Public Private Partnership policy in UAE : What you need to know

Public Private Partnership policy in UAE : What you need to know

One of the most popular collaborations between the government and the private sector for development of a country is through a public private partnership. Simply put, a public private partnership entails a contractual relationship between a government entity and a private organisation. Typically, such relationships are forged for the development of infrastructure in a country. There are several ways in which a public private partnership can operate. This article looks at the public private partnership policy in UAE through various case studies.

The need for public private partnership policy in UAE

UAE : Where the future is

The rise of the public private partnership policy in the UAE has been on account of tighter governmental budgets for development of infrastructure. According to experts, the gap has been filled by various public private partnership schemes across the region. [1]

The need for public private partnership has been recognised by the members of the government : While speaking at the UAE Public Policy Forum in 2018, H.E. Sultan bin Saeed Al Mansoori, UAE Minister of Economy noted that [2]

A robust economy does not rely solely on the government; it counts on a strong private sector and solid relations between private and public. Defining the nature of this relationship is one of the main challenges to its success, and this makes it crucial to have a federal law to regulate it, where the government’s main role is supervisory.

In addition to the above, increased public private partnership policy also means cost saving on the operation and maintenance of a project through competitive bidding, encourage innovation in the private sector, creation of more job opportunities and the reduction in government spending. [3]

Legal framework for the public private partnership policy in UAE

Legal framework for PPP in UAE

The legal framework in relation to the public private partnership policy in UAE is as follows:

  • The UAE Cabinet issued a resolution (1/1) in 2017 which sets out the procedures manual for partnership between government entities and private sector. The objective of the manual is to diversify the mechanisms to develop strategic infrastructure projects and improve the quality of services.The manual also provides a general framework for project life cycle of partnerships with private sectors. [4]
  • In February 2019, UAE enacted a law designed to encourage private sector involvement in housing, infrastructure and education projects in Abu Dhabi. This is part of the three year Dh50 billion “Ghadan 21” programme which will provide a boost to the economy. The objective of the law is to formalise the Abu Dhabi Investment Office, a government body set up in 2018 to boost drive foreign direct investment. [5]
  • Dubai has also enacted laws to promote the public private partnership policy. Law No. 22 of 2015 is directed towards encouraging the participation of private sector in the development of projects and increase investments in different fields. The law permits the partnership project by the government or by the private sector. [6]

Case studies of public private partnership in UAE

Case studies of public private partnerships in UAE

Set out below are some examples of the public private partnership in UAE currently.

In the renewable energy sector, Masdar Clean Energy, a leading developer and operator of utility- scale renewable energy projects, is executing the project of delivering solar and wind projects across a range of different geographies. [7] Other projects in the renewable space includes the three utility scale renewable based on photovoltaic solar technology. [8]

In the education sector, in 2018 the Abu Dhabi Executive Committee approved the proposal to establish new schools, in partnership with the private sector. This is a part of the Abu Dhabi Development Accelerators Programmes which has been launched by Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi. According to the officials, such public private partnership schools in Abu Dhabi are expected to contribute to “raising education capacity, with very reasonable expenses for citizens and residents. [9]

In the healthcare sector, in 2018, the Dubai Health Authority (DHA) began the tendering process for the establishment of a state-of-the-art cardiac centre which will be built on a public- private partnership (PPP) model. The private sector player will be responsible for design, building, financing, maintaining, operating and managing the cardiac centre for 25 years. At the end of the contract term, the facility will be transferred to DHA. The private player will be also responsible for carrying out the operation and maintenance of the medical and surgical equipment provided. [10]

Partial PPP projects have also found a place in Dubai where the operation and maintenance contract of Dubai Metro were contracted to a private player. [11]

Future projects

Future of PPP in UAE

Dubai Roads & Transport Authority has a PPP project in the pipeline called the Union Oasis. This is a transit-oriented development project to be built at the at the intersection of the Dubai Metro Red and Green lines. [12] As per the information available in the public domain, there are several public private partnership projects where the tender has been announced. [13]

Other examples of Public private partnership policy in UAE include Dubai Supreme Court Car Park, Abu Dhabi Airport Midfield Terminal and Mirfa Independent Water and Power Project. [14]

What happens next

As per the International Data Corporation, MEA will receive a huge boost of investment which is expected to hit the USD 2.30- billion mark by 2021. This funding will be critical for building the smart cities as well as executing the public-private partnerships (PPPs) projects. [15]

Conclusion

In case of any public private partnership project, it is critical to remember that there is no one size fits all approach. Depending on the needs of the country and taking into consideration the practical aspects, each project is unique in nature and brings something extraordinary to the table.

About the author

Financial advisor to UHNWI, private entities, family offices, and companies. Certified Anti-Corruption Manager from The American Anti-Corruption Institute

Leave a Reply