148. In light of the demonstrated challenges of PPP procurement and the often limited resources and capacities of MENA-region governments, it makes sense to concentrate efforts on those projects that are most likely to succeed. ISMED consultations have identified certain characteristics that increase the chances that a project in the transport and logistics sector will attract investors and will reach financial close. These characteristics include standardised construction requirements and operational services, limited traffic risk and a small number of sophisticated users. In the view of the ISMED Programme, governments should concentrate on those projects most likely to be successful in order to build capacity and expertise and to demonstrate a track record of successful projects.
149. Airports and deep sea ports have been singled out as perhaps the projects that are currently most amenable to PPP procurement. These facilities are somewhat standardized with construction techniques and functional requirements similar to those built elsewhere meaning that developers and operators with relevant experience are easily found. Government often owns the land on which the project is to be built, and in cases where it does not, the area of land required to be obtained is limited. The customers of such facilities usually consist of a small number of sophisticated and creditworthy operators. Services can be priced in hard currency helping address foreign exchange risk. Customers will also likely be mostly foreign and therefore less capable of exerting political influence to lower fees or oppose fee increases.
150. Roads on the other hand occupy the opposite end of the spectrum from airports. Roads feature large numbers of operators often with a limited ability to pay and who may be able to exert significant political influence over fees. Road construction techniques are fairly standardised, but the project will be subject to local conditions and the need to obtain a large area of land as a right of way, which may again entail political pressures. Traffic is also sensitive to macroeconomic conditions and changes in government policies with regard to licencing, taxation and especially fuel subsidies. Roads are important for development and may rightly be a government priority, but MENA governments should carefully consider all aspects of procuring road infrastructure, especially on a concession-PPP basis.
151. Rail, light rail and logistic zones projects can be considered as falling in the middle of spectrum between airports/deep sea ports and roads as they display characteristics of each. Logistics zones for instance may feature a small number of international operators or a larger number of local customers. However, they can be built on a relatively small parcel of government-owned land (if supported by traffic and volume demand at the location) and do not feature technically-challenging construction requirements or techniques. Rail projects may have a small number of clients but will face significant capital costs and may face right of way issues. Light rail projects add to these complications by adding a large number of often poor users.