PPP Law’s remit to cover all sectors, except energy

Muscat, FEB 2 - A landmark Public Private Partnership (PPP) currently under finalisation by the Omani government will regulate the financing and procurement of public works — infrastructure or services — across all sectors, with the exception of the energy sector, according to an expert of the Ministry of Finance.
Naufal Hameed Rasheed, Investment and Policy Adviser at the Ministry, said the keenly anticipated PPP Law will be promulgated in conjunction with an amended Privatisation Law which together will provide a strong institutional framework underpinning the delivery of public projects in partnership with the private sector.
Speaking at a recent forum showcasing investment opportunities in the agriculture, fisheries and food sectors, Rasheed said the promulgation of the two statutes will be accompanied by the unveiling of a new Public Authority for PPP and Privatisation, which will usher in a new era of PPP-driven projects and initiatives.
“Following a major study conducted by the Diwan in 2016-2017, a PPP framework was approved, leading to the drafting of a PPP Law and Privatisation Law,” said Rasheed. “They have been drafted consistent with best practices regionally and globally. The PPP Law covers all sectors, with the exception of energy. Final approvals are under way.”
The PPP model, according to the expert, enables governments to provide incentives via partnerships with the private sector to develop sectors or commercial activities in areas that lack these assets or services. Such PPP projects can be implemented, for example, through the provision of access to land or resources that allow the private sector to develop a commercial venture in lieu of rent or royalty payable to the government. In this particular example, the assets do not revert to the government at the end of the partnership agreement.
An alternative PPP model envisages private investments in social or commercial initiatives, such as training support or the promotion of an economic development project. In this type of PPP project, the government’s contribution typically comes in the form of a grant, interest free loan or other such involvement.
“PPPs are ‘legal agreements’ between government and private sector entities for the purpose of providing public infrastructure, community facilities and related services,” said the expert. “Typically the partners share risk, reward and responsibility — for a shared investment. The public sector defines and buys a service not an asset. The private sector creates the assets and then delivers the service to the public sector client, in return for payment commensurate with the service levels.”
In his address, Rasheed listed a number of benefits and advantages associated with PPP-led projects. Foremost is the increase in efficiency and cost savings achieved through improved performance incentives and increased competitive pressure. PPP projects also enhance the speed and timing of service delivery, secure specialized skills that may not be available in sector, and overcome public service operating restrictions such as salary scales and civil service work rules.
Furthermore, PPP projects permit quicker responses to changing demands and facilitate adoption of service delivery innovations, said the official. They allow government agencies to focus on functions where they have a comparative advantage. Besides contributing to revenue risk sharing, PPP initiatives also increase transparency of government spending by making the cost of services more visible, he noted.
Opportunities for PPP abound in the agriculture sector in particular, according to the expert. In addition to options in agro-related infrastructure, energy services, water and irrigation, opportunities may also be explored in: Veterinary and Quarantine Services; Labs and Diagnostics; Commercial Activities; Marketing; and Access to Land, he added.