Public-private partnerships (PPPs) have become a cornerstone for infrastructure development in the GCC region. As governments strive to diversify their economies and lessen their dependence on oil revenues, PPPs present a strategic pathway to harness private-sector expertise and capital.

Against this backdrop, Lina Noureddin, CEO of Bahrain-headquartered investment firm Lamar Holding, offers an in-depth look at the evolving PPP landscape, shedding light on the strategic priorities and challenges that define PPPs in the region.

Evolving landscape

Noureddin characterises the current period as the "golden decade for PPPs in the region", fuelled by the convergence of Saudi Arabia's Vision 2030, fiscal diversification across the Gulf, and a looming global infrastructure financing gap projected to reach $15tn by 2040.

This confluence of factors has created an unprecedented environment for PPPs. Saudi Arabia, for instance, enacted its private-sector participation law in 2021 and has established legal certainty and standardised procurement processes, led by the National Centre for Privatisation & PPP, which oversees a pipeline exceeding $190bn in 17 sectors.

“For Lamar Holding, the strategic focus is clear: go deep where the ecosystem rewards execution, and go early where we can shape the market," Noureddin says.

Saudi Arabia serves as the anchor for Lamar's operations, with the company managing $2.8bn in projects and plans to boost assets under management to more than $7bn in the next 12-18 months.

The company is prioritising sectors such as water and wastewater treatment, industrial infrastructure for the energy transition, and residential and social infrastructure.

The firm is currently bidding for some of the landmark projects in the region, including the 60 million-imperial-gallons-a-day Hidd independent water project in Bahrain, Saudi Aramco’s expanding PPP programme and the Asir-Jizan highway.

Risk management

In addressing the challenges within GCC PPPs, Noureddin identifies the most common "bankability breakers" as ambiguity in termination compensation and change-in-law provisions.

These issues are critical as the region undergoes rapid regulatory evolution. “Lenders require absolute clarity on what happens if a contract is terminated, and change-in-law provisions must be robust to accommodate the fast-paced regulatory changes,” Noureddin says.

She praises the availability-payment model adopted by Saudi Arabia’s procuring authorities as the gold standard, allowing the private sector to focus on building, operating and maintaining infrastructure without undue financial risk.

Also, local content requirements and nationalisation policies – often seen as hurdles – are not viewed as constraints by Lamar Holding. Instead, they are considered strategic advantages. The CEO says: "Many international developers view local content requirements as a compliance burden, but for us, it is part of our DNA."

Lamar embeds training and upskilling into the project delivery model from day one and develops local supply chains. This approach builds capacity without inflating costs or delaying schedules, Noureddin adds.

Strategic edge

“Lamar Holding’s edge in PPPs lies in being the region’s first vertically integrated infrastructure developer, controlling the full life cycle and capturing value at every stage,” Noureddin says.

This integrated approach allows Lamar to manage projects more efficiently and effectively, ensuring that value is maximised throughout the project life cycle.

A key lesson learnt was from Lamar’s first major PPP project with Saudi Aramco, where the firm invested heavily in the operations model before breaking ground. This foresight and long-term thinking unlocked billions of dollars in follow-on work, setting a precedent for future projects.

When it comes to the financial landscape for PPPs in the region, Noureddin notes that for established asset classes, long-dated project finance structures remain achievable, providing stability and predictability for investors. 

"However, for newer asset classes, lenders are pushing for shorter tenors or mini-perm structures, reflecting the increased risk and uncertainty associated with these projects," she adds.

Noureddin notes that the Islamic bond (sukuk) market is becoming relevant for PPP financing, offering access to a different investor base and providing an alternative source of funding.

Governance and outlook

Ensuring the long-term success of PPP projects requires robust governance mechanisms to prevent value erosion over a 20-30-year concession period.

Noureddin notes the importance of a key performance indicator framework with no more than 15-20 indicators tied to availability, response time, quality, safety and environmental compliance. This framework, she says, provides a clear and concise set of metrics to measure performance and ensure accountability.

Additionally, Lamar implements digital dashboards for real-time visibility into asset performance, allowing for proactive management and timely interventions.

On dispute resolution, Noureddin advocates for a tiered approach, with arbitration as a backstop. This ensures that disputes are resolved efficiently and effectively, minimising disruptions to project delivery and maintaining strong relationships between stakeholders.

Reflecting on the broader landscape, Noureddin notes that while the ambition and political will for PPPs are evident across the GCC, the real challenge lies in procurement readiness. She estimates that fewer than half of announced PPP projects are genuinely procurement-ready, with many still in the "pre-procurement gap".

To bridge this gap, she suggests investing in upstream project preparation, creating dedicated transaction teams with decision-making authority, and engaging the market early to resolve potential issues before formal processes begin.