How to engage the private sector in infrastructure projects remains a top issue for governments in emerging economies. Infrastructure plays a key role in socio-economic, and sustainable development, so the participation of private investments accelerates economic growth.
As Egypt is now beginning to reap the benefits of its transformative reform programme, new opportunities emerge for the private sector, especially in infrastructure projects. Public-private partnerships (PPPs) could be a magic wand in this regard.
A number of emerging countries such as Brazil, India and Malaysia have drawn on PPPs in carrying out many infrastructure projects and the provision of public services.
On the macroeconomic level, PPPs increase value added to the gross domestic product (GDP). However, there should be a mechanism to rein in the higher cost of public services because of undue profits for the private investors.
What is a PPP?
A PPP simply means that private investors provide infrastructure projects with adequate finance for the direct provision of public services.
Experience in many emerging and advanced economies across the world has proved that PPPs are more efficient than build-operate-transfer (BOT), which is a financing scheme via a concession given by the government to a private firm to build an infrastructural project.
The complexity of modern economics, where sustainable development relies on a host of growth drivers, may shed light on how the state along with the private investment, which is profit-led by nature, should work together on public utilities.
PPPs can be an efficient instrument to boost a variety of sectors such as energy, transport, wastewater, telecommunications, power, healthcare, water and education.
According to the World Bank, PPPs can be a tool to get more quality infrastructure services to more people.
“When designed well and implemented in a balanced regulatory environment, PPPs can bring greater efficiency and sustainability to the provision of public services such as energy, transport, telecommunications, water, healthcare, and education. PPPs can also allow for better allocation of risk between public and private entities,” a World Bank study on PPPs stated.
Legislative framework
Law No. 67/ 2010 marked the beginning of legislative efforts to regulate the participation of the private sector in infrastructure projects. However, between 1990 and 2007, a number of PPPs were success stories in infrastructure, communications, transportation, water and sanitation, and energy.
In a bid to boost PPPs, the parliament enacted a bill last year allowing the private sector to take part in the nation’s infrastructure projects, services, and public facilities.
The law is aimed at engaging the private sector in the country’s infrastructure projects by enabling the administrative authorities to partner with private companies.
The law is designed to enable the government to sign contracts to carry out the infrastructure projects nationwide, in a range of sectors such as transportation, electricity, telecommunications, technology, water, sanitation and health.
It is part of measures taken to empower Egypt’s private sector in a bid to promote market-orientated economic policies for all-inclusive growth.
