Mohannad Basodan, CEO, National Center for Privatization & PPP (NCP); and Salman Badr, Executive Vice President for Infrastructure Advisory, NCP

Investing in airport infrastructure and boosting passenger capacity in Saudi Arabia

Global Platform

In this Global Platform video, Oxford Business Group speaks with Mohannad Basodan, CEO, National Center for Privatization & PPP (NCP); and Salman Badr, Executive Vice President for Infrastructure Advisory, NCP, about how the Covid-19 pandemic in particular affected airport and air travel, and how the use of public-private partnerships to develop airport infrastructure has helped to revitalise Madinah Airport, proving that such collaborations can help modernise, upgrade and expand public services and assets in Saudi Arabia.

Madinah Airport was an early and complex transaction, but also highly successful. The PPP generated investment of $1.2bn in the facilities, and brought in improved management and operations. Passenger traffic increased from 4.6m in 2013 to 8.4m by 2019, around an 83% increase. NCP was established in 2017 to drive the government's private-sector participation (PSP) initiative as part of Vision 2030, of course, and it has become a centre of excellence for PSP in the Kingdom. By 2021 the PSP law, grounding rules and implementing regulations were approved, incorporating the lessons from past transactions and the best ideas from elsewhere. Of course, the Covid-19 pandemic was an incredibly difficult time across many industries globally, maybe none more severely hit than the aviation sector in general, and airports in particular. We quickly formed a task force that involved the General Authority of Civil Aviation (GACA), the Ministry of Finance. In addition to NCP, a centre of expertise for PPP in the kingdom, we were quickly brought in to make sure that we were developing a best-in-class solution that is based on global benchmarks. We realised that we need to provide relief for the private company, so we deferred revenue for the period until traffic comes back to 2019 levels. This period of deferment was then extended on to the contract at the end of it, with a cap of about eight years. It is a very important milestone that demonstrates how government will react in difficult times. It is very easy to have a partnership in the sunshine. But when things get difficult, how is your partner going to react? How quickly is that response going to be to come together and find a win-win solution? So this was demonstrated for Madinah, and this is the approach the government will take in all of its PPP projects. Traffic numbers have been phenomenal in the recovery since Covid-19, and we are well on track to achieve the Vision 2030 targets, and the Hajj and Umrah targets are for traffic within Madinah to reach 30m by 2030. The experience emphasised the importance of flexibility from all sides in dealing with unanticipated events rather than sticking to the letter of the contract. The government took into account the bigger picture and focused on the best way to ensure that projects affected by such events continue to add value to the economy. Sometimes this can only be achieved if government is willing to step up and adopt a proactive approach to resolving issues. Madinah Airport and more recent successes in other sectors have demonstrated the potential of PPP as a tool for the government to modernise, upgrade, expand and improve public assets and services. NCP is working closely with the Ministry of Transportation, GACA and other key stakeholders to build on these successes. The PPP pipeline includes four more airports: Abha International, Taif International Airport, Ha’il International Airport and Prince Naif Bin Abdulaziz International Airport at Al Qassim. These are under preparation, and we expect to tender them over the medium term. We are confident that these transactions will experience similar levels of success.

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Mohannad Basodan, CEO, National Center for Privatization & PPP (NCP); and Salman Badr, Executive Vice President for Infrastructure Advisory, NCP

In Saudi Arabia

In Transport

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