Public-private partnerships (PPP) for infrastructure spending and development are relatively new in the Middle East, but they will be instrumental to support continued economic growth given the volatility of oil prices and the financial impact that the COVID-19 pandemic has had on national economies. According to PwC’s 2020 Capital Projects & Infrastructure Survey, these factors have strained government resources and made it increasingly challenging to implement major infrastructure projects across the region. This is where PPPs will come into play.
Qatar, the United Arab Emirates (UAE), Saudi Arabia, and Oman have either updated or introduced PPP projects in the last few years. Saudi Arabia’s Private Sector Participation Law, introduced as updated legislation in 2021 and approved under Council of Ministers Resolution 436, is a key component of Vision 2030. It provides clear guidelines for PPPs to support planned infrastructure projects over the next two decades.
Oman, however, first introduced a PPP law in 2019. This regulatory framework will allow private sector companies to bid on and participate in public projects in partnership with the government, as the country, like others in the Middle East, strives to diversify its economy and alleviate its reliance on oil. The following is a breakdown of the law and some of the initial planned PPPs.
Introduced via Royal Decree 52 of 2019
Oman’s PPP law was introduced via the Royal Decree 52 of 2019 and came into effect on July 1, 2019. The law is strictly for the development of infrastructure or utility projects that have “economic or social benefits and is consistent with [Oman’s] strategy and development plan.” The Ministry of Finance will tender and award projects to select clients. Projects must be clearly defined in size and scope on the PPP Authority’s website. This means they must include a summary of the project and its objectives as well as the experience required for consideration and the deadline for applications. Submissions must also have an initial feasibility study.
After all project submissions have been received by the deadline, the Ministry of Finance will engage in negotiations with the successful bidder. The PPP law states that both parties must be clear on all technical and financial elements during negotiations. The successful tender must then create a project company with the single purpose of implementing the PPP project. This entity must be a joint stock company, but it can be a limited liability company if the tender doesn’t require financing.
The Liwa Fishery Harbour
The Liwa Fishery Harbour is expected to be the first PPP project developed in Oman. It was one of four fishery harbor development projects made available to investors as early as February 2019, but these projects were suspended due to the pandemic. The Ministry of Finance, along with the Ministry of Agriculture, Fisheries and Water, reinvited investors to submit bids for the Liwa Fishery Harbour in December 2021.
At present, the Liwa Fishery Harbour features rudimentary harbor infrastructure, including almost 1.5 kilometers of breakwater arms and a 100-meter-long fixed dock with two floating berths. The project involves a comprehensive upgrade of this infrastructure in addition to the development of supporting facilities to establish a thriving fishery-based economy in Liwa and surrounding areas. Supporting facilities include a fish market, refrigeration and ice-making facilities, fish-processing plants, boat-building and repair workshops, and other commercial properties. Water-oriented tourism opportunities will also be explored.
Other Seaport Developments
The Liwa Fishery Harbour isn’t the only seaport development being considered for PPP projects. The government is also tendering bids for a multi-purpose seaport development in Al Musanna. The status of the other two seaport developments announced before the pandemic is uncertain.
In a summary of the investment opportunities at these seaports, the Ministry of Finance stated: “As part of the government’s efforts to establish partnerships with the private sector in development projects, and in view of the strategic location of (these fishing ports), the ministry has allocated some areas (within these ports) for investment in various activities to capitalize on the port, generate lucrative returns, and create job opportunities for Omanis.”
These seaport developments make up just two of the six PPP projects announced by the Ministry of Finance in 2021. The other projects include a new toll highway from Thumrait to Salalah, a dialysis center, and more than 40 new schools.
42 Schools to Be Built under PPP Model
More than 170 developers expressed interest in building 42 schools in Oman for the country’s first PPP schools project. In August 2022, the Ministry of Finance qualified 10 bidders to submit proposals. The company with the winning bid will be responsible for financing, construction, design, operation, and maintenance of the schools.
The 10 qualified bidders are as follows: Galfar Engineering & Contracting, Al Madina Real Estate, Aberdeen Standard Investcorp Infrastructure Partners, Lamar Holding, Tamasuk Holding, Muscat National Development & Investment, Oman Investment Corporation, Vision International Investment Company, Renaissance Services, and Alghanim International General Trading & Contracting.