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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Zeina Al Nabih - Senior Associate - Corporate / Mergers and Acquisitions / Commercial
Law No. 12 of 2020 on the Regulation of Public Private Partnerships (‘PPP Law’) was recently promulgated in Qatar. The PPP Law aims to develop the Qatar private sector and encourage competition in order to boost the role and participation of the private sector in developing the local economy. The PPP Law also aims to allow the public sector a new perspective in managing national projects in order to enhance the proficiency, productivity and sustainability of such projects and handling the same in a cost efficient manner.
The PPP Law defines a Public Private
Partnership (‘PPP’) as an agreement between a governmental body and the private sector to implement and finance works or provision of services, in one of the following forms:
Generally, a PPP will be carried out by the government body and the private sector participant under the terms of a PPP agreement, which must be in accordance with the provisions of the PPP Law and the PPP policy approved by the Council of Ministers. However, certain projects may be exempt from the PPP Law provided that the Council of Ministers’ approval is obtained.
The PPP Law provides for the establishment of a PPP Administration Unit at the Ministry of Commerce and Industry (‘MOCI’) as well as project specific committees, which will comprise representatives of the relevant government contracting party, the PPP Administration Unit and the State Audit Bureau. These project specific committees will be responsible for:
The PPP Law sets out the following method for inviting bids on PPP projects:
The PPP Law permits tendering through a consortium of companies provided that none of the consortium members submits any separate bid alone or with another consortium for the same project, unless tender documents provide otherwise. Upon the recommendation of the Minister of Commerce and Industry and the request of the government contracting party, the Prime Minister may cancel tendering procedures in any of the following events:
In this context, the Prime Minister may cancel tender procedures for public interest reasons. Bidders may not claim any damages for cancellation of a tender unless the tender documents provide otherwise.
Furthermore, the Prime Minister will issue an approval of award upon the recommendation of the project specific committee.
A PPP agreement must cover the following aspects:
The PPP Law sets a maximum limit for the term of the PPP agreement, being 30 years, which may be permitted to be extended on an exceptional basis or in the public interest subject to the approval of the Prime Minister upon the recommendation of the Minister of Commerce and Industry.
The government contracting party may co- found a project company with participation of the private sector. If the relevant government contracting party does not wish to co-found the project company, the successful bidder of the PPP agreement must incorporate the project company as a special purpose vehicle for the sole purpose of implementing the PPP project pursuant to the underlying PPP agreement. However, the PPP Law provides that the government contracting party may permit, in accordance with the tender documents, the awarded bidder to implement the project without incorporating a specific project company provided that it has the capability to perform the project financially and technically.
Subject to the approval of the relevant government contracting party and provisions of adequate security, a project company may finance the project through banks provided that it secures its rights and assets contractually.
The PPP Law further provides that the Prime Minister may exempt a project company from certain restrictions on foreign owned companies, including ownership, usufruct or lease of real estate.
In addition to the obligations set out in the PPP Law and the executive regulations to be issued by virtue of the same, and subject to the terms of the PPP agreement, a project company has the following required obligations pursuant to the PPP Law:
The PPP Law provides that the ownership of the project and its assets and facilities shall be transferred to the State at the end of the term of the PPP agreement without payment of any compensation or damages unless the PPP agreement provides otherwise.
The tendering process under the PPP Law will not be subject to the Tenders and Auctions Law nor the State Budget. The PPP agreement must be governed by the laws of Qatar and any agreement to the contrary will be void. Also, Qatari courts shall have the jurisdiction in resolving disputes resulting from the PPP agreement unless the Prime Minister approves an alternative dispute resolution method.
For further information, please contact Zeina Al Nabih (firstname.lastname@example.org) or Frank Lucente (email@example.com).
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