The fall in crude oil prices has had a significant impact on the fiscal positions of states in the Gulf Cooperation Council (GCC), and a number of infrastructure projects in the region have been delayed for the indefinite future. At the same time, payment periods for projects already under construction have in many cases been lengthened. The measures that governments may address for budgetary shortfalls include sovereign debt issuances and/or capital raising by state-owned enterprises. GCC economies will continue to pursue infrastructure development as part of non – hydrocarbon diversification. The GCC region has witnessed significant developments in the PPP segment in recent years.
Dubai has introduced a new PPP law to tap private sector funding and expertise for infrastructure projects which came into effect in November 2015. The law applies to PPP projects originated by Dubai government agencies and subject to the general government budget governed by existing legislation. The law indicates strong political support for PPP in Dubai, which is key to any successful PPP policy, with the aim of encouraging private sector participation in projects. 
The PPP model should allow the government to take advantage of private sector expertise and ease the financial burden and risks of capital-intensive projects on the government’s budget. The law does not yet impose restrictions on finance sources, however, it does expressly state that the obligations under the financing arrangements will be borne by the project company alone. This should allow international sponsors to combine multiple sources of finance such as Banks and export credit agencies. 
Saudi Arabia is committed to PPPs which is witnessed across the Kingdom’s civil aviation sector, with the government announcing its intention to privatise international and domestic airports by 2020.  Saudi Arabia can look to PPP schemes to encourage the private sector to participate in a diverse range of projects and thus relieve the government from seeking additional debt or to suspend further essential projects.
The Kuwaiti Public Private Partnership Law which was published in 2014 seeks to promote investment opportunities and provides certain tax benefits and exemptions for foreign investors in the Public Sector in Kuwait. 
Potential taxation benefits under the Law include income tax holidays and exemptions from customs duties. It also provides general guidelines with respect to the project procurement procedures, details relating to incorporation of the project companies as well as consortium companies/ bidding companies and information related to investment terms and transfers of the project to the Kuwaiti government at the conclusion of the PPP. 
The Second Kuwait Development Plan seeks to boost aggregate investment through PPP programme which has potential to attract foreign developers. Under the state’s PPP law, project companies should hold an initial public offering after their selection on a PPP project.
PPP approach has a significant potential to help achieve the objectives of the Qatar National Vision 2030. However, to develop a vibrant and robust PPP programme, Qatar must ensure that there is a well thought out PPP framework in place, projects are backed up by thorough business case and affordability analysis and a visible pipeline of viable projects is created. Progressive collaboration” between government agencies and various business institutions through stronger public-private partnerships (PPPs) will also play a key role in the development of Qatar’s small and medium-sized enterprise (SME) sector.
In power and water sector, there have been a number of IPPs/IWPPs (independent power/water projects) structured on a PPP model and the GCC region has also seen a limited number of infrastructure projects implemented on a PPP basis in utilities and social infrastructure. However, PPPs outside the power and water sector have been relatively few. PPPs in the GCC follow a project financing model. 
The debt financing for regional PPPs structured on a project finance basis has generally been characterised by long tenors, and mainly sourced from commercial banks and in the case of large projects through export credit agencies (ECAs). GCC governments are expected to pursue private sector financing as a way to plug budgetary gaps for public infrastructure development in a weak oil market. Liquidity challenges will have a bearing of banks’ ability to participate in PPP projects. 
However, commercial banks will play a vital role and continue to provide the main source of financing for infrastructure PPPs in the region. 


Dr R Seetharaman is Group CEO of Doha Bank.