Introduction To Public Private Partnerships With A Focus On Qatar

The Qatari Government is increasingly interested in public private partnerships (PPPs) for the delivery of its infrastructure projects. As we will explore later in this article, some of the key drivers for the Qatari Government's desire to use PPPs as a form of procurement model for specific sectors differs from other parts of world. However, it is clear that given the number of projects connected with the Qatar 2030 Vision, alternative procurement structures will need to be considered to help alleviate the public sector burden.

This article will provide an overview of PPPs, consider some of the main PPP procurement options and how to facilitate PPPs from legal and regulatory perspective as well as examine some recent trends in relation to PPPs in Qatar.

What is a PPP?

There is no widely agreed, single definition or model of a PPP. However, PPPs are arrangements typified by joint working between the public and private sector. As the name suggests, they are meant to be partnerships but the reality is that this is not always the case.

PPPs are an alternative to the more traditional form of procurement. Traditional procurement characteristics might include:

Where a government procures assets, not services, from the private sector; or Where the private sector is only responsible for delivering the asset and is not responsible for its long-term performance. With PPPs, the private sector returns are linked to service outcomes and performance. The private sector is responsible not just for asset delivery, but for overall project management, implementation and operation.

PPPs can encompass a variety of structures comprising freehold ownership, leasehold ownership, a combination of the two or an alternative.

Click here to see a typical PPP structure.

Why should a PPP be considered? There are many potential benefits to structuring a project as a PPP. One of the main benefits of a PPP is that it removes the up-front capital costs from the public sector's balance sheet. Consequently, PPPs may allow for the delivery of an asset which a government may have been unable to finance directly.

Some of the other key potential benefits of PPPs are:

Access to private sector know how. PPPs can encourage innovation and good design through use of output specifications; Increased productivity and efficiency to help ensure delivery to time and price. The private sector does not receive payment until the asset has been delivered, which encourages efficiency; Cost savings can be achieved through the reduction of bureaucracy and administrative burdens that are often experienced by the public sector; The private sector can often provide a better service to the public sector through experience, innovation and the adoption of best practice methods; and PPPs can encourage the allocation of risks to those most able to manage them. Therefore, PPPs may be able to deliver risk transfer to the private sector. Brief history of PPPs in the GCC

One of first PPP projects was in relation to the Al-Manah independent power project (IPP) in Oman in 1994. This project was procured on a...