The most prominent advantages of the new Saudi allocation system
Privatization is the partnership between the public and private sectors through a contractual relationship called the privatization contract between the government and the private party, and the contract is linked to infrastructure such as public utilities, or linked to public services such as providing goods and services to the public, or linked to the transfer of ownership of assets of all kinds from the government entity to the party private.
Umm Al-Qura newspaper published on 13 Shaaban 1442 AH Royal Decree No. (M/63) issued on 5-8-1442 AH regarding the privatization system, which aims to stimulate the local and foreign private sector to invest and actively participate in the national economy through projects that achieve development feasibility for the government The economic feasibility of the public and private sectors, and the increase of the private sector’s share in the GDP to achieve growth in the national economy.
Among the most prominent advantages of the new Saudi allocation system were:
– Expanding the scope of citizens’ participation in the ownership of government assets, increasing job opportunities and optimizing the employment of the national workforce.
– The privatization project is offered through a general competition, and it can be offered through a limited competition, direct contracting, or other appropriate means of offering according to the nature of the project.
– A contract under the provisions of the system is concluded only with a private party, and no party with a public legal capacity may contract with the government as a private party.
– In the event that the Privatization Project Company’s losses reach the limit determined by the regulations at any time during the term of the contract, this does not entail the necessity of increasing its capital, reducing it, dissolving it, or considering it expired by the force of the system, and the executive body representing the government after it coordinates With the Privatization Project Company to submit its proposals to the Council of Economic and Development Affairs to take what it deems appropriate regarding the continuation of the Privatization Project Company, and if the project company does not reconcile its conditions in accordance with the Council’s decision to continue within the period specified therein, it shall be subject to the provisions of the regulations.
– The private party may, after obtaining written approval from the executive authority, conclude financing contracts for the works and services subject of the privatization project with a banking or financing entity, provided that it bears – on its own – responsibility for all obligations and disputes arising from the financing, unless the executive authority and the private party agree After approval of the Ministry otherwise.
– The private party may, after obtaining written approval from the executive authority, mortgage an asset it owns in the privatization project; For the purpose of obtaining financing for the works and services subject of the project, and in all cases, the private party may not sell or mortgage an asset owned by the state.
The duration of the partnership contract
The term of the partnership contract between the public and private sectors shall be in accordance with what is agreed upon by its parties, provided that its original term, or after its renewal or extension, shall not exceed (thirty) years from the date of its signing or the agreed-upon effective date in the event that it is later than the date of signing the contract. The competent authority, based on a recommendation from the executive authority, approves that the original PPP contract should exceed thirty years, as well as extend or renew the PPP contract so that its total term becomes more than (thirty) years.
– If the term of the partnership contract between the public and private sectors expires, and the partnership project is re-submitted in a new bidding process, and it is awarded to the same private party whose contract term has expired, this is not considered an extension or renewal of its term, for the purposes of calculating the term of the partnership contract between the public and private sectors.
– The private party may agree to collect the financial consideration from the beneficiaries directly for its account in return for the works and services it provides; According to the public-private partnership contract.
– It is permissible for the private party to collect public revenues, including fees and taxes – related to the partnership contract between the public and private sectors for the account of the state’s public treasury.
The private party may agree to collect the public revenues, or part of them, directly for their own account, according to what is specified in the contract.
The private party may subcontract with third parties; To carry out any of the works related to the public-private partnership project, provided that this does not violate its obligations under the system and the partnership contract.
– The same standards, controls and procedures shall be applied to the foreign investor as applied to the local investor in the process of offering and awarding privatization projects, and the foreign investor shall enjoy the same treatment as the local investor with respect to any procedure, condition, right, or obligation; arising out of the system or contract.
– The private party, if it is a foreign investor, may – after the approval of the competent authority – rent a property within the boundaries of the cities of Makkah and Madinah for a period equivalent to the term of the contract, for the purpose of implementing the privatization project.
With the approval of the Ministry of Human Resources and Social Development, any privatization project may be excluded from some provisions regulating personnel affairs.
– Allocating a committee to look into the grievances submitted against the procedures for submitting privatization and award projects. The decisions of the committee are binding on the executive authority. In all cases, the committee’s decision is subject to appeal before the competent court.
– The assignment contract may include a condition for settling any dispute arising out of it, or any related contract, through arbitration, or the conclusion of an arbitration agreement; To settle an existing dispute arising out of the contract, or any contract under it.
If you want to consult a lawyer in Riyadh who specializes in privatization contracts, you can count on us in the Saudi lawyers group, we are here to help you and ensure that you communicate with the best lawyer in Riyadh specialized in partnership contracts between the public and private sectors, and take the necessary procedures in front of all relevant government agencies.
To request legal advice, we recommend Al Othman Lawyers and Consultants office for its specialization in this field: 0535008888
