in mid-2010 a PPP program comprising 32 projects and requiring investment of $28 billion. Transportation, real estate, healthcare and utility projects all feature on the list, with the largest being the estimated $10 billion Kuwait national rail scheme. With huge government surpluses, securing finance is not the overriding factor behind the PPP push in Kuwait, even though the PTB estimates that about $4 billion a year will have to be spent on infrastructure.
