Saudi Arabia establishes a minimum threshold for public-private partnership projects.

The revised executive regulations of Saudi Arabia’s Privatization Law, which were published in the official gazette Umm Al-Qura, detail essential provisions for privatization projects .

These regulations establish minimum thresholds for public-private partnership projects at SR 200 million (approximately $53.3 million) and for asset ownership transfers at SR 50 million (around $13.3 million).

Endorsed by the Board of Directors of the National Center for Privatization & PPP (NCP) in December 2023, the regulations have been crafted by incorporating international standards and local insights from privatization initiatives.

Their objective is to improve transparency and equity while fostering economic advancement by engaging the private sector across various industries.

These regulations supersede previous guidelines and represent a significant advancement in Saudi Arabia’s privatization agenda, aiming to enhance service quality, efficiency, and cost-effectiveness for individuals and businesses, thereby stimulating economic growth and creating opportunities for citizens.

Article three of the regulations delineates the minimum thresholds for privatization projects, along with specific criteria for determining these values.

For asset ownership transfer projects, the minimum value is established at SR 50 million.

Conversely, for public-private partnership projects, the minimum threshold is set at SR 200 million. This benchmark is determined based on the projected total nominal value throughout the project’s duration.

This estimation takes into account various factors to ensure that the minimum requirement is met in terms of capital and operational expenditures, potential financial obligations for the state treasury, and expected financial revenues for the government.

The executive entity may consolidate multiple projects with similar characteristics in scope and contractual structure to fulfill the specified minimum requirement under this article.

These regulations will be applicable to privatization projects either offered or contracted by companies that are government-established or government-owned, with a direct or indirect ownership stake exceeding 50 percent of their capital.

These companies are established or owned with the aim of presenting privatization projects.

In 2023, the NCP unveiled the launch of the Privatization & PPP (P&PPP) pipeline, comprising 200 approved projects across 17 sectors, including seven desalination projects scheduled to commence in 2024.

Furthermore, Independent Water Plant projects, Independent Sewage Treatment Plant projects, and strategic water reservoir projects will be tendered in the upcoming years under various contractual models.

Source : Saudi Gazzete

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