“Development of further sophistication of investment vehicles; particularly PPP will be one of crucial one of among these tools.”

KSA National Transformation Program 2030

I would like to start the second volume of my article series with the reference taking place in the 2030 vision.

From this perspective, the main purpose mentioned below is much more important for future steps of Saudi Arabia’s sustainable development:

To sum it up briefly:

“We will seek to shift the government’s role from providing services to one that focuses on regulating and monitoring them and we will build the capability to monitor this transition. We will seek to increase private sector contribution by encouraging investments, both local and international, in healthcare, municipal services, housing, finance, energy and so forth.” 

PSP and PPP tools will become very important in order to reach these goals.

Executing strategic development plans and transition plans are not that important for countries, instead it’s important to develop an action plan that will be able to carry the strategic development and transition plan into effect and an implementation schedule in order to declare the intentions.

Especially, In the Spring of 2016, the 2030 Vision was announced, and it functions as a blueprint to steer the country towards economic diversification.  As part of the 2030 Vision, The National Transformation Program (NTP) is a five-year roadmap set out by the government to realize this vision. The NTP details 178 strategic objectives for the 24 main Governmental entities. Many of these objectives require financing from the Government, as well as, the private sector in various forms of PSP agreements.

After sharing the sectors with you I would like to share the success criteria and a general SWOT analysis chart that shows KSA’s PPP ecosystem.  

Some of the target sectors of KSA include: 

  • Housing
  • Social Infrastructure: Health, Education, Social Affairs
  • Power & Utilities
  • Infrastructure: e.g., Municipal Works- Transportation
  • Agriculture
  • Hajj & Umrah
  • Tourism & Recreation
  • Sports facilities

Well, what is basically needed in order to reach these goals with successful PPP tools?

Increasing private sector participation requires a number of factors for success, which include:

  • Establishing an institutional capacity to manage PPP process
  • Appropriate legal/regulatory framework with strong political support
  • Extensive feasibility studies VfM and risk analysis of proposed projects
  • Effective organizational structures rooted in transparency to streamline decision-making and ensure effective implementation
  • Competitive business environment
  • Public awareness and cultural enforcement
  • Human capital development to support sustained growth
  • Clear record mechanism
  • Need to be a clear communication plan between public and private parties

Increasing private sector participation in any environment comes with its challenges and limitations, such as:

  • Ensuring transparency, open market access, and fair competition
  • Choosing the right partner and protecting the public interest
  • Selecting the most effective PSP model and the most appropriate share of risk
  • Assessing the value of money added for non-quantitative elements (e.g., social factors)
  • Guaranteeing continuity
  • Applying the concept to rapidly evolving sectors (such as, IT)
  • Using the concept in complex/high transaction cost structures
  • Ensuring the private sector’s capacity to extensively participate
  • Modifying agreements post confirmation

I would like to end this chapter with a SWOT analysis that takes part in NPT and is generic for PPPs.

As seen, in the matter of PPP there is a huge desire of success. In the whole strategy and action plan it is indicated as a goal. Between the stakeholders work is shared, even in the matter of planning and success.

Another pleasing matter is that KSA does not only desire the realization of PPPs but also the dynamics of the market offer PPP opportunities. The areas Energy, Hajj-Umrah, Social Progress and so forth are ready for the realization of PPP projects.

The threats and weaknesses of countries strategic plans and similar problems are also seen within KSA.

Thus we can summarize:

  • In order to realize projects there must be enough time
  • While the given timeframe is getting closer the expectations of the realization of the number of projects increases
  • A general PPP law framework and a process management guide
  • And of course the absence of capacity in human resources

Needless to say that it’s possible to list up more points, but all the efforts and works done so far are pleasing. But the most important achievement, as the title of my article series states, is the rapid increase of awareness and knowledge level.

The coordinated training, seminar, conference and delegation programs will compensate the gap in unqualified human resources. Transition and development are going to be the main key factors that will lead the planned and consistent work to success.

Whenever a development regarding the KSA PPP ecosystem happens I will share the information here.

For further knowledge:

Web: www.pppcoe.com

Twitter: @evuralaydin