PPPs in the GCC: Governments as Growing Business and Strategic Partners

The Gulf Cooperation Council (GCC) countries continue to raise their efforts to enhance economic growth and development. Governments have generally been playing a regulatory role and developing major projects through conventional means relying directly on the government budget. On the other hand, private-sector players’ relationships with governments were for regulatory and licensing matters or for execution of projects owned by the government. As governments seek optimised models to accelerate economic growth, private-sector players have been on the lookout for strategic partners to get involved with the various interesting projects in the GCC. Public–private partnerships (PPPs) have been a key instrument for strengthening relationships between governments and the private sector, aiming at enhancing national enterprises, creating job opportunities, and generating sustainable development by integrating private-sector expertise and investment into strategic government initiatives.

Bahrain has been proactively implementing PPPs to drive land development programmes. In Kuwait, energy and telecommunications infrastructure PPPs, among others, have been awarded. Oman’s interest in PPPs has also grown, now targeting 11 projects in several sectors (including transport, logistics, health, education and technology). Qatar’s focus has been on PPPs related to education and healthcare, although other sectors such as wind turbines are also increasing. KSA reportedly has over 200 approved PPP projects. While in the UAE, at the Emirate level, Abu Dhabi and Dubai have taken the lead with further regulatory support at the Federal level issuing new rules to boost federal PPPs.

While there is a lot of action on PPPs in the GCC, this article focuses on the KSA and the UAE in view of the recent trends which should assist in forecasting opportunities, requirements and models.

The KSA has made significant strides in creating an environment conducive to PPPs. Driven by an attractive regulatory environment, the PPP pipeline of more than 200 PPP projects with a value of +USD50 billion approved continues to grow, with 300 projects being evaluated. Moreover, in March 2024, the KSA introduced the “Rules for Dealing with Requests from Government Entities to Establish Companies, Participate in their Establishment, or Establish any Entity for Investment and Profit-making Purposes”, which provide a structured framework for government entities to engage in investment activities, set up companies and participate in their incorporation. From a structuring perspective, establishing a project company is key. However, having the government entity directly owning a share in a project company to operate a long term PPP may not necessarily permit exercising all rights and obligations from a corporate governance perspective. In the authors’ view, this recent regulation allows building stronger corporate models for PPPs which strengthen the relationship between the public and the private sector and allow the government to be more engaged with agility in such PPPs.

In the UAE, public–private partnerships have been key in the government’s strategy to reduce public spending, while maintaining high standards of public services. The UAE’s government expenditure has increasingly focused on leveraging private-sector participation to deliver critical infrastructure projects. For instance, in March this year, the Dubai government approved a portfolio of PPP projects worth AED40 billion (USD10.9 billion) in sectors such as health, water, waste management, infrastructure, public transportation and utilities, while Abu Dhabi recently announced the largest PPP student accommodation project. Aligned with this, the UAE federal government introduced Federal Law No 12 of 2023 Regarding Partnerships Between Federal Public and Private Sectors, and more recently in 2024, the Public Private Partnership Manual (revamping the previous regulations and manual), boosting opportunities for the private sector to become involved in strategic federal projects, by ensuring profit-sharing and risk distribution.

As much as governments want to grow their economies and boost PPP projects, there are various elements that lay a level of governance on such business initiatives. These elements relate to factors, such as, but not limited to, ensuring protection of local wealth, sovereignty, data protection and employing a national workforce.

The UAE recently rebranded its former “National In-Country Value Program” to the “National Content Program”. This seems to reflect an alignment with Saudi Arabia’s use of local content terminology. Such change could be a sign with respect to the UAE’s approach to PPPs and the significance of local content in selecting government partners from the private sector. More recently, the UAE issued Ministerial Decision No 438 of 2024 concerning the Reorganisation of the Emiratisation Partners Club. A successful initiative by a government in the GCC seems to be influencing neighbouring countries to take similar steps of tested strategies with respect to PPPs and the involvement of the private sector.

On the other hand, there are projects and key sectors that governments seem to be cautious not to expose to a PPP model. For example, there are projects that may expose the sovereignty of a government including but limited to its security and data. The more the government supports digital transformation, the higher the exposure to such limiting factors that require governments to act conventionally, albeit inspired by recent models due to the very nature of a digitally advanced system. In Saudi Arabia, the Public Investment Fund (PIF) has been playing a crucial role in enabling agile business models with the wider private sector. The Rules for Dealing with Requests from Government Entities to Establish Companies, Participate in their Establishment, or Establish any Entity for Investment and Profit-making Purposes require projects to be first offered to the PIF prior to requesting entering into direct arrangement with the government.

The GCC’s emphasis on local content and PPPs highlights the region’s commitment to economic diversification and growth in a balanced approach that protects the local wealth and workforce. By fostering supportive regulatory environments and encouraging government–private-sector partnerships, GCC countries are enhancing economies of scale and boosting private sector involvement, particularly in the KSA and UAE. While the authors expect further regulatory alignment across the region, they look forward to observing and participating in the forecasted projects and partnership models on cross-border level.