Energy, Utilities & Mining Focus
Matthew HeatonPartner, Head of Office - Qatar
Frank LucentePartner, Corporate Commercial
A huge amount has been written about the upcoming FIFA World Cup which Qatar is hosting this year, from uniqueness of the tournament being held in the Arab world to the impact on residential rents in Qatar, before any of the usual chat around the football itself and the favourite teams to win the event. Less talked about is the challenge of how to deal with the waste water generated by the anticipated one million visitors during the month-long tournament. However, if you are trying to drive through West Bay, the commercial district of Doha, it is something that is very much apparent as there are huge roadworks underway as a result of the last-minute upgrading of the waste water systems to ensure the 2022 FIFA World Cup is not remembered for the wrong reasons.
In a way, this is a neat illustration of the development of Qatar and its impact on the country’s social infrastructure. Qatar has witnessed an economic boom over the last two decades, with surging gas and oil revenues further boosting Qatar’s coffers. Alongside the huge amount of residential and commercial construction, there have been projects such as the building and subsequent expansion of the main international airport (as well as the refurbishment of the previous airport to cater for football fans, resulting in Doha now boasting the new airport – Hamad International - as well as the new Old Airport) and the building of an entire metro system.
In addition, there is now an increasing focus on social infrastructure projects in Qatar, in pursuit of Qatar’s National Vision 2030 which is made up of four pillars: human development, social development, economic development and environmental development. The next stage of Qatar’s development is to ensure that after the last football fan has left, the country will have the infrastructure to enable it to meet its development goals and making it an attractive destination in which to live and to holiday.
Many of the current social projects are being undertaken pursuant to Qatar’s recent public/private partnership ("PPP") law. The PPP law permits allocation of State land by way of lease or usufruct for development by the private sector and includes projects by way of the following mechanisms: (a) build, operate and transfer; (b) build, transfer and operate; (c) build, own, operate and transfer; (d) operate and maintain; and (e) any other form approved by the Council of Ministers. Generally, a PPP will be carried out by the government body and the private sector participant under the terms of a PPP agreement, which must be in accordance with the provisions of the PPP law and any PPP policy approved by the Council of Ministers. However, certain projects may be exempted from the PPP Law provided that the Council of Ministers’ approval is obtained.
Several significant PPP projects have already been put out to tender by such government agencies as Ashghal (the Public Works Authority) and Kahramaa (the Electricity and Water Authority). As mentioned, some of these projects relate to upgrading existing services such as sewage and water treatment, whilst others involve state of the art new technologies and industries such as the Al Kharsa Solar Project. The latter project is noteworthy, as for a country whose wealth largely derives from hydrocarbons, there is a stated objective to reduce consumption of gasoline and natural gas to reduce emissions and improve air quality. The FIFA World Cup will the first carbon neutral edition of the event, and fleets of hi-tec electric buses will transport fans to the stadium. The Qatar government is looking to make itself a global energy transition leader, with the focus on solar power providing an example. It is also increasing the number of air quality monitoring stations to measure its air quality, with a view to this being the first step towards cleaner air for its residents and visitors.
“The Qatar National Vision 2030 is made up of four pillars: human development, social development, economic development and environmental development.”
Under the Qatar National Vision 2030, the country is set to award an estimated USD 85 billion worth of planned projects. Included in this are education PPPs, the first package of which has already opened for students. Under the education programme, the government plans to build 45 new public schools at a capital cost of QR4billion to provide an additional 34,000 student places. Again, this is to meet the stated aim of accelerating social and human development in the country.
There has also been a marked improvement in provision of healthcare services. Qatar has a stated objective of becoming a regional and global health leader, and both the government (via the Hamad Medical Corporation) and private providers (including the Qatar Foundation initiative Sidra Medicine) are investing large sums to build and expand hospitals. The relaxation of the Foreign Capital Investment Law in 2019 allowing foreigners to invest in greater sectors of the economy without the need to have Qatari partner, has also greatly contributed to such investments. Under the Foreign Capital Investment Law, the Ministry of Commerce and Industry is empowered to allow foreigners to hold greater than 49% of capital in companies incorporated in Qatar, subject to certain conditions imposed by the Ministry’s Investment Department. One of the goals in this regard is not just to create centres of excellence to attract health tourists, but to improve the quality of care for all residents of Qatar, not just the wealthy. As with education, the flood of public and private investment is pitched to raise the level for all consumers.
With foreigners now able to achieve 100% ownership of subsidiaries in many sectors of the economy, especially when introducing new economic activities or technologies, opportunities are now presenting themselves like never before. In addition, the scope for establishing in the Qatar Financial Centre and the Qatar Free Zone are ever widening. Accordingly, this does mean a huge opportunity for market participants looking to take part in these projects. Whilst many of the more visible projects were completed to coincide with the FIFA World Cup, the next phase of projects in Qatar will focus on social infrastructure. Recent world events have increased demand for Qatar’s gas and oil reserves, meaning the government will have funds to finance its development objectives.
As Qatar moves into the post-football stage of its development, there should be a great deal of dividends for all residents, including cleaner energy and better air quality and improving schools and hospitals. This will be the unheralded legacy of the FIFA World Cup 2022.
For further information, please contact Matthew Heaton or Frank Lucente.
Published in November 2022
