Respondents noted that access to skilled workers, political risks and cultural differences are the three biggest risks of projects in emerging markets.

Surveyed executives are most optimistic that power projects can be propelled through public-private partnerships (P3s), followed by transportation. About 30% of EMEA-sector respondents say the latter offers the most potential.

Pushing Partnerships

Istanbul-based TAV Airports Holding AS was recently awarded a ">contract to develop the Medina Airport in Saudi Arabia as part of a consortium, the Gulf region's first full-fledged P3 project. “The airport will benefit from our marketing and operations capabilities without using government resources for the initial construction,” says Serkan Kaptan, TAV Airports business development and investments director.

The consortium will rehabilitate the existing airport, including construction of a brand new terminal, operate the facility for 25 years and pay a portion of revenue collected during the concession period to the country's General Authority of Civil Aviation (GACA) as a concession charge.

“When the revenues are higher, a higher concession charge will be paid to GACA and vice versa," says Kaptan. "However, since the potential of Medina airport is extremely strong, we believe that the overall traffic and revenue risk is minimal.” The concession will invest $1 billion to $1.5 billion to expand the 30-year-old airport in order to accommodate as many as 16 million passengers per year.

“We expect to see more infrastructure projects follow the P3 approach in the Gulf region to benefit from the marketing and operations expertise of the private sector, even though the governments have the funds to finance these projects,” says Kaptan.

But KPMG survey respondents noted concern about the public sector’s ability to drive this kind of infrastructure investment, with 80% pointing to "lack of leadership" as a key barrier. More than two-thirds, however, see a "lack of private-sector initiative" as another obstacle.

"New investment models have to meet the interests of both the public and private sectors, with a better understanding of risk allocation, greater transparency and more accurate measures of cost and performance," says Nick Chism, KPMG's U.K.-based global head of infrastructure.