The financial crisis may have counted Dubai as one of its highest-profile casualties, but infrastructure investment in the Gulf region actually saw a boost in the wake of the global turmoil.
Or so thinks Tim Risbridger, a partner at consultancy EC Harris, who expects the pipeline of deals to remain “strong” for the short to medium term – after a crisis that, perhaps counter-intuitively, saw no sign of a drought in infrastructure deals.
The drivers behind this dynamism are twofold, Risbridger explained in response to questions asked by Infrastructure Investor. First, populations in the six states forming the Gulf Cooperation Council – which comprises Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates – are fast increasing, which naturally drives a greater need for infrastructure and energy. Qatar and Oman, for example, witnessed respective population growth rates of 7.1 percent and 9.1 percent last year, according to the World Bank.
But Risbridger also sees efforts to “support the development of non-oil related industries” as the second major force behind infrastructure development. “There is a lot of investment going in to create or promote new industries. There are a significant number of new industrial zones being created, linked to world class transportation hubs.”
Many GCC countries are also using new infrastructure investment to facilitate the establishment of locally based companies, he argued, by requiring a significant portion of the works to be delivered by local organizations. In addition, he noted, developers are often pressured to include training and knowledge transfer as part of their contractual arrangements.
Risbridger doesn’t think the development of shale oil and gas in other parts of the world has started to have an impact on infrastructure programs in the Gulf States – but he admits their potential impact on oil prices is now increasingly recognised.
Despite the positive outlook, further progress was needed at the level of regulation and legislation, Risbridger concluded.
“There are some successful examples [of public-private partnerships] in some sectors, such as utilities and waste management for example. However there is still reluctance to introduce PPPs into the transportation sector.”