Government-related entities (GREs) in the Gulf are playing an increasingly influential role in project finance, transforming the landscape for large-scale infrastructure and energy transition projects, according to a new report by S&P Global Ratings.
The report, titled “On The Rise: How Government-Related Entities Are Shaping Project Finance In The Gulf,” highlights a surge in project finance activity in the Gulf Cooperation Council (GCC) region since the mid-2010s. This growth has been driven by governments’ efforts to diversify their economies and attract private investment, particularly in renewable energy, utilities, and transportation.
Governments in the region, especially in the UAE and Saudi Arabia, have leveraged GREs to facilitate funding and ensure the success of major projects. The involvement of these entities has helped to mitigate credit risk and improve financing conditions, making projects more resilient.
“We believe the rising demand for project finance is a direct result of global sustainability goals, regional economic diversification strategies, and developers’ preference for financing models that match long-term concessions with long-term debt,” said S&P Global Ratings credit analyst Sofia Bensaid.
Bensaid further emphasized the stabilizing effect of government involvement in project finance: “We believe the GCC government’s active involvement in projects reduces credit risk, enhances financing conditions, and improves overall project resilience.”
The report examines the role of GREs in shaping infrastructure development in the GCC and assesses the factors influencing project creditworthiness. As the Gulf nations continue to advance their ambitious infrastructure and energy goals, the role of government-backed entities in securing project financing is expected to remain critical.
