New rules on privatisation projects come into force

27 July 2021

New regulations to streamline and clarify the law governing privatisation projects in Saudi Arabia have come into force.

Saudi Arabia’s National Centre for Privatisation and PPP (NCP) issued the Private Sector Participation (PSP) Implementation Regulations following a public consultation.

The regulations are part of the Private Sector Participation Law, which aims to increase private sector participation in infrastructure projects and provision of public services by supporting public-private partnerships (PPP) and the privatisation of public sector assets.

The regulations streamline the requirements for developing and analysing privatisation plans and models. They are also intended to identify the mechanisms for PPPs and divestment procurement.

The regulations set out mechanisms and procedures for dealing with disputes relating to the procurement process and the guiding principles for awarding decisions.

It is hoped the legislative changes will enhance investor confidence in the PPP process, strengthen the enforcement of contracts and ensure the state will meet financial obligations. The PSP law will also increase transparency, fairness and integrity of procedures for tendering PPP contracts, NCP said.

The law supports the Saudi government's Vision 2030 strategy, which includes improving spending efficiency, economic diversification, sustainable development and boosting regional and international competitiveness.

In an analysis law firm Ashurst said definitions with the legislation, including infrastructure, assets, public service, asset transfer arrangements and direct procurement, provided greater flexibility to allow for internationally competitive privatisation projects.

Ashurst said underlying policies for privatisation projects included achieving the government's strategic goals, raising the quality, time and cost of services, and raising the performance of assets.

Incentivising the private sector to engage in partnership in the national economy and increase its participation in gross domestic product, as well as increasing Saudi nationals’ ownership of government assets, and boosting job opportunities, also underpinned the changes, Ashurst said.

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