Emerging trends in Gulf PPP projects and ECA finance

(Gulf Times, Doha, 24 April 2016) The fall in crude oil prices has had a significant impact on the fiscal positions of states in the Gulf Cooperation Council (GCC), and a number of infrastructure projects in the region have been delayed for the indefinite future. While GCC economies will continue to pursue infrastructure development as part of non – hydrocarbon diversification there are significant developments in the PPP segment in recent years to encourage the private sector to participate in a diverse range of projects and thus relieve the government from seeking additional debt or to suspend further essential projects. Debt financing for regional PPPs structured on a project finance basis has generally been characterised by long tenors, and mainly sourced from commercial banks and in the case of large projects through export credit agencies (ECAs). GCC governments are expected to pursue private sector financing as a way to plug budgetary gaps for public infrastructure development in a weak oil market.