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British business delegation offers Egypt new public-private partnerships

UK trade representatives end two-day visit to Cairo with an offer to collaborate on 'social' PPP projects

Salma Hussein, Wednesday 5 Oct 2011
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Views: 1733

A British business delegation has offered to be the Egyptian government's partner in building low-cost housing, hospitals, schools and general infrastructure projects.

"It's up to the Egyptian government to decide its priorities. These three sectors, we think are of interest for Egypt," said the Lord Mayor of the City of London, Rt. Hon Alderman Michael Bear, who headed the delegation.
 
The list of suggested projects also included toll roads, airports and ports, all of which have a near-guaranteed flow of revenues and are less risky.
 
"We are here to give our view on how to give confidence to business," add Bear, who acts as a UK ambassador for finance and business. 
 
He is a social public-private partnership (PPP) expert, who oversaw low-cost housing and hospital projects under the method, which requires long-term investment.
 
Under the PPP model, the public sector, short of adequate capital, hires private companies to build and run a project for 20-30 years. The government then pays running costs in installments.
 
Egypt's governement passed a PPP law in 2010 and invited local and foreign companies to invest in electricity, water and sewage projects. 
 
But the private sector is often keen to bring an end to its involvement, say experts.
 
Electricity and water concessions often involve long-term pricing agreements and large investments, both reasons that drive private sector to exit projects before the contract is due to end, according to a  World Bank study entitled 'Why private sector exit infrastructure projects'. 
 
Economic crisis is another reason, according to the same study.
 
The World Bank found that one in 10 PPP projects exited by the private sector was in the water and sewage sectors, followed by energy projects.
 
After the revolution, the political instability and shortage of public investments have given rise to different ideas about investment, focusing on areas that were less costly, less risky and more social friendly, and of benefit to the poor.
 
The delegation held meetings with officials from the Ministry of Finance, Central Bank of Egypt and British Egyptian Business Association, among other organisations, on the tour that ended on Wednesday. 
 
Among the group are the heads of several British companies and executives from major banks, Standard Chartered, JP Morgan and HSBC.
 
Currently there are more than 900 British-funded companies operating in Egypt with cumulative investments estimated at US$20 billion. The UK is the largest foreign investor in Egypt.
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