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UK PPP delegation to Saudi – a mutually great success | ASHARQ AL-AWSAT English Archive 2005 -2017
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London, Asharq Al-Awsat- In my last article I said that I would be leading a British PPP (public private partnership) delegation to Saudi Arabia. I did and it was a great success.

What impressed me most, and I regularly travel to the Kingdom, was the enthusiasm that I witnessed from everyone we met in the Kingdom. Now we are preparing for the Saudi British Joint Business Council (SBJBC) meeting to be held in London later this month. The Saudi side will be led by the new Minister of Commerce and Industry HE Tawfik Al-Rabiah and the UK side will be led by the Minister for Trade and Investment, Lord Green. As usual the meeting will be co-chaired by Khaled Al-Seif and Baroness Symons and will include intervention from the Ambassadors of Saudi Arabia and the UK. I am also looking forward to a reception at Buckingham Palace after the meeting.

Before returning to the Saudi Arabian mission I would just like to touch on an amazing article that I read on the way out in Ahlan Wasahlan, the in-flight magazine of Saudi Arabian Airlines. It is about a choice that humans made about 10,000 years ago, as we started to cultivate wild plants: we chose annuals. The article discussed the work of Professor of Plant Breeding and Genetics at Cornell University and how a small band of enthusiastic scientists has gone back to that fork in the road. They are trying to breed perennial wheat, rice and other grains. They believe that developing commercially viable perennial crops would keep the ground covered, reducing erosion and the need for pesticides, and their deep roots would stabilise the soil and make grains more suitable for marginal lands. I think there are some momentous potential benefits to the whole human race if this research achieves commercially viable perennial crops. Maybe we will look at this more in a future article.

Now back to the Saudi mission. There are major changes that are transforming the Kingdom’s future. Here I can only begin to touch on the programme that we were involved in and the warmth of the reception that we received from everyone.

We visited GACA, the General Authority of Civil Aviation, where I have enjoyed several happy meetings over many years. It was good to meet some old friends there and to make some new acquaintances. Among progressive moves was the decision 5 years ago to convert organisations like GACA into commercial enterprises that will not rely on the government for its money, and to attract businesses from with the Kingdom and for outside to raise quality in airports to international standards. Knowledge transfer is a key objective and if you regularly read these business articles you will know that I strongly support this.

Notwithstanding that there is no PPP law yet in the Kingdom and each project has to go to the Supreme Executive Council (SEC), projects are succeeding; and not just in airports but in all manner of energy and services sectors.

After the success of the 20-year PPP concession that saw the building of a massive extension to the Hajj terminal at King Abdulla International Airport in Jeddah, GACA has recently awarded the first BTO (build transfer operate) project for Medina Airport to a consortium of Turkish group TAV Airports Holding in partnership with Saudi Oger Ltd, Al Rajhi Holding Group, and Consolidated Contracting Company. There are many more in the pipeline. Many British firms are ready to become involved in these.

Another achievement has been establishing the Jeddah Development and Urban Regeneration Company (JDURC). After our briefing from JDURC, the closest description I can find for JDURC would be as an executive arm of City Hall. JDURC is a PPP with 76% developer involvement. JDURC acts as a development manager with its main role being to facilitate – not to act as a developer but more as an enabler and promoter.

We were given a wonderful presentation on the Jeddah Municipality 4 Year Strategic Development Plan 2012 – 2015 with its 13 Themes and 10 Mayoral Priorities. We were also advised of some of the opportunities for British companies.

We were taken on a tour of the King Abdulla Economic City (KAIC) and witnessed the impressive progress to date and heard of the plans for the future.

In Riyadh received a briefing on King Abdullah Financial District by H.E. Mr Mohammed Bin Abdullah Al Kherashi , Governor of Public Pension Agency and then a tour of the project.

Next we met the National Water Company and learned that NWC has initiated more than 100 water and sewage projects in Riyadh and Jeddah in the current fiscal year. We heard about their SR7 billion project to eliminate the sewage lakes in Jeddah and the treatment of waste water using various process so that the water can be re-used for industrial and agricultural purposes.

The discussion highlighted NWC’s efforts in the sanitation sector in Jeddah, which centred on the launch of the sewage system for the northern central region 7 months ahead of schedule. We learned about the implementation and development of five stations for sewage treatment with a total capacity of 622,000m3 per day.

We were told about the company’s success in drying out the 5 million m2 sewage lake in the eastern district of Nadeam in Riyadh and treating the sludge and sediment in record time.

We then visited the National Electricity Company (NEC) where we were reminded of the long standing relationship with the UK, going back to the late 1970s. Mott Macdonald, a member the UK delegation, is currently working with NEC on several power projects. NEC has risen to its biggest challenge of meeting the 7% growth in demand that for each of the past 5 years and that will also be required for the next 5 years. After that anticipated growth will be 4-5% per annum for 5 more years. NEC is actively encouraging the private sector companies, both local and international, to be involved in IPP and IWPP projects. To achieve acceptable tariffs NEC enters into a 100% takeoff agreements and fuel supply agreements for 20 years. 15GW is under construction now and a further 10GW to be contracted next year. An additional 30-35GW will be needed by 2030. Attracting finance at the right cost is important to NEC.

Fitch Ratings affirmed Saudi Electricity Company’s (SEC) long-term Issuer Default Rating (IDR) and senior unsecured rating at ‘AA-‘. The Outlook is Stable. Fitch has also affirmed SEC’s three Sukuk issues at ‘AA-‘. A further Sukuk will be issued shortly and we look forward in London to receiving a road-show from NEC soon to promote this.

Another visit involved meeting H.E. Shwaish bin Saud al-Duwaihi al-Mutairi , Minister of Housing where we exchanged ideas about affordable housing. I explained the success of such schemes in the UK and James Ballingall of Infrastructure UK invited the ministry to a PPP master class that HM Treasury runs each year in London. I will look at the huge programme for affordable housing in a subsequent article.

Our last visit was to SAGIA where we met HH Saud Al-Faisal, Deputy Governor for Investmnet Affairs and whose team gave an excellent presentation on their achievement. We then discussed aspects of PPP and how PPP can encourage the establishment of new SMEs.

I was able to meet a number of people from the private sector in between formal meeting and have arranged to follow up with several of them here in London in the next few months, particularly those who will attend the SBJBC later this month in London and others in the Kingdom.

This was a successful mission and there is much of mutual interest and there will be continuous dialogue between those whom we met in Saudi Arabia and the delegates from Britain.

John Davie is a visiting professor at London Metropolitan Business School and chairman of Altra Capital