Leaders in Rail: PPP funds could boost projects

Public-private partnerships could hold the key to swift future rail development in the GCC

SPECIAL REPORTS, Projects, Finance, Gcc, Ppp, Rail, Rail construction, Rail construction gcc

The Leaders in Rail Summit 2015 commenced with a panel discussion between Harj Dhaliwal, vice president and Middle East and Africa (MEA) rail and transit sector manager of Parsons, Graeme Bampton, rail technical director for Middle East at Aurecon, and Vincent Prou, managing director for Alstom’s GCC operations.

The panellists took to the stage to discuss the case for private investment and explore the options for public-private partnership (PPP) and private finance initiative (PFI), or similar financing models for procurement of rail projects. Given that rail authorities in the region are seeking alternatives to state investment, a viable economic case may still be required to source this funding.

With rail infrastructure at the forefront of the GCC’s development plans over the next 10 to 15 years, Alstom’s Prou insisted alternative funding options must be considered.

He said: “As low oil prices squeeze budgets, governments need to leave behind traditional methods of funding when it comes to large-scale projects. With multiple rail projects planned and some already under construction in the region, both volume and speed present challenges in terms of funding.”

Dubai has recently taken advantage of PPP as a financing model for Union Oasis – a mixed-use project surrounding the Union Square metro station. Parsons’ Dhaliwal commented on the move: “PPPs can ensure efficiency, speed, transparency, and economic impact in the delivery of infrastructure projects, as well as helping governments achieve their national development plans.”

Aurecon’s Bampton said the region is now at a stage where rail projects are vital for the GCC, and we can no longer rely solely on government financing.

“[PPPs] can free up public funds for other vital infrastructure projects or services in the region,” Bampton said. “PPP projects can also facilitate the transfer of technology and expertise knowledge from the private to the public sector.

“In the case of no, or very little, revenue, this type of framework could provide an instant cash injection, because firstly, no land purchase is required, and, secondly the majority of financing will already have been carried out through the private developer,” he added.

Concluding the session, Dhaliwal referred to transit oriented development (TOD) as a possible funding option for the future.

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