Qatar’s banking industry appears optimistic about the new public private partnership (PPP) model in the schooling sector, even as the sector is awaiting finer details.
The PPP, the first of its kind in the social infrastructure of the country, provides for special purpose vehicle (SPV), which can source funding for the private sector for the construction of 45 public schools at an estimated capital expenditure of more than QR4bn in the next five years.
The guaranteed payment and the government’s shouldering of demand risk are particularly seen by the lending community as the positive micro elements in the new model.
“We are yet to see the fine print (about the details regarding the special purpose vehicle that could be created and the funding mechanism),” a source in the banking sector said.
The real estate is one of the sectors that have received renewed attention by the banking sector, which had extended QR198.8bn credit to the segment at the end of December 2018.
The announced projects will be divided into six investment packages and be offered to the private sector at successive intervals. The first package consists of eight schools to be launched during the first quarter of this year.
As per the PPP model, the project company will be responsible for the financing, which will include debt and equity, Ministry of Finance, economic policy and research director Saud bin Abdullah al-Attiyah had said.
“It is premature to talk about the specifics as project company and consortium are yet to be established, only then we can analyse their financial base and the (funding) needs,” a senior official of a leading bank said.
It is understood that the funding from the banks is expected to be on a lenient terms covering interest/profit rates, considering the vital contribution to the country’s future.
Under the PPP model, the private sector will bring the full package of design, construction, financing and facilities management to the project. The construction of schools, each with a capacity of 750 students, is based on population projections by municipalities.
The projects will be divided into six investment packages with the first package – comprising eight schools – to be launched during the first quarter of this year. The financial closure is expected by 2020, following which construction has to be completed within 15 months.
The Ministry of Finance, the Ministry of Education and Higher Education and the Public Works Authority (Ashghal) are of the view that schools fit the profile of successful PPPs, which can play a role in developing the Qatari private sector and the adoption of new technology.
Qatar Chamber first vice chairman Mohamed bin Towar al-Kuwari recently said Doha is committed to implementing the country’s PPP schemes, underscoring the private sector’s “vital role” in accomplishing the goals of the Qatar National Vision 2030.