Following on from the success of a PPP conference, entitled ‘Financing Syria’s Infrastructure,’ held in Damascus in November last year by the British Syrian Society (BSS), the organisation is convening a roundtable meeting to discuss the new proposed draft law.

The roundtable meeting which will take place in early December 2010 has been designed by the BSS to examine and discuss the proposed draft law which was put forward by the Central PPP unit with the help of French expertise before it is passed to the Syrian parliament for endorsement in early 2011.

Participants at the roundtable meeting, all experts on PPPs, amongst them renowned international and local lawyers, consultants, bankers and policy makers, are expected to scrutinise the proposed draft law from legal and financial perspectives, and suggest any necessary amendments to make it more attractive to both the public and private parties.

David Freeman, a lawyer at Thomas Eggar LLP in London, who has helped the BSS since it was founded in 2003 has been very enthusiastic about Syria ever since. He was one of the keynote speakers at last year’s PPP conference alongside 600 attendees, which highlighted the enthusiasm of the Syrian government, business people and people from outside Syria to help with the renewal and development of infrastructure in Syria.

He spoke to Forward Magazine about his thoughts ahead of the meeting.

What do you think this draft PPP law signals?
With the draft law going through the legal process, it looks as though Syria will become an international destination for PPPs. These structures have been used by governments in the UK, France, across the world – from Canada to Denmark, and in many different contexts and cultures to harness the power of private capital.

What are the biggest obstacles to the signing of PPPs in Syria?
The major issue that needs to be addressed is the enforceability of a contract; there must be faith that it will be respected by everyone involved in a project. Contracts must balance the return for the investor with a fair price for the public. There should also be no private industry in an unregulated monopoly situation. The law needs to be user-friendly for people (the end consumer), business and government.

If you look at some contracts signed under current regulations, the country is a popular place for international business. Those in industry, especially from the Middle East, view Syria as an opportunity. People are entering into contracts and long-term business arrangements. But things, as in the UK, need to develop and improve. It is a case of showing what Syria can offer PPP investors, telling the world about the possibilities of doing business here. Once the legal system supports the enforcement of PPP agreements, so everyone knows where they stand, the money will start to flow.

In terms of securing finance for projects, what topic impedes PPP the most?
The credit rating is the main concern investors have. International capital works on the straightforward formula of risk versus reward. When there is higher perceived risk, as in places like Syria, the rewards have to be much higher. As the credit rating improves and the understanding of the Syrian business landscape increases, financing will become easier, and less expensive, to obtain.

Al-Thawra reported that a new law has been passed to allow private investors to generate and distribute electricity. The same law provides incentives for private investments in renewable energy. Do you think ethical investors from Europe and the US will consider investing in Syria as a result?
There has been a wave of enthusiasm for sustainable development that respects the environment. If you can offer projects that are environmentally-conscious, you reduce risk, which is positive, you are showing awareness of a current issue and you move the project into an area that will appeal to investors that might have not been interested before. This will appeal to a broader spectrum of investors, which is good if the costs don’t outweigh the benefits.

Supplies of oil are rapidly falling and Syria is now a net importer of energy. What recommendations will you be making in order to boost PPP in oil and gas?
To be honest, oil and gas is no different to any other sector. If you tick the box on enforceability of contracts, you have the basics right. In oil and gas, the investment is for the long-term. Having said that, all infrastructure projects are going to be long-term commitments from all stakeholders - investors, bankers and the Syrian government.

Is there any sector that you believe has the most potential for PPPs?
I would say transport is of great interest. Minister of Transport Yaarub Badr has estimated that the value of possible transport infrastructure projects that Syria needs is in the billions of dollars. PPPs can turn ideas into reality. The added advantage of dealing with transport is that a better transport infrastructure can also help Syria to benefit from more tourism. Every tourist that has been to Syria seems to return full of enthusiasm for the country. When they get home they are ambassadors for Syrian tourism. The more people that visit, the more normal it becomes to travel to Syria, the more likely it is that investor confidence will grow. Energy infrastructure is, of course, another hugely important area that can benefit from PPPs.

The PPP story in Syria continues. We all hope that the law will simplify the creation of PPPs and make the legal relationships clear. It is then just a matter of building investor confidence and the government’s moves to develop PPP is helping to do that

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