meed-logo

line1 line2 line3
SIGN IN / REGISTER

PPP activity rebounds in 2023

26 October 2023

 

This report on project finance and PPP also includes: Liquidity drives project finance appetite

There has been an increase in both the number and value of public-private partnership (PPP) contract awards made across the Middle East and North Africa region in 2023, according to data from regional projects tracker MEED Projects.

The total value of PPP deals from January to early October has already overtaken the value of awards made in 2022. To date, $21.3bn of PPP deals have been finalised in 2023, compared to $18.1bn in 2022, representing a rise of 18 per cent.

With most of the final quarter of the year still to go, there is every chance that the 2021 total of $22.6bn will also be surpassed. In the five years before that, the total was at most about $12bn a year, underlining the healthy position of the market at the moment.

However, the longer-term record high of $29.6bn, set in 2009, still appears to be out of reach.

In numerical terms the picture is more balanced, with 34 PPP contract awards to date in 2023, compared to 44 in 2022 and 47 in 2021. However, the average size of PPP contracts being handed out this year is significantly up, at $627m an award so far in 2023 compared to $401m in 2022 and $482m in 2021.

Water and transport lead the way

The surge in deal-making has been particularly evident in the water sector, where $9.3bn-worth of deals have been signed this year, far ahead of last year’s figure of $3.6bn.

The largest of these is a $2.2bn contract for Abu Dhabi National Oil Company’s Mirfa seawater treatment plant. A consortium of Orascom Construction and Metito has been appointed to develop the project.

Just behind this in terms of value is the $2.1bn contract to install a water transmission pipeline from the Ar-Rayis1 independent water plant to Rabigh for Saudi Water Partnerships Company. The contract was won by a consortium of Cobra Group, Al-Khorayef Water & Power Technologies and Orascom Construction.

The transport sector has also been performing well, with $5.3bn-worth of contracts in 2023, significantly more than the $428m in 2022. The biggest schemes include a $2.2bn contract for Iran’s Roads & Urban Development Ministry to expand capacity at Tehran’s Imam Khomeini International airport, for which a joint venture of Hycan Automobile Technology Company and Khatam al-Anbia was appointed in September.

Another major contract is the $1.9bn deal that Saudi Ports Authority (Mawani) signed with China Harbour Engineering Company to upgrade Terminal 1 and expand Terminal 2 at King Abdulaziz Port in Dammam.

Construction and power struggle

There has been a relative decline in other areas, however, and most notably in construction. The high level of activity seen in the sector in 2022 has not been sustained, with contract values falling by two-thirds so far this year to $1.6bn. The number of PPP awards in the sector has also fallen, from 14 in 2022 to seven so far in 2023 – the lowest figure for this part of the market since 2019.

The power sector looks set to continue its recovery, with several solar and wind independent power projects (IPPs) in Saudi Arabia expected to be awarded before the end of the year. An estimated $4.9bn-worth of deals have been awarded in the first nine months of 2023. 

The expected award of the Saudi IPP contracts, as well as the third solar photovoltaic project in Abu Dhabi, indicates that the total value of power deals this year could equal or exceed that of last year.

PPP deals in the power sector – which pioneered the model in the region – account for 139 of the 332 contracts awarded between 2015 and 2023. This is followed by the water sector with a further 86 contracts, construction with 50 awards and transport with 31 deals. The remaining contracts were awarded in the chemicals, oil and gas and industrial sectors.

Within the power sector there has been a preference for build, own and operate (BOO) contracts, with 84 in total over the period, worth a combined $30.1bn; and build, operate and transfer (BOT) contracts, of which there have been a further 76, worth $20.1bn. In the water sector, the contracts are more evenly spread between BOO, BOT and build-own-operate-transfer (BOOT) schemes, while both the transport and construction sectors tend to favour BOT models.

Across all sectors, BOT, BOO and BOOT contracts account for 77 per cent of all contracts by value in the period under review. BOT emerged as the frontrunner in 2023 in terms of the value of awards, having been second to BOO contracts last year.

For most of the past decade, these two contract models have been the dominant ones, although BOOT was far ahead of the pack in 2021 thanks to the award of a $6bn contract that year by Algeria’s Transport Ministry for the development of El-Hamdania Port.

Gulf economies remain dominant

The most important markets in the region for PPP deals in 2023 are Saudi Arabia, with $11.6bn-worth of contract awards, followed by the UAE with $5.7bn and Iran with $2.2bn – the latter almost wholly because of the Tehran airport deal.

Among the other major contracts in these markets is a $2bn deal signed by Red Sea Global in September with a team of Masdar, EDF and Korea East-West Power Company for a multi-utilities package at the Amaala development, including a solar power plant, battery storage, sewage treatment and a desalination plant.

