Falling oil prices, budget deficits, and the vast number of new and ongoing infrastructure projects in Qatar have all placed a burden on the government, hence a need to develop strategies to diversify its economy and encourage foreign investment.
In the lead-up to hosting the 2022 FIFA World CupTM, the government has increasingly turned its attention toward the private sector as a potential partner in developing major infrastructure works.
To govern such relationships between the public and private sectors, the cabinet recently approved two new laws: one regarding public private partnerships (PPP), the other regulating the investment of non-Qatari capital in economic activity, allowing up to 100% foreign investment in all economic and trade activities.
Under the law, the PPP partnership is as per one of the following regulations:
• Allocation of land through a rental or usage licence, for development by the private sector
• Build-operate-transfer (BOT)
• Build-transfer-operate (BTO)
• Build-own-operate-transfer (BOOT)
• Operations and maintenance (OM)
• Any other form adopted by the Prime Minister, upon the proposal of the relevant minister. The government or other administration may, on its own initiative or at the suggestion of the private sector, identify a project for its implementation through partnership.
Using a PPP framework is not without precedent in Qatar, and has already been used, for a water and power project at Ras Laffan and a power project in Mesaieed. However, extending the PPP initiative to its infrastructure development plans will make Qatar a hub in the region for foreign long-term investment. It will also drive momentum in the country’s currently small PPP sector by establishing a clear legal basis for PPPs, provide a clear governance and approval framework, and give confidence to the government, investors and lenders through legal certainty.
The law will be mutually beneficial to both parties, allowing for the transfer of technologies and innovation from the private sector to public projects, while diversifying funding sources for government infrastructure projects from private sector financing. It will also encourage best practices and efficiency, and support economic diversification by expanding PPPs to all sectors, not just the large infrastructure projects that PPPs are usually associated with.
A major Public-Private Partnership (PPP) pilot project was unveiled before potential investors in January, for the construction of 45 schools in the public sector worth an estimated QAR4 bn. The six packages under the project are to be completed within the next five years – the first package is for eight schools to be completed at the same time. The private sector will finance, build and maintain the schools to be run by the government.
The Ministry of Education and Higher Education (MOEHE), Ministry of Finance (MOF), the Public Works Authority (Ashghal) and the Technical Committee are the key stakeholders of the PPP Program. MOEHE will oversee operation of the schools and contract management, while MOF will be in charge of payment guarantee and the PPP policy and guidance.
Meanwhile in March, Ashghal held a roadshow for the Al Wakra and Al Wukair Sewage Treatment Plan (STP) project, to be implemented under a PPP contract. The project includes a sewage pumping station, sludge treatment and management units, odour control units, and the construction of a treated water pumping station. The project is to be completed within four years. The private sector partner will operate and maintain the plant for 25 years, and then transfer to Ashghal.
Implementating the project through PPP is a continuation of Qatar’s efforts to increase the participation of the private sector in development projects, and also ensure the transfer of expertise and the enhancement of service levels provided in various fields.
Author: Sarah Palmer
This feature is an editorial from the ‘Oil, Gas and Petrochemicals’ section in the latest issue of Marhaba – Issue 75, which comes out in August 2019.
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