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| 15 January, 2018

Call for UAE federal law to regulate public-private tie-ups

To ensure that projects drive the economy further and benefit both parties, a legal framework needs to be in place

Image used for illustrative purpose. People walk outside the Gate Building at the Dubai International Financial Centre (DIFC) November 28, 2011.

Image used for illustrative purpose. People walk outside the Gate Building at the Dubai International Financial Centre (DIFC) November 28, 2011.

The UAE needs a federal law to regulate public-private partnerships (PPPs) and ensure both parties achieve their objectives effectively, stated local officials on Monday.

Speaking during the UAE Public Policy Forum, organised to discuss the private sector's active role in shaping the UAE future and challenges facing PPPs, the UAE ministers and delegates called for such a law. They also stressed the need for a clear legal, policy and institutional framework to ensure PPPs achieve their objectives effectively and efficiently, for people's good.

While the UAE government achieved several successful projects through their partnerships with the private sector, there are still challenges ahead that need addressing, officials said.

Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy, said the economy is sustained largely by the private sector.To ensure that projects drive the economy further and benefit both parties, a legal framework needs to be in placeto guarantee commitment and transparency of contracts.

"The challenge is to open more fields for both parties, which will require a lot of effort. To be able as a government to benefit from the economic part, we need to contribute in diversifying the economy, which won't happen without the private sector," said Al Mansouri in a panel discussion addressing experts and delegates.

He added the International Monetary Fund (IMF) has been recommending a clear framework on PPPs in the UAE, noting that partnerships with the private sector need detailed studies, goal determination and transparency before projects are commenced. Hiring advisers who can guide and provide a clear roadmap for both parties is recommended.

In Dubai, specific laws were put to ensure transparency and modification of conditions on the contract, if needed.

A PPP roadmap

Abdel Mohsen Ibrahim Younes, CEO of Strategy and Corporate Support services at the Roads and Transport Authority (RTA), said such regulations must be put under an integrated public framework. "The government has to have its own internal policies and criteria on projects when developing contracts. If the public sector was not clear on project requirements, private investors will hesitate to join."

The RTA has achieved partnerships in several projects, with revenues estimated to reach Dh18 billion. Among them are the 100 air-conditioned smart bus shelters introduced throughout Dubai.

Smart Amer centres that process visa transactions in one place and Saaed accident reporting services are among PPP-projects in the UAE.

Younes said a challenge facing PPPs is the balance between the private sector's need for profit and the government's development goals. "This balance is destabilised with larger projects, which is why it's difficult to find private investors willing to spend huge amounts on big infrastructure projects that can cost billions," said Younes. He also noted that careful studies and preparation are necessary for financial and economic sustainability.

"Contracting needs to be flexible among both parties to allow for amendments of conditions as required, because these contracts can go up to 25-30 years." He noted efficiency, administrative, technical and technological experiences are some advantages the private sector adds to government projects.

Meanwhile, Abdulrahman Al Saleh, director general of the Department of Finance at Dubai Government, said determining goals with the private sector is essential. Government entities, he said, need to dispense the idea of full dominance on projects. "The private sector is better administered and looks at gains and revenues that would be achieved through effective management. This is why there is a knowledge exchange opportunity from private to public," said Al Saleh.

The two-day forum highlights the country's opportunities of public-private partnerships in transport, health, education, sustainable development, infrastructure and technology and innovation. It gathers over 90 lecturers who will speak in six main panel discussions and six scientific sessions that will present over 30 research and academic papers and case studies.

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