The global overview of public private partnerships in infrastructure in 2022: Investment commitments to public private partnership (PPP) projects in infrastructure continued to accelerate in 2022, with investment commitments growing 23% y-o-y last year to USD 91.7 bn, according to a recent World Bank report (pdf). PPPs involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects.

Still leading the pack globally: East Asia and the Pacific, which saw USD 43.4 bn of investment commitments last year, rising 54% y-o-y and 17% from the average amount over the past five years. South Asia saw USD 13.9 bn earmarked during 2022, marking its highest number of PPI investment over the past decade, according to the report.

In MENA, PPP investments for the year continued to account for the smallest share of the global total, despite more than tripling from the year prior. Investment commitments to infrastructure PPPs in the MENA region hit USD 2.0 bn, rising 214% y-o-y, although this figure “was still lower than the region’s average of USD 3.1 bn over the past five years,” the report says. In terms of regional GDP, MENA fared slightly better than last year, with PPP investments accounting for 0.13% of the region’s national GDPs. That’s 0.6 percentage points higher than last year’s ratio, but still remains among the lowest percentages globally.

Egypt accounted for the lion’s share (85%) of the region’s infrastructure PPPs in 2022, followed by Morocco with 9% and Tunisia with 5%.

REMEMBER- The Madbouly government has been working to increase the volume of PPPs in Egypt, passing legislative amendments last year designed to make it easier for companies to bid for government contracts. The government sees PPPs as forming a key part of its privatization strategy, which will attempt to double the private sector’s role in the economy over the next three years.

Our biggest infrastructure PPP project of the year: The 500 MW wind farm in Ras Ghareb that will be built by Amunet, a local special purpose vehicle in which Al Nowais subsidiary AMEA Power holds a 60% stake and Japan’s Sumitomo Corporation holds the remaining balance. AMEA Power is set to build, manage, and operate the plant, for which it received debt and equity funding in December.

Overall, the energy sector was the largest recipient of investment commitments for infrastructure PPPs in Egypt last year, with four out of the total five infrastructure projects that reached financial close last year in the energy sector, according to country-specific data from the World Bank. The fifth project in Egypt fell under the municipal solid waste sector.

Globally, however, the transport sector once again took the lead as the largest recipient of infrastructure PPP investments, “outpacing other sectors significantly,” the report notes. The sector — which covers everything from roads and airports to railways and ports — recorded USD 66.2 bn-worth of investments in 2022, accounting for 68% of total infrastructure PPP investments for the year. That’s a c.51% y-o-y increase from 2021 figures, which “can be explained by a huge increase in the roads sub-sector,” which is “historically the largest sub-sector in transport commitments,” according to the report.

Investments in global water and sewage PPPs last year fell 76% y-o-y, coming in at USD 2.3 bn across 25 projects in nine countries. That’s also a 48% drop from the average figures of the past five years, the report notes.

Egypt is expected to see an uptick in water PPP projects this year, with the Sovereign Fund of Egypt’s (SFE) tender of renewables-powered desalination projects, for which the fund prequalified 17 consortiums earlier this year. The tender is part of the government’s water desalination program, which aims to add 8.85 mn cbm / d of capacity by 2050. The SFE is planning to have three or four of these plants tendered by 3Q 2023, with contracts for the remaining plants in the program’s first phase expected to be signed in the next 16-22 months, an SFE spokesperson previously told Enterprise.

On the global scale, the majority of financing came from the private sector — although its share shrank y-o-y: Around 35% of financing came from public sources, 15% came from development and export finance institution (DEFI) sources, and the remaining 50% came from private sector sources. The figures show a 15 percentage point y-o-y drop in private sources of financing in 2022, while public sources of financing rose 17 percentage points compared to the previous year, which “was largely due to the larger role played by public banks and a rise in government subsidies,” the report explains.

MENA, however, continued to be largely reliant on DEFI investment, which accounted for 77% of the total commitments in 2022 compared to 55% in 2021. “MENA also saw an increase in international commercial debt, with three projects receiving investment from commercial lenders,” including the Amunet wind farm in Egypt, the report says.

Your top infrastructure stories for the week:

  • Freight rail money: MPs finally approved a USD 400 mn loan from the World Bank to finance the construction of a railway line between the Port of Alexandria and the Sixth of October dry port.
  • Port terminal money: MPs also gave final approval to two bills allowing for the USD 565 mn redevelopment of the East Port Said port.
  • Scatec wind farm progresses: Norway’s Scatecsigned a land allocation agreement with the Electricity Ministry for a planned 5-GW wind farm in Sohag.
Tags: