Low oil prices – having halved since last year – are causing repercussions for infrastructure development in the Gulf, says Standard & Poor’s Karim Nassif in his article for InfraNews. This is because infrastructure companies dependent on state revenues are witnessing a public funding deficit, he explains. And as cheap oil means liquid capital becomes scarcer, banks are less likely to lend to major high-risk infrastructure projects.
In response, Gulf-based governments are addressing the growing deficit. In fact, markets are opening up to foreign investment, while also improving conditions for private investors and public-private partnerships. Meanwhile, renewable energy infrastructure may well see increasing development to counter oil’s price volatility, bringing potential for new investment opportunities in the Gulf over the coming years.
Read the report here (note: article lies behind a paywall)