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There has been a growing interest in public-private partnerships (PPPs) worldwide in recent years, being a popular way of procuring public-sector infrastructure. This alliance is gaining momentum at a time regional economies face increasing budgetary pressures resulting from the weaker price of oil.
Most examples of successful PPPs are in transportation, housing, roads, public parks and others. So the PPPs are a win-win for both sides. For the public sector, it means being able to have high-quality asset-yielding superior services; for the private sector, it means receiving an acceptable return without shouldering the demand risk.
Given the importance of PPPs, Vice President and Prime Minister of UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum, in his capacity as Ruler of Dubai, issued last August, Law No. 22 for 2015, regulating partnership between the public and private sectors in the emirate of Dubai.
The new law aims to encourage the private sector to participate in the development of projects and increasing investment in different fields in a way that serves economic and social development in the emirate.
In the UAE, a high-profile PPP has been agreed between intergovernmental organisation Global Green Growth Institute (GGGI), the Masdar Institute (MI), the Research Institute for Industrial Science and Technology (RIST) and POSCO, one of the world’s largest steel producers with its headquarters in Pohang, South Korea. This project expects to combine solar PV, wind power and biofuel production from waste and algae, linking to seawater-desalination plants and providing electrical energy.
While in Dubai, the Roads and Transport Authority (RTA) is offering Union Oasis Project for partnership with the private sector comprising the construction of towers above the Metro Station at the Union Square spanning an area of 19,000 square meters to be dedicated for business outlets, restaurants, offices, residences and other uses.
The PPPs are also being mulled in the areas of public parks across the UAE to enhance services to public and maintain the green lungs.
It has been proven beyond doubt that the PPPs provide considerable improvement in the level of service delivered to the public by introducing private-sector efficiencies as well as innovations in working methods and uptake of new technologies.
Of course, communities benefit from PPPs as they enable the public sector to provide much-needed infrastructure that might not otherwise be forthcoming due to budgetary constraints or lack of expertise.
Indeed, the developing world is experiencing remarkable growth in PPPs. For instance, in Brazil, schools, hospitals, transport and social infra-structure developments are being built and managed under PPP.
In India – with a population in excess of 1.2 billion – is a prime example of a nation seeking new means of achieving rapid and sustained infrastructure development. Its exceptionally large PPP plans currently total more than US$1trillion, according to the Asian Development Bank.
At best, the PPPs will fill the gap of public spending in the GCC states and other emerging economies.