Also notable is Etihad Rail’s $800m contract with National Infrastructure Construction Company and National Projects & Construction in early October for the first phase of the light rail network in Abu Dhabi.

No other country has yet broken through the $1bn mark in terms of PPP contract awards in 2023, although Oman may yet do so. So far this year, the sultanate has seen the award of $824m-worth of projects, including two $400m contracts awarded by Oman Wastewater Services Company to develop solar power plants at Manah, southwest of Muscat.

This year’s figure is the highest for the sultanate in several years and marks a step-change from its recent performance. In 2021 and 2022, PPP contracts worth just $50m and $60m were signed, respectively.

Other markets have been performing more poorly. Both Egypt and Iraq have seen the level of activity slump significantly, with just $520m-worth of contracts in Egypt so far this year, compared to $3.6bn in 2022. Iraq has seen no PPP contract awards in 2023 at all, after two bumper years in which $8.5bn worth of deals were finalised in 2021 and $3.7bn in 2022.

The fall in these markets is a further sign of the wider problems facing their economies and could be a signal that private-sector actors are increasingly wary of signing up to long-term deals in such uncertain economic and political environments.

Among other, smaller markets, there have been signs of activity in both Bahrain and Tunisia, with one and two deals respectively this year, after no activity was recorded in either market last year. 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11227112/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Saudi firm signs $5.4bn oil and gas contract in Algeria

    15 October 2025

    Register for MEED’s 14-day trial access 

    Algeria's national oil and gas company Sonatrach and Saudi Arabia-based Midad Energy have signed a hydrocarbons exploration and production sharing agreement related to Algeria’s Illizi South block.

    The agreement is valued at $5.4bn and has a duration of 30 years, with the option to be extended for an additional 10 years, according to a statement by Sonatrach.

    This contract was signed by Sonatrach CEO Rachid Hachichi and the CEO of Midad Energy North Africa, Sheikh Abdelilah Ben Mohamed Ben Abdellah Al-Aiban, at Sonatrach’s headquarters in Algiers.

    The investments for exploration and exploitation of the block, which is located about 100 kilometres south of In Amenas, will be financed entirely by Midad Energy and include $288m allocated for research investments.

    The contract has a research period of seven years and was singed within the framework of Algeria’s Law 19-13 for hydrocarbons, which came into effect in December 2019.

    ALSO READ: Algeria makes provisional award for downstream project

    In a statement, Sonatrach said: “The work programme associated with this contract will be implemented in strict compliance with environmental protection requirements and in accordance with applicable Algerian regulations.

    “This programme also includes the use of the latest technological and digital solutions,” it added.

    Projected production from the Illizi South offshore development by the end of the contractual period is estimated at 993 million barrels of oil equivalent, including 125 billion cubic metres of marketable gas and 204 million barrels of liquid fuels.

    The expected 204 million barrels of liquid fuels includes 103 million barrels of liquefied petroleum gas (LPG) and 101 million barrels of condensates.

    The latest contract signed by Sonatrach and Midad Energy follows on from an agreement protocol concluded between the two companies on 3 March 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14866259/main1744.jpeg
    Wil Crisp
  • Indian company wins gas project contract in Kuwait

    15 October 2025

    Register for MEED’s 14-day trial access 

    State-owned upstream operator Kuwait Oil Company (KOC) has awarded a contract for its planned project to develop a gas sweetening and recovery facility in West Kuwait to Indian contractor Megha Engineering & Infrastructure (MEIL).

    Hyderabad-based MEIL submitted the lowest bid for the tender, at KD69.2m ($225.5m), in February this year.

    The full list of prices that were submitted was:

    • L1 – MEIL (India): KD69.2m
    • L2 – Al-Khorayef (Saudi Arabia): KD74.5m
    • L3 – Mechanical Engineering & Contracting Company (Kuwait): KD94.8m
    • L4 – China Oil HBP Science & Technology Corporation (China): KD97.9m
    • L5 – Spetco (Kuwait): KD99.5m
    • L6 – Jereh Oil & Gas Corporation (China): KD102.8m

    The project uses the build-operate-transfer contract model and has been split into two parts. KOC has informed contractors that the two stages will be performed independently.

    The project execution stage will cover:

    • Licensing
    • Design
    • Engineering
    • Health, safety and environment services
    • Project management
    • Supply
    • Shipment
    • Procurement
    • Construction
    • Testing
    • Mechanical completion
    • Pre-commissioning
    • Commissioning
    • Stabilisation
    • Performance testing of the facility

    The operation and maintenance stage will cover:

    • Operation and maintenance of the facility
    • Performance of all associated safety, quality control and environmental protection services
    • All other inherent and related obligations

    In November 2024, KOC's parent entity, Kuwait Petroleum Corpration (KPC), confirmed that it plans to spend $410bn on its long-term energy strategy.

