Does Abu Dhabi's new Public Private Partnership framework signal a new dawn for PPPs in the Emirate?

7 minute read
07 December 2020


The Abu Dhabi Investment Office ("ADIO") has outlined the new Public Private Partnership (PPP) framework to be followed in the Emirate. The new approach follows the promulgation of the Abu Dhabi PPP Law in 2019. Law No. 1 of 2019 established ADIO and Law No. 2 concerned the regulation of Public Private Partnerships. With the government cognisant of the benefits of a clear, structured approach to all PPP projects, the guidance and regulations recently announced by ADIO represents their commitment to attracting private sector investment.

ADIO was initially set up in 2019 with the aim of improving the investment environment for both local and international investors. This was part of Abu Dhabi's wider Development Accelerator Programme "Ghadan 21", a three year, AED 50 billion (US$ 13.6 billion) economic development strategy that was aimed to boost the Emirate's economy. The new guidance is ADIO's first foray into providing procedural details for what they hope will eventually become a 'PPP Centre of Excellence' that will establish and enable best practice and encourage private sector involvement in major projects and the delivery of public services.

The initial focus of Abu Dhabi's infrastructure procurement programme will be education, transport and municipal works. These areas are planned to benefit from AED10 billion (US$ 2.7 billion) worth of infrastructure partnership projects which will be facilitated by ADIO and its new PPP programme.

The current picture

With all members of the Gulf Cooperation Council (GCC) seeking to reduce their reliance on oil revenues, Abu Dhabi and the wider UAE is at the forefront of diversifying their economies. The UAE is currently the least reliant GCC country on the sale of oil to provide government revenues (41% of all its government revenues derived are derived from oil) and it is continuing to emphasise economic diversification. Attracting private enterprise and investment across a range of sectors, including the provisions of public services and infrastructure projects, is a key part of this process.

The development of the new PPP framework is intended to provide robust, clear and consistent legislative and procedural structures to support long term private sector investment in the provision of all public services and infrastructure projects. Historically, there has been a lack of clarity on the processes and procurement rules that apply to PPPs in Abu Dhabi. Only the water and power sectors were governed by specific laws, which is a key reason why Abu Dhabi has primarily had success in procuring privately financed projects in these areas.

What does the new approach change?

The latest developments seek to enhance Abu Dhabi's ability to procure PPPs across a wide range of sectors. They provide a consistent and clear procedure that is in line with international best practice. Furthermore, the programme is a clear signal of the Abu Dhabi government's commitment to PPP as a delivery model for major infrastructure projects. Having a robust PPP framework will assist in attracting private capital. Meanwhile, project preparation will be enhanced, increasing the attractiveness of the programme.

This framework is underpinned by a four stage process that covers the entire life-cycle of a project. At each stage, there are clear deliverables and key elements. Projects can be proposed by the Government in response to an identified need, but private sector providers are also encouraged to propose projects in the form of an unsolicited proposal. As the stages progress, there are ample opportunities for collaboration and communication between the procuring authority, ADIO and the private entities working on the project. This collaborative process should promote efficiency, transparency, consistency, and allow for rigorous analysis and management of the proposed project throughout its lifetime, taking into account value for money, compatibility with government's strategic aims and community benefit.

ADIO itself will play a key part in enabling the procedure to function. In addition to the above, it will provide a single point of contact for private sector parties who seek to get involved in PPPs in Abu Dhabi, simplifying what can be complex processes. Furthermore, it will continue to develop supportive and transparent policies for PPPs and support the identification, procurement and implementation of PPPs in a manner that is consistent with Abu Dhabi government strategy, community needs and international best practice.

The regulations clarified, crucially, that projects approved in accordance with the new framework will not be subject to existing procurement laws regulating the financial systems of the Abu Dhabi government. This clear delineation between the existing regime and the new one is a further sign of the intent of the Abu Dhabi government to substantially improve the environment for PPPs in the Emirate.

The government of Abu Dhabi hopes that by formalising the PPP programme, they can begin the process of creating a sustainable, attractive environment for private sector investment. The framework is hoped to produce an increase in private sector investment; facilitate the development of true partnerships; enhance accountability for Government expenditure; increase access for the Government to private sector innovation, entrepreneurship and efficiencies and spread the cost of procuring public assets and services through long-term contracting. In addition, they hope to improve the accountability of the delivery and management of infrastructure and services by utilising an output-driven payment and incentive structure.

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