Saudi Arabia Sets Regional Standard for Public-Private Partnerships

In late June, Saudi Arabia signed contracts for the development and operation of five airports throughout the nation. These deals symbolize an unprecedented effort by the Saudi government to strengthen the kingdom’s public-private partnerships strategy in accordance with Vision 2030.

The General Authority of Civil Aviation (GACA) entered into long-term public-private partnerships (PPPs) with companies from Germany, Singapore, Turkey, Saudi Arabia, deals that will revolutionize the region’s airport infrastructure.

“The GACA airport concession contracts represent a significant boost for the privatization agenda,” stated PricewaterhouseCoopers Middle East partner and infrastructure lead Maarten Wolfs. These deals underscore how public-private partnerships can lay the groundwork for sophisticated economic initiatives involving multidimensional collaboration.

The deals, which were finalized on June 8, are long-term concession arrangements, thereby protecting Saudi ownership. Unlike deals in which ownership is transferred, this recent batch of agreements guarantees that external entities will maintain a presence in the Kingdom based on economic viability.

The deals expand to Singapore’s Changi Airports International (CAI) operating King Abdul Aziz International Airport (KAIA) in Jeddah for twenty years; a consortium comprising Munich Airport, Consolidated Contractors Co and Saudi Arabia’s Asyad Holding developing and operating the new Taif International Airport; and a consortium of Turkey’s TAV Airports Holding and local firm Al Rajhi Holding Group to operate Prince Naif Bin Abdul Aziz Airport in Qassem, Hail International Airport and Prince Abdul Mohsen Bin Abdul Aziz Airport near Yanbu, according to Arabian Business.

These agreements represent only a portion of the objectives Saudi Arabia plans to accomplish over the next two decades to rejuvenate the nation’s economy. In line with the second pillar of Saudi Vision 2030, which aims to transform the Kingdom into a global investment powerhouse, Saudi Arabia plans to privatize six additional airports in the short term.

The deals will increase foreign investment while improving each airport’s service quality. Prince Mohammad Bin Abdulaziz International Airport in Madinah is the first airport operating as a PPP and opened as a private enterprise in 2015 with upgraded runways and terminals.

Such a rapid pace of change has earned Saudi Arabia praise from leading economic figures in the region. CBRE Middle East managing director Nick Maclean concluded that “Saudi Arabia’s PPP strategy to bring international operators and investors into its aviation infrastructure is an important step in the GCC’s journey towards creating a globally attractive capital market.”

Read more here at Arabian Business.