d2 s6 alsharif khalid alghalib

8/9/2019 d2 s6 Alsharif Khalid Alghalib

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Investment Opportunities and PPP

in the Transport & Railway Sector


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Table of Contents

1. GCC Transportation Sector Overview

2. Transportation Projects and Financing Options

3. Lessons Learned and Way Forward

4. Conclusion

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-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

2002 2003 2004 2005 2006 2007 2008 2009 2010

Saud i Arabia UAE

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Saudi Arabia Qatar UAE

4

Transportation sector growth

Source: Respective central banks and statistics authority

Credit growth to the transportation sector

Bank credit to the sector has increased significantly,

reaching a peak of 207% in 2007


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Top Rail Projects in the GCC

Rank Project Country Sector

1 Qatar National Rail Scheme Qatar Rail

2 Emirates Railway Project UAE Rail

3National Freight and

Passenger RailwayOman Rail

4Kuwait National Railroad

(KNRR) Network Kuwait Rail

5Bahrain Rapid Transport

NetworkBahrain Rail

6 The Land Bridge Saudi Arabia Rail

7 Kuwait Metro System Kuwait Rail

8Mecca – Medina Railway Link(MMRL)

Saudi Arabia Rail

9Jeddah Light Rail Transit –

TramSaudi Arabia Rail

Source:ConstructionWeekOnline.com5


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21%

30%

29%

16%

6%7%

Saudi Arabia

Kuwait

UAE

Qatar

Oman

Bahrain

Source: Zawya 6

Ongoing GCC aviation projects

Top 10 ongoing aviation projects in GCC

Rank Project Country

1Kuwait International AirportExpansion

Kuwait

2 New Doha International Airport Qatar

3 Al Maktoum International Airport UAE

4 Abu Dhabi Airport Expansion UAE

5Bahrain International Airport

ExpansionBahrain

6King Abdulaziz International

Airport - Phase 1Saudi Arabia

7 Abu Dhabi Airport Expansion -

Midfield Terminal ComplexUAE

8Muscat International Airport

Expansion - Phase 1

Oman

9Prince Mohammed Bin Abdulaziz

Airport Expansion - Phase 1Saudi Arabia

10Dubai International Airport

ExpansionUAE

Investment in the GCC's civil aviation sector

is massive


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Saudi Arabia

2% Kuwait

8%

UAE

90%

Qatar

18%

Source: Zawya

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GCC ports ongoing projects by country

Top 10 ongoing port projects in GCC

Rank Project Country

1 Khalifa Port and Industrial Zone UAE

2 New Doha Port Qatar

3 New Doha Port - Phase 1 Qatar

4 Bubiyan Island Port - Phase 3 Kuwait

5 Duqm Port - Marine Works Oman


7King Abdulaziz Port Expansion -

Container TerminalSaudi Arabia

8 Ras Al Zour Port Saudi Arabia


10Khalifa Port and Industrial Zone -

Khalifa Port - Onshore Port FacilitiesUAE

The GCC region is made up of 35 major ports


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GCC Rail Projects

Saudi Arabia railway network

Other GCC countries are also in the process of rail network development

Source: Saudi Railways Organization 9

UAE railway network


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Table of Contents




4. Conclusion

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Most transport projects in the region have been

financed by governments

Increased participation of the private sector will be key to sustaining andaccelerating the pace of development

In recent years, a number of initiatives have been taken to attract investment

through domestic and international investors

Private investment is encouraged through a number of means, including sale ofgovernment assets, investments by private equity funds and Initial Public

Offerings (IPOs) of state-owned entities

The region still lags in Public Private Partnerships (PPP), a method broadly

used for financing infrastructure projects in other emerging as well as developed

economies

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Lack of bankability and weak debt market was the main

obstacle in Saudi Landbridge Rail Project

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The 950km Landbridge project was originally packaged as a BOT PPP project, had

serious structural problems hindering its bankability

The low appetite to transfer demand risk to the private sector and the difficulties of a

50-year concession period

After some delay, the project worth USD7bn is to be funded by Public Investment Fund

(PIF)


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4. Conclusion

13

Table of Contents


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17.0 16.9 16.5

26.5 27.0

29.8

24.5

15.5

18.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 0.0 2.0 4.0 6.0 8.0 10.0

Education

Transport

Healthcare

General Public Service

Public Or der & Safety

Telecoms

Environment

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The success of PPP models in Western Europe and US have increased confidence among private equityinvestors and banks

Aggregate value of PPP projects in Europe (EUR bn) Sector-wise PPP projects in Europe by 2010 (EUR bn)

International Investor Appetite

Source: European PPP Expertise Centre


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PPP Lessons from international markets

Essential ingredients needed for a

PPP program

High level government commitment

Skilled central support from a PPP “Task Force” with

authority over all PPP projects

The involvement of high quality private firms

Availability of long-term private capital

Project success criteria

The project must be bankable

It must offer a service (output) driven solution

There must be scope for innovation in design

Lessons from the international

experiences

The single objective should be better services for

the public

Need to have realistic expectations on timing

Focus on realistic risk transfer to private sector

PPP does not make a bad project good

Address public concerns

Involve all parties in initial discussions

Ensure objective evidence of performance andvalue for money

Prioritize projects


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In conclusion

Involving private capital is not easy

Formalize Legal approach to PPP investment laws is needed

Transportation infrastructure has established itself as one of the key growth drivers ofthe GCC economies

Multi-billion Dollar investments are envisaged across the region – private capital has

an important role to play

Investors must be driven by the incentive of realizing profitability

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Thank you

d2 s6 alsharif khalid alghalib

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