Saudi Arabia unveils significant rules for privatization initiatives

With the goal of improving transparency and giving firms clear instructions, Saudi Arabia has amended its regulations for privatization projects.

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Friday saw the publication of the updated rules by the National Center for Privatization and PPP, which had earlier this year approved changes made late.

One of the main modifications is that the regulations now have minimum value thresholds that are specified for certain project types. SAR 200 million, or around $53.3 million, is the minimum valuation for partnerships between government and private sector schemes. The minimum value in circumstances when asset ownership is transferred is now SAR 50 million, and it is based on the executive entity's projected value for the target assets.

Projects falling below these thresholds may still proceed with approval from relevant authorities. If the minimum value is not met but authorities deem it necessary to continue with the project, the regulations and rules related to infrastructure or public service will still apply.

The guidelines also offer clearer criteria for identifying companies established specifically for privatization. One determining factor is whether the government's establishment or ownership of the company aims to present a project related to infrastructure or public services through privatization.

Musaed Al-Gwaiz, the chief of the privatization program, highlighted that the new rules draw on international practices and local experiences. He emphasized that these regulations will replace previous guidelines, outlining the principles crucial for project implementation, including fairness, transparency, contract enforcement, planning, and feasibility.

Saudi Arabia initiated a significant privatization drive in 2018, focusing on sectors such as transport, healthcare, and utilities. The updated regulations aim to instill greater certainty for businesses looking to invest in the kingdom's diversification plans. The amendments provide a framework to ensure fairness and transparency in the privatization process, aligning with international best practices and local insights.

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