20-30% of Egypt PPP contracts face legal challenges
This comes as the government is intensifying its efforts to introduce new initiatives in preparation for the completion of the fifth and sixth reviews of Egypt's loan programme under the International Monetary Fund, scheduled for this year.
As Egypt works on attracting private capital for sectors, legal clarity has become a decisive factor in sustaining investor confidence and project momentum.
Tahoun breaks down the legal intricacies behind PPP contracts, the evolving corporate and labour frameworks, and the high-stakes legal considerations underpinning Egypt’s IPO and privatization wave.
She also highlights how structural reform, transparent risk-sharing, and modernized regulations are reshaping Egypt’s investment ecosystem.
Moreover, she sheds light on what more is needed to ensure the country's resilience and competitiveness on the global stage, drawing on over two decades of legal practice.
Ahram Online: What are the primary legal challenges you have encountered while drafting and reviewing PPP contracts?
Nermine Tahoun: PPP contracts face several critical legal challenges, including ensuring a fair and balanced risk allocation between public and private partners to encourage investment.
This also includes safeguarding public interests, drafting contracts that are flexible enough to adapt to evolving legal frameworks (eg, tax or environmental laws) over long project lifecycles, addressing land acquisition issues such as ownership disputes and compensation to prevent delays, and aligning contract terms with lender requirements, including step-in rights and guarantees, to ensure bankability.
Clearly defining termination provisions and compensation formulas for legal certainty and investor confidence, establishing effective and enforceable dispute resolution mechanisms (often through international arbitration), and striking a balance between transparency, competition, and confidentiality to comply with public procurement laws are also among the legal challenges.
Based on our practical experience, approximately 20-30 percent of PPP contracts in Egypt encounter legal challenges during implementation, whether in the form of disputes over risk allocation or the need for renegotiation due to regulatory or economic shifts.
This percentage tends to rise in large-scale or internationally financed projects, where legal and technical complexities are significantly higher.
When analyzing the root causes of these challenges, the most problematic clauses typically involve termination and compensation provisions, accounting for nearly 40 percent of contractual disputes.
This is followed by risk allocation clauses (around 25 percent), particularly in projects with volatile revenue streams such as transportation or utilities.
Additionally, renegotiation and amendment mechanisms often cause delays, especially when contracts lack flexible frameworks to adapt to changing regulatory or financial conditions.
Regarding the timeline, the average legal review period for PPP contracts typically ranges from 6 to 12 months, depending on the project's complexity and structure.
In some high-value or multi-stakeholder deals, this can extend up to 18 months.
Naturally, contracts requiring substantial revisions, or those modelled after previously disputed agreements, tend to take longer, as they must be carefully aligned with local laws and international standards while maintaining investor appeal and bankability.
AO: How do you see the role of PPPs evolving in Egypt’s infrastructure and development plans?
NT: Egypt is positioning PPPs model as a core driver of its Vision 2030, shifting from limited pilot projects to a strategic framework that harnesses private capital and expertise to expedite critical infrastructure development.
The country aims to develop airports, ports, power, and water facilities, while promoting sustainability without overburdening public finances.
By integrating private-sector innovation, PPPs enhance the efficiency and quality of public services. This is evident in initiatives such as the New Cairo wastewater treatment plant and planned EGP 39 billion tenders for energy and water projects, which are backed by partnerships with the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).
These efforts preserve public ownership while fostering a pipeline of projects aligned with Egypt’s sustainable growth ambitions. However, their success relies on navigating legal complexities, such as equitable risk-sharing, adaptable contracts, and robust dispute resolution, to sustain investor trust and project momentum.
PPPs are helping shift the government's role from direct operator to regulator and enabler, while ensuring that essential public services are delivered efficiently without adding pressure to public finances.
With Egypt targeting $100 billion in infrastructure investment by 2030, PPPs are expected to account for at least 25–30 percent of project financing in key sectors, especially as fiscal consolidation continues.
Still, the sustainability of this model depends on overcoming key challenges, such as improving legal frameworks, enhancing transparency, and providing viable risk-sharing mechanisms, to build long-term investor confidence.
AO: What key elements should both the public and private sectors prioritize when entering into a PPP agreement?
NT: When entering into PPP agreements, both public and private sectors should prioritize transparent risk allocation by assigning construction, demand, or political risks to the party best equipped to manage them and ensuring legal and regulatory clarity by aligning the agreement with national laws and establishing transparent approval and dispute resolution processes.
They can also do this by structuring financial viability through sustainable revenue models with guarantees or subsidies to attract financing, defining measurable performance standards with KPIs and service levels tied to penalties or incentives, and adhering to transparent procurement practices through open, competitive bidding to ensure fairness and attract qualified private partners.