    Bader Ebrahim Al-Attar, KPC’s managing director of planning and finance, said the company plans to spend the money until 2050.

    The strategy involves raising KPC’s overall oil production capacity to 4 million barrels a day by 2035.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14866258/main0806.jpg
    Wil Crisp
  • Firms submit interest for Saudi high-speed rail

    15 October 2025

    Register for MEED’s 14-day trial access 

    Firms expressed interest on 12 October in the Qiddiya high-speed rail project, which will connect King Salman International airport and King Abdullah Financial District (KAFD) in Riyadh with Qiddiya City.

    Saudi Arabia's Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company and the National Centre for Privatisation & PPP, issued the expression of interest notice to the market in September.

    Also known as Q-Express, the railway line will travel at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

    The project was previously planned to be developed under a conventional model, but will now progress under a public-private partnership (PPP) model.

    The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.

    The second phase will start from a development known as the North Pole – which is understood to include the Public Investment Fund’s proposed 2-kilometre-tall tower – and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of Riyadh. 

    In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project.

    UK-based consultancy Ernst & Young is acting as the transaction adviser on the project. Latham & Watkins is the legal adviser.

    Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14867663/main.png
    Yasir Iqbal
  • Qatar’s Ashghal awards $305m road contracts

    15 October 2025

    Register for MEED’s 14-day trial access 

    Qatar’s Public Works Authority (Ashghal) has awarded two contracts worth over QR1.1bn ($305m) for the construction of roads and infrastructure networks in the Izghawa and Al-Themaid areas in the northwest of Doha.

    The contract for the first package, valued at over QR688m ($190m), was awarded to local firm Al-Mohannadi for Roads & Trading & Contracting.

    The contract for the second package was awarded to another local firm, Attikat. The value of the contract is QR418.4m ($115m).

    This project involves the construction of a single- and dual-carriageway road network in the area. 

    The scope includes the construction of carriageways, footpaths, parking areas, kerb lines, traffic signs and road markings, pedestrian guard rails, fencing, traffic signals, street lighting, landscaping and irrigation systems.

    The scope also involves surface/groundwater drainage systems, foul water drainage systems, treated sewage effluent irrigation, potable water network systems, electricity networks, a telecommunications infrastructure network and other associated facilities.

    The construction period is three years.

    The proposed development includes a residential area comprising over 1,262 housing plots, 133 utility plots, 32 government plots, 28 open spaces, four commercial centres, nine mosques, two transportation and four education facilities.

    In June 2022, Qatar’s Transport Ministry unveiled the Transportation Master Plan for Qatar 2050. The plan supports 286 projects, including 86 highway schemes, 22 for goods transport, 54 public transport schemes, 21 for pedestrians, 29 cycling schemes and 74 cross-modal and integration projects.

    The future highway schemes entail 37 infrastructure packages totalling 770 kilometres (km), 22 truck schemes and 10 infrastructure and facilities schemes. The public transport programme comprises 30 schemes for upgrading the main 540km public transport network.

    The masterplan also includes long-distance, metro and regional rail network plans.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14867823/main.jpg
    Yasir Iqbal
  • L&T announces UAE grid substation award

    14 October 2025

    Indian industrial contracting conglomerate Larsen & Toubro (L&T) has announced several new grid infrastructure orders, including the engineering, procurement and construction of a 400kV substation in the UAE.

    The facility, awarded to L&T's Power Transmission & Distribution business, forms part of the planned 400kV interconnection between Oman and the GCC grid.

    The interconnection will enable a direct 400kV link between Ibri in Oman and Al-Sila in the UAE. It involves around 528 kilometres of overhead transmission lines, expansion of the existing Al-Sila substation and the development of two new 400kV substations, one in each country.

    MEED understands the substation to be built by L&T is a planned 400kV intermediate substation near Madinat Zayed in the UAE.

    L&T also said it has secured an order for the construction of a series of 132kV substations in the Middle East to cater to rising power demand. No other details were given and it is unclear where these substations will be located.

    In Saudi Arabia, the company has received a contract for the construction of 380kV overhead transmission lines associated with the integration of renewable energy power plants.

    It is understood that these contracts are for Saudi Electricity Company's Al-Khurma 1 and Al-Khurma 2 projects in Mecca, for which L&T submitted the lowest bids earlier this year.

    ALSO READ: L&T announces QatarEnergy NGL train project award
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14863247/main4046.jpg
    Mark Dowdall