Saudi Arabia: Public-private partnerships are becoming increasingly vital in Saudi Arabia, as the Kingdom seeks to fast-track projects and sustain non-oil growth while avoiding pressure on the sovereign balance sheet, experts said.

Speaking to Arab News, Emilio El-Asmar, partner at Oliver Wyman’s Government and Public Institutions practice for India, the Middle East and Africa, said Saudi Arabia’s PPP framework provides a clear channel for government support, making the Kingdom a bankable destination for international investors.

“In a volatile global environment, marked by tariff frictions and supply-chain shifts, Saudi Arabia offers a predictable, rules-based market for FDI. Its PPP framework provides flexible procurement routes, enforceable contracts, and clear channels for targeted government support,” he said. “These features are making projects bankable for international investors and financiers.”

He noted that the government is also “showing skin in the game” through dedicated financing vehicles that add local currency depth and co-investment capacity, helping reduce financing friction and attract a wider pool of participants.

These elements, he said, make PPPs a practical tool to accelerate project delivery and sustain non-oil growth without overburdening public finances.

Under Vision 2030, Saudi Arabia aims to lift the private sector’s share of gross domestic product from about 40 percent to 65 percent, using PPPs to mobilize capital and world-class operators while maintaining fiscal agility.

To support this, the Kingdom has introduced the PPP and Privatization Law, designed to provide transparency, accountability, and protections for stakeholders.

Finance Minister Mohammed Al-Jadaan said in February at the G20 Finance Ministers and Central Bank Governors Meeting that Saudi Arabia has adopted a PPP model enabling private entities to partner with the government in developing and managing infrastructure projects. He highlighted initiatives such as the National Center for Privatization and the National Infrastructure Fund, which focus on drawing private investment in transport, water, and energy.

Yigit Saf, principal in the public sector practice at Arthur D. Little in the Middle East, said PPPs are facilitating activity in infrastructure and services such as education and health care, which are essential for workforce development.

“PPPs play a crucial role in three key ingredients of economic growth: investments, workforce development and productivity, while at the same time supporting public finances, and providing the government with a tool to manage, and shift away undesired strategic, operational and financial risks,” Saf said. He added that PPPs are increasingly bringing private sector dynamism into the Saudi economy.

Diversification Engine

El-Asmar said PPPs are becoming a driver of economic diversification, channeling investment into sectors well beyond hydrocarbons. Saudi Arabia’s privatization pipeline includes more than 200 projects across 17 sectors, spanning airports, roads, water, health care, education and municipal services.

“This multisector flow builds what non-oil GDP needs most: logistics gateways, dependable utilities, and high-quality social infrastructure,” he said. “The payoff is broader revenue streams, new value chains and quality jobs, and a steadily rising private-sector share of GDP.”

Saf said PPPs help optimize public spending while shifting risks to the private sector, where they can be better managed. He noted that PPPs are already drawing strong investor appetite in areas like education, health care, and construction.

“We already observe substantial investor appetite for PPP projects in Saudi Arabia from local and international players,” he said.

The expansion of Madinah airport is a case in point: capacity has grown from 5 million to 8 million passengers, with further expansion planned, while generating revenue for the government.

“Eventually, PPPs will contribute to the establishment of infrastructure for emerging sectors, foster innovation and technology transfer, enhance service delivery, and strengthen Saudi’s positioning in the global ecosystem through its PPP partnerships,” said Saf.

Sector Impact

El-Asmar said infrastructure will continue to see the biggest impact from PPPs. Water and wastewater are the most advanced areas, with desalination, strategic reservoirs, and sewage-treatment projects attracting international interest due to stable demand and clear offtake agreements.

He added: “Energy and power — especially renewables — are the next outsized growth drivers; as grid capacity expands, utility-scale solar and wind PPPs will deepen investor participation and free hydrocarbons for higher value uses.”

“Transport and logistics are also accelerating, with several airport privatizations complete and further concessions in the pipeline.”

He also pointed to new opportunities in ports, waste management, and municipal concessions such as logistics parks, which are widening investable options and multiplying non-oil value chains.