Saudi Arabia sets $53.3mln minimum limit for public-private partnership project

A public-private partnership project must not exceed SR 200 million, according to the revised executive regulations of the Saudi Arabian Privatization Law that were published in the official periodical Umm Al-Qura. The rules also established SR 50 million as the base price for asset ownership transfer initiatives.

These amendments were endorsed by the Board of Directors of the National Center for Privatization and PPP on December 31, 2023. The regulations, comprising 169 articles, cover the principles of privatization, minimum project values, and criteria for applying the privatization system.

Article three of the regulations details the minimum values for privatization projects, setting the minimum for the transfer of asset ownership project at SR 50 million and the minimum limit for a public-private partnership project at SR 200 million. The latter is determined based on the total nominal value expected throughout the project period, considering factors such as capital and operational expenditures, potential financial obligations for the state treasury, and expected government revenues.

The regulations allow the executive entity to combine multiple projects of similar nature to meet the specified minimum. If the minimum is not met and there is a need to continue with the project related to infrastructure or public service, the relevant rules and regulations will apply.

Businesses that are either wholly or partially owned by the government are subject to the rules and regulations of the law when it comes to privatization efforts. An essential component of the privatization regulatory framework, the revised regulations control the operations of supervisory committees, their teams, and advisers, and supersede the Manual of Privatization Projects.

The principles emphasized in the implementation of projects include fairness, transparency, contract enforcement, planning, and feasibility. Launched in 2018, Saudi Arabia's privatization program aims to support economic growth, enhance the role of the private sector, and identify government assets and resources for allocation in various sectors. The program targets the development of sectors such as transportation, health, education, and municipalities, encouraging innovation and transformation and providing opportunities for citizens.

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