Qatar announces QR 4bn pilot PPP Program

Qatar unveiled a major Public-Private Partnership (PPP) pilot project before potential investors yesterday, involving the construction of 45 schools in the public sector with an estimated capital expenditure of QR4bn.

Divided into six packages, the projects are to be completed within next five years. The project delivery dates range from 2021 to 2023. The private sector will finance, build and maintain the schools and government will run the educational facilities.

Ministry of Education and Higher Education (MoEHE), Ministry of Finance, Public Works Authority (Ashghal) and the Technical Committee are the key stakeholders of the PPP Program. While MoEHE will be in charge of operations of the schools and the contract management, Ministry of Finance will be in charge of payment guarantee and the PPP policy and guidance.

Ashghal will monitor the project management, procurement, design and construction and the Technical Committee for the encouragement and participation of the private sector in economic development projects, will be in charge of approvals and implementation support.

The officials said PPP can play a key role in developing the Qatari private sector. Local private sector can go for joint ventures with international firms and become part of the PPP Program. The JVs can also rope in local sub-contractors.

Making the opening presentation, Khamis Al Mohannadi, Chairman, Technical Committee said PPPs will be an important mechanism for future projects in Qatar. Over the past three or four years, QR26bn were invested in many sectors such as food security, building and construction, health, education, logistics, tourism and industry. He said PPP schools project is a pilot project to test the PPP mechanism in Qatar. New PPP projects in several sectors will be announced soon.

PPP Schools Program will follow best in class PPP practice. The PPP structure of schools in Qatar will follow similar structure to successful international PPP school structures such as UK and Australia. The procedures followed ensuring the government support, risk aversion and payment methods.

MoEHE will be responsible for students, teaching, school administrative activities, managing the school and will appoint all teaching and administrative staff. All payments to  the Project Company will be  on a performance   and availability basis. Andy demand risk for the schools will not be transferred to the Private sector PPP provider.

The private sector will bring the full package of design construction, financing and facilities management to the project. The Project Company must have the ability to design build and maintain a school or have a reputed partner that has design, build and maintenance capabilities or must bring in a subcontractor that has international and regional experience in developing and managing similar education or real estate projects. At the RFQ (request for quotation) stage, bidders must present their capability to do financial, technical and legal scope.

The Project Company must also be able to demonstrate their ability to inject equity and raise finance, including through SPVs. The Project Company will have the flexibility to raise debt locally or internationally. At the RFQ stage, the bidder should submit evidence of previously raise debt and equity. At the RFP bidders shall provide firm evidence of support from equity and debt providers towards providing financing for this project.

The first package of the PPP Program consists of 8 schools. The sites for the 8 schools have been identified and allocated. All the sites must be developed in parallel, therefore requires a good construction logistics capability.

On the funding and government supports, the officials said  the authorities are currently in discussion with QNB regarding the financial services that would be offered by QNB and other banks. The payment to the project company, consortium will be at a competitive, inflation-adjusted rate.

Source from: The Peninsula