Reviewing the history of Public Private Partnerships (PPP_ experiences in both the UK and MENA region and the driving forces for their use, Adrian Creed, partner at Clyde and Co. stressed that Libya must find the model that best suits its circumstances.
Speaking at the yesterday’s workshop in Tripoli organised by the Ministry of Housing launching Libya’s new draft PPP law, Creed said that Libya had had a bad experience with privatization in 2002-3, but that PPP and privatization are not the same.
Creed, who has advised a number of MENA countries on PPP projects, felt that in Libya’s case the Ministry of Housing should set the agenda and policy and act as a regulator and maintain overall control.
Libya would not be expected to start at the most advanced end of PPP models at this period of time. It would have to adopt different strategies for different sectors, he explained.
Drawing examples from various other international experiences, Creed noted that “it took a while for the UK to accept that it was financially constipated and had to accept the PPP medicine in the 1980′s”. Much of the UK’s infrastructure had been built quite a while back and it did not have the finances to finance redevelopment of its capital intensive infrastructure, he explained.
Today, virtually all of Europe, including Eastern Europe, use PPP for financing many infrastructure and development projects. Creed highlighted worldwide examples of PPP use including Iran for power generation and China for its Olympic stadium.
More closer to home and may be of greater relevance to Libya’s case, PPP has now spread to most of the MENA region, Creed explained, including Lebanon, Jordan and Saudi Arabia.
More appropriately for Libya’s case, Creed feels that the PPP model is very much compatible with Islamic banking and gave examples of PPP projects that he had worked on in Saudi Arabia that used Islamic banking. These included the Hajj Airport and the Medina airport.
To this end, Creed felt that Libyan banks would find no conflict with the PPP models and converting to Islamic banking.
Creed felt that Libya needed a PPP law and reviewed a number of MENA region laws from which appropriate examples and positive experiences could be drawn from.
Transparency and the ease of doing business were two of the top barriers to PPP, Creed warned, adding that Libya, unfortunately, scored very low in both of these in international rankings. Libya would need to work on improving these and he noted that PPP models in themselves helped in transparency.
Ultimately, Creed said that PPP would help Libya gain the huge finances that it needs to embark on its ambitious development programmes – finances that were well beyond the size of its current state budget.