Saudi Arabia should expect more than finance from its public private partnerships

Shaping PPPs that create lasting economic and social value

The Kingdom of Saudi Arabia needs to look beyond the financial benefits of privatisation as it embarks on a new wave of investment in quality public services and national infrastructure, explains Jonathan Looker, managing director for Saudi Arabia at Mott MacDonald.

Public private partnerships (PPP) are not new in the Kingdom of Saudi Arabia, but there is a major shift taking place from one-off deals to delivering a cross-sector programme at scale and pace.

Encouraging greater private sector participation in the economy is a key priority of Saudi Vision 2030. The privatisation programme aims to enhance public services and improve national infrastructure, from water networks to schools, hospitals, sports facilities and transport corridors.

In January 2026, Saudi Arabia launched a National Privatisation Strategy targeting more than 200 PPP contracts and over US$64bn of private sector investment across 18 sectors by 2030.

However, the privatisation programme should have a wider goal than attracting private capital or reducing pressure on the public finances.

The real measure of success for PPPs is the value they generate through improved public assets and infrastructure, higher quality services and lasting economic and social value.

From pipeline to delivery

Saudi Arabia has already demonstrated its ability to deliver landmark PPP projects, such as the Madinah Airport, a 25-year Build-Transfer-Operate agreement awarded in 2011. It was the Kingdom’s first PPP and set a precedent for private sector delivery of public-facing services. There have been a number of landmark transactions in Saudi Arabia, including the TBC Schools Wave 1 and the Ansar Hospital PPP projects.

These projects build on Saudi Arabia's long-standing experience with Independent Water and Power Projects, where a single off-taker agrees to buy an agreed utility output on a long-term contract. The next generation of PPPs require the delivery of complex public services across diverse sectors. Delivering this at scale involves much less certainty about outcomes and requires a more systematic approach.

To build market confidence, Saudi Arabia has created a standardised and repeatable framework for project selection, procurement and delivery. The programme is coordinated across ministries and state entities by the National Centre for Privatisation and PPP, which implements a standardised process that improves the quality of project preparation across sectors. This institutional framework is needed for a scalable, national delivery programme.

Providing a clear and consistent approach to risk allocation and contractual terms will give private investors and delivery partners greater certainty. Robust project preparation remains one of the most important foundations of successful PPP programmes. Time invested upfront on credible business cases and value for money assessments is never time wasted. It can help to attract the interest of high calibre private bidders with international PPP expertise.

Moving projects from pipeline to financial close is only one measure of success. If Saudi Arabia can build confidence in its PPP process, it will ultimately lead to more competitive bids, more projects moving from pipeline to delivery and greater value for money.

To build market confidence, Saudi Arabia has created a standardised and repeatable framework for project selection, procurement and delivery.

Balancing risks and incentives

To build momentum behind PPPs in different sectors, Saudi Arabia will need to strike the right balance between standardisation and flexibility. Standardised PPP frameworks can improve efficiency and reduce transaction costs, while sector-specific contract schedules can tailor risk allocation and incentives to reflect different assets.

In emerging areas where demand and future revenues are less predictable, such as toll roads, the private sector may be reluctant to accept the full demand risk. To create bankable projects, governments may need to consider targeted risk-sharing mechanisms, such as grants, availability-based payments or minimum revenue guarantees.

The objective should not be to maximise risk transfer, but to allocate risks to the party best placed to manage them. Public and private stakeholders need to collaborate closely to shape transactions that are attractive to both sides, leaving room to innovate while meeting the needs of end users.

Private delivery partners bring valuable expertise that extends beyond financing and construction. Their experience can improve service quality through stronger project design or make infrastructure more constructable or resilient.

For this reason, standardisation should not come at the expense of innovation. If contracts leave little room for sector-specific innovation, PPPs can become too narrowly focused on financial returns, rather than improving outcomes.

Looking beyond financial returns

While PPPs require a robust business case, they can create value beyond direct financial returns. Decision makers need to recognise that PPPs can generate wider economic growth, improved public services, enhanced social outcomes and more efficient use of public resources.

In the transport sector, for example, infrastructure investment can boost productivity across the wider economy by reducing travel times, improving reliability and enhancing road safety. These benefits can often outweigh the direct costs of delivering the infrastructure and can create lasting value across the wider economy.

The same principle applies to social infrastructure. In the education sector, private sector expertise can improve the quality of learning environments, helping students to achieve better outcomes. A higher skilled workforce can, in turn, contribute more to the economy and society.

While PPPs require a robust business case, they can create value beyond direct financial returns.

Many of these outcomes are difficult to quantify and are not always fully considered in investment decisions. Without robust metrics to assess the value of social infrastructure projects, they may be evaluated mainly on a cost basis. This can cause delays to strategically important projects because they appear less attractive than they truly are.

Globally, there is evidence that social infrastructure projects, such as schools, hospitals and community facilities, can deliver significant value for individuals or communities, but these benefits need to be clearly articulated.

Developing better frameworks to identify, measure and communicate these benefits will be critical to ensuring that PPPs support long-term national priorities and maximise public value.

From ambition to execution

Saudi Arabia’s PPP programme has scale and ambition. Its success shouldn’t be judged by the amount of capital it attracts, or assets delivered, but also by the outcomes achieved for citizens and communities.

As the Kingdom moves from building a project pipeline to delivering a national PPP programme at scale, the challenge will be to capture the full benefits of private sector expertise and innovation.

If Saudi Arabia can successfully translate ambition into delivery, it could become one of the most significant and influential PPP markets globally.

Find out more about the importance of planning ahead for the end of PPPs in our mini-series