Abu Dhabi, UAETuesday 22 October 2019

Dubai sets up new public-private partnership unit

Dubai Department of Finance's director-general expects tens of billions of dirhams of private sector investment in PPP schemes

Cranes in place at Dubai's Expo 2020 site in July 2019. The emirate has just set up a PPP unit to encourage foreign investment in infrastructure projects.
Cranes in place at Dubai's Expo 2020 site in July 2019. The emirate has just set up a PPP unit to encourage foreign investment in infrastructure projects.

The Dubai government's Department of Finance has set up a new public-private partnership unit.

The unit will encourage the development of projects and initiatives that can be funded by global infrastructure investors, and accompany a new Public-Private Partnership (PPP) strategic plan for 2019-21 which was approved by the DOF on September 18, according to a statement on state news agency WAM.

"DOF has established a dedicated PPP unit. We are also finalising the formulation of operating guidelines based on best practices across the PPP procurement life cycle and devising a uniform budgeting approach to managing PPP liabilities and managing aggregate fiscal exposure," Aref Abdulrahman Ahli, executive director of the planning and general budget sector at the DoF said.

Public-private partnerships are a method that allow governments to procure major infrastructure and social projects from project developers and investors who design, build and then manage facilities for periods of up to 30 years in return for revenue generated by users of the asset.

"We are continuously aspiring to enhance the financial sustainability of the public sector and provide a stimulus for economic growth in the emirate of Dubai. In line with these aspirations, DoF is placing a key focus on Public-Private Partnerships, PPPs, aiming to leverage local and international private sector expertise, efficiency, and innovation," said Abdulrahman Saleh Al Saleh, director-general of Dubai's Department of Finance. Mr Al Saleh expects the private sector will engage in projects and initiatives with the government worth tens of billions over the next few years, the statement said.

“A PPP unit is an essential part of a successful PPP programme," Sachin Kerur, head of Middle East at law firm Reed Smith said.

"Time and time again, it has been the case that when countries organise a wide-ranging and efficient unit, a PPP programme has better regulation, policy, delivery, financial hygiene and standardised processes.

Mr Kerur said that when the private sector suddenly becomes involved in providing services that were once the preserve of governments, it "can provoke misunderstanding and distrust".

"A PPP unit plays a valuable role in educating all stakeholders as to how the PPP procurement process best operates.”

Andrew Greaves, head of the Dubai office at Addleshaw Goddard, said that there has been tightening liquidity across the broader region when it comes to funding projects, but that the creation of a PPP unit would "give potential investors confidence in the market".

"What we need to see is the creation of a PPP unit which really focuses on those deals which will come to market and be categorised as bankable — i.e. there's a need for the particular facility or service line and it's capable of generating profitable revenue for the investors and the operators. Overall, it's a good development and hopefully it will stimulate some schemes in the region."

Peter Greatrex, a real estate partner at Clyde & Co in Dubai, added that PPP units allow governments to "centralise your expertise in managing the relationships with the private sector".

"These bodies allow the project to be developed in an environment that has specialised experts with legal and financing training that may not be present in the separate ministries or other government agencies," Mr Greatrex said.

Updated: September 19, 2019 05:32 PM

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