Saudi minimum PPP level will ‘strengthen sector’

The Saudi Arabian government’s move to establish a minimum value for PPP deals is the latest step towards strengthening the sector, a regional legal expert has told Partnerships Bulletin.

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Under the updated Privatization Law regulation, the minimum value for a project to be delivered under a PPP will now be SR200m (US$53m).

Jason Gouveia, Dubai-based senior associate at global law firm Ashurst, said he sees the new rules as a positive development that will help streamline and support the kingdom’s already healthy PPP pipeline.

“It is useful for the government to set a minimum threshold in this way as it’s generally difficult for small capex deals to be successful, given the additional complexities and costs inherent to the PPP structure,” said Gouveia, adding that the “cost and time burden” relating to regulatory approvals is also streamlined through these changes, speeding up project implementation.

“It is also good to see that there remains the flexibility for contracting authorities to aggregate one or more projects of a similar nature in order to create the necessary scale to make a PPP structure a workable prospect,” he continued.

The new amendments will replace the Manual of Privatization Projects, as well as the rules governing the work of a range of supervisory bodies.

Saudi Arabia’s National Centre for Privatisation and PPP (NCP) is issuing 200 forthcoming PPP projects across 16 sectors including energy, transport, education and healthcare. For more insight into the plans, watch our recent webinar, with input from NCP and Neom project officials, plus private sector representatives working in the country.