Doha: While the new Public-Private Partnership Law (PPP law) which is expected to be enforced in Qatar next week should bring optimism to the private sector, it also comes with responsibilities and capacity building which the private sector needs to also consider to gain maximum benefits from the new law, according to experts.
Speaking at the second session of the digital ‘Conference on Developing Partnership Between Public and Private Sectors’ yesterday, Dr Ehab Elsonbaty, Senior Legal Counsel at the Qatar Investment Authority, said the new PPP law demonstrates the flexibility of the Qatari government towards PPP projects in the country. He said the private sector can now take the initiative to go to the government and propose that a certain project is undertaken through PPP.
He added that the new law also features authorisation from the Prime Minister to allow alternative dispute resolution (ADR) to resolve any dispute that may result from the application of the law. “As every good news, there are also responsibilities and capacity building that the private sector should be considering in order to be ready to benefit from the law. Every private sector entity should have in mind, when considering working with a public private partnership project is to be mindful of all the framework and policy documents of the law from the beginning. And make sure they have the commercial benefit without affecting their financial model,” Elsonbaty added.
Dr Luana Ozemela, Founder and CEO of DIMA, a Qatar Financial Centre-related company which is aimed at promoting direct investment between Qatar and Latin America, shared a number of international experiences on PPP, particularly in Latin America, which has been operating PPP laws for over 20 years. To date, about 17 economies in Latin America have been classified as having a developed PPP framework and model to operate with. Brazil, in particular, has approved over $50bn in PPP contracts since 2008, she added.
“One thing that is crucial for it to work well is the coordination among the several actors. This challenge has been addressed with dedicated wellstaffed PPP units. PPPs in general have risks. And just like any investment project, they can also fail. In the case of Brazil, three out of the ten largest PPPs that have ever been approved have failed. One of the issues was incapacity for payment from the contracting entity. Sometimes, both public and private entity both get too carried away, excited, and overly optimistic about the financial returns with the PPP project. This excessive optimism is a failure that happens in both sides. That’s why it’s important for project structuring to be done well in a conservative manner. These challenges have more to do with the project preparation than with the PPP system itself,” said Ozemela.
Tim Armsby, Partner at Pinsent Masons, who also led the team which worked on the first draft of the PPP law which was previously submitted to the Ministry of Commerce and Industry, highlighted the reasons for the new law.
“This is a competitive market and it’s important to have a good law. Many countries across the region have PPP laws. And it’s notable in the last three years in particular, a number of states have issued new PPP legislation. What this law gives is it demonstrates serious government support for the programme at the highest level. It consolidates and streamlines the approach that will be used. And that shift gives a very positive message to the private sector as projects are tendered,” he added.