Infrastructure
Private investment opportunities in infrastructure
Over US$ 400 billion of infrastructure development is planned for the Middle East and North Africa over the next decade, according to independent research commissioned by Invest AD.
Much of the spending will take place in the Gulf, where governments have set aside surpluses from oil revenues to carry out their infrastructure plans, and are looking for partnerships with institutional investors who can bring expertise in finance as well as asset development and management.
Saudi Arabia, for example, opted to increase government expenditure by 16% in 2009, focusing on infrastructure spending, which was due to rise by 36% in the year, the largest ever increase in infrastructure spending in that country, according Standard & Poor’s.
Similarly aggressive expansionary policies with a focus on infrastructure are evident in Abu Dhabi, Qatar, and Oman, the ratings agency said.
"We believe that GCC governments have exceptional fiscal space to implement their counter-cyclical expansionary policies, despite experiencing significant losses on their foreign asset holdings over the past 18 months," Standard & Poor's credit analyst Farouk Soussa said in a statement in May.
"In our view, Saudi Arabia, Abu Dhabi, and Kuwait have the greatest amount of fiscal space to pursue such policies, and we forecast that each could sustain a 10% deficit without resorting to debt finance for at least 25 years.”
According to the research commissioned by Invest AD, infrastructure spending in the MENA region in the next decade will be led by development of transport networks, followed by downstream energy.
Airport projects - USD billion
A total of 15 projects have been identified within the Airports Sector with a total
Capital value of USD 28.7 billion, of which it is expected that at least 5 of these with
A capital value of USD 8.6 billion will be privately financed.
There are significant opportunities within the UAE as the Governments of Abu Dhabi, Fujeirah and Ras Al Khaimah are seeking private sector participation as a means of partly expanding capacity.
Port Projects - USD billion
A total of 24 projects have been identified within the Ports Sector with a total capital value of USD 39.7 billion, of which it is expected that at least 12 of these with a capital value of USD 36.1 billion will be privately financed.
Significant opportunities for investment in both early stage projects and in hybrid projects involving the acquisition and expansion and upgrading of existing facilities.
Road/rail projects - USD Billion
A total of 61 projects have been identified within the Roads/ Rail Sector with a total capital value of USD 60.9 billion, of which it is expected that at least 9 of these with a capital value of USD 35.5 billion will be privately financed.
Significant expenditure expected to improve both rail and road networks both as a result of historical underinvestment and due to the rapidly growing populations and the requirements to move freight.
Power projects - USD Billion
A total of 57 projects have been identified within the Power Sector with a total capital value of USD 41.6 billion of which it is expected that at least 9 of these with a capital value of USD 19.4 billion will be privately financed.
The power sector is the most developed in the market with respect to private sector participation and a number of projects have successfully been undertaken in Oman. Saudi Arabia and the UAE. The trend is expected to continue given the rapid economic expansion and fast growing populations.
Water and wastewater projects - USD Billion
A total of 56 projects have been identified within the Water and Wastewater Sector with a total capital value of USD 48 billion of which it is expected that at least 9 these with a capital value of USD 5.4 billion will be privately financed. The demand for water and wastewater infrastructure is high due to the rapid pace of urbanization, and Governments are increasingly looking to the private sector to meet the infrastructure requirements in this area.