Saudi Arabia’s public and private sectors are willing and ready to have more Public-Private Partnership (PPP) projects, according to Mohamed Hedi Majai, who is director general at the department of enterprises development at Islamic Development Bank (IDB), in an interview with Saudi Gazette on the sidelines of first forum of IDB on PPP which was held in Al Faisaliyah Hotel in Riyadh.
The event has several objectives: Create awareness about IDB’s current development activities, sensitize IDB member countries about the important of PPP funding model, give an opportunity to hear some of the best practices in IDB member countries and other countries elsewhere, Majai said.
He stressed the significance of the need for a clear regulatory and policy framework. “If there is a country ready with regulatory and clear policy framework, this increases its chance to attract more funding and interest from private sector to undertake PPP projects,” he said.
“The presence of clear policy and regulatory framework can determine the success or failure of PPP’s future in any country. This is because this type of business is contractual and very much detailed. The relationship of all the stakeholders needs to be clear throughout all phases of the projects. Also there should be willingness to revisit some of the terms if needed throughout the life of the project. Credibility always plays a pivotal role in the success of PPP in any country. If one of the stakeholders does not fulfill the specified commitments that will create a precedent and it might deter some of the parties involved,” he added.
On the future of PPP in the Kingdom, he said the Kingdom has all elements that PPP require. However, he added, there should be also more clear regulatory and policy framework since such projects are very detailed. “About 20% of our portfolio PPP projects are in Saudi Arabia. We have done 8 PPP projects over 6 years including petrochemicals and Haj. The last project we did in Saudi Arabia is the Fadhili project, we participated with $105 million in the project financing. When we look at the absorption capacity of Saudi Arabia and the size of the economy, there should me more PPP activity and I think this is where the government is really exerting effort to work them out,” he said.
From IDB experience, he emphasized that both parties’ public and private sectors are ready and willing to enhance the collaboration in the Kingdom. “Private sector has the capacity. We have seen great examples from big companies such as: ACWA Power. However, smaller companies see the market opportunities but they need to either have joint venture or they can create a set up that can really present very good offering to the government,” he said.
“In terms of the government, most of ministries have initiatives and work hard to integrate PPP. We just signed recently a memorandum of understanding (MOU) with the Ministry of Health; they plan to move to this direction. And we are excited about that because we already started to do PPP projects in health care in Turkey,” he added.