In a significant development, Saudi Arabia has amended the executive regulations of the Privatization Law, setting a new minimum limit of SR 200 million for public-private partnership (PPP) projects. The updated regulations, published in the official gazette Umm Al-Qura, emphasize the commitment to international best practices and local experiences in implementing privatization projects.
The amendments, endorsed by the Board of Directors of the National Center for Privatization & PPP (NCP) on Dec. 31, 2023, comprise 169 articles covering key aspects such as privatization principles, project values, and application criteria. According to Article three, the minimum limit for PPP projects is based on the total nominal value expected throughout the project period.
1. New Minimum Limit: The minimum threshold for a PPP project is now set at SR 200 million, ensuring a robust financial foundation for these collaborations.
2. Comprehensive Criteria: The regulations outline specific criteria for estimating project values, including capital and operational expenditures, potential financial obligations, and expected government revenues.
3. Flexibility in Project Aggregation: Article three allows the executive entity to combine multiple projects of similar nature to meet the minimum requirement, offering flexibility in project structuring.
4. Applicability to Government-Owned Companies: The regulations apply to privatization projects offered or contracted by companies with over 50% government ownership, emphasizing transparency and fairness.
5. Privatization Plan: Article 5 highlights the importance of a detailed privatization plan, determining assets and services for privatization, assigning responsibilities, and evaluating project feasibility based on various criteria.
6. Regulatory Framework Overhaul: The amended regulations replace the Manual of Privatization Projects, ensuring a streamlined approach to privatization with a focus on fairness, transparency, contract enforcement, and planning.
7. Economic Growth and Sector Development: Saudi Arabia's privatization program, initiated in 2018, aims to boost the national economy, enhance private sector roles, and improve the quality and efficiency of services across sectors like transportation, health, education, and municipalities.
