Risk Management in Transport PPP Projects
In the Islamic Countries
187
(GIZ) and the Netherlands (RVO). Financial support from neighboring countries has been
provided by the Kingdom of Saudi-Arabia and the Gulf States, for instance through the
Governments of the Gulf Cooperation Council (GCC). Currently, donor support is however
mainly related to the International Monetary Fund, the World Bank, France, Japan, the United
States and the EU (COMCEC, 2019). So far, Islamic finance has never contributed to transport
PPP projects in Jordan, despite Islamic banks being characterized by high liquidity. In addition,
there are no indications of future involvement of Islamic financing in transport PPPs either.
According to interviewed institutional stakeholders, the government is currently pursuing the
goal of investment attraction through PPPs by preparing a strategy for issuing guarantees, as a
way to reduce risk perception for the private sector. So far, no sovereign guarantees have been
issued, as the public sector is faced with a legal constraint due to the Public Debt Law. As of
August 2019, no details are available yet on the future approach to guarantees. Nevertheless, it
is interesting to notice that in the water sector guarantees have been issued by the government
in the form of letters of undertaking, reportedly in a successful way, proving that Jordanian
public finances are perceived as reliable.
Box 32 Investment attraction in the QAIA case
In the QAIA PPP project, the composition of the awarded consortium (at the time of the tendering
procedure) was characterized by the strong presence of investment funds: in particular, the
consortium was led by Abu Dhabi Investment Company (United Arab Emirates), owning 38% of
AIG, with Noor Financial Investment Company (Kuwait) having a 24% ownership instead. The
French group Aéroports de Paris (ADP), today AIG’s main shareholder and airport services
operator, held 9.5%.
Back in the tendering phase, the role of IFC was instrumental for reducing risk perception and
contributing to successful investment attraction. Firstly, it provided key advisory support to the
Jordanian government for the project’s tendering procedure, which was reportedly characterized
by high quality in the documentation. The bidding process could be carried out swiftly,
transparently and with the concession agreement being known from the start. Secondly, IFC had
a key role as regards the project financing. In particular, IFC provided USD 120 million in loans to
AIG and supported arrangements for additional USD 180 million from commercial banks. Further
support was offered by the Islamic Development Bank through a USD 100 million loan (World
Bank Group, 2015).
After the project was awarded and the construction phase was concluded, a consolidation of the
consortium took place, with ADP gaining control of AIG. Today, ADP owns 51% and the other
shareholders are: Meridiam Eastern Europe Investments (32%), an independent investment
company focused on the development, financing and management of public infrastructure
projects; Mena Airport Holding Ltd. (12.25%), a UAE-based investment vehicle of the Islamic
Development Bank’s Infrastructure Fund II, managed by Asma Capital Partners; EDGO Group
(4.75%), a Jordan group with a diversified business portfolio.