The State of Qatar is witnessing a new era of economic development which is largely dependent on a constructive and collaborative partnership between the public and private sectors. Establishing an attractive investment environment would not be easily achievable without paving and reshaping the legal and regulatory framework through adopting a set of economic incentives to attract foreign and local investors to invest their money in the local economy.
In an attempt to enhance the private sector’s engagement in the economic development of the country, the State of Qatar issued the Law No. (12) of 2020 on the regulation of Public Private Partnership (“PPP Law”). The PPP Law sets out the rules and regulations of the private sector’s partnership with the government to perform economic activities across the country in a professional, productive and cost-efficient way – and thereby providing greater transparency and predictability in the Qatar’s regulatory regime. With a range of existing PPP projects underway, this article takes a look at the PPP Law and considers its application in Qatar since its enactment in 2020.
1. DIFFERENT MODELS OF PPP PROJECTS
According to the PPP Law, the PPP agreement is an agreement concluded between a public/ governmental entity and a private entity (e.g., a private sector company) whereby such parties agree to perform and finance projects or to provide services through one of the models outlined in the PPP Law, which constitute the different forms of partnership. In this respect, the private sector may:
a) be allocated a land as a leasehold or based on usufruct right to be developed by the private sector and then be transferred to the governmental entity after certain period of time,
b) Build a project, operate it for a certain period of time and transfer its ownership (“B.O.T”), after lapsing the operation period, to the government,
c) Build the project, transfer its ownership to the government and operate it (“B.T.O”),
e) Operate and maintain the project (“O.M”), or
f) Any other regime that may be approved by the Council of Ministers based on the recommendation of the competent minister.
2. CONTRACTING PROCESS
According to the PPP Law, the PPP project may be initiated through the following process:
|PPP project may be initiated through either:
|The governmental entity, per se, to recommend to the competent minister a specific project to be performed in partnership with the private sector.
|A private sector entity (e.g. company) may submit a proposal to the concerned government entity for a project to be executed with the government
|The Gov. entity to prepare a report to summarize the project’s idea, its feasibility and duties and responsibilities of each party
|The report should be reviewed by the competent minister and if approved, it should be submitted to the Prime Minister.
|A special committee will be formed for each suggested project in coordination with the relevant gov. authorities and the contracting party and the State Audit Bureau.
|The project’s committee will prepare a “project’s policy” to be approved by the competent Minister.
|The tendering procedures and related documents should be announced by the government entity.
|Tender process to be initiated and bidders to submit their proposals. As soon as the successful bidder is announced, a formal agreement will be concluded with the contracting gov. entity.
|The PPP agreement to be concluded taking into consideration that it shall not exceed 30 years and it may be extended depending on the public interest necessities and provided that the Prime minister’s approval is obtained
The PPP Law provides, inter alia, for the possibility of the government to partner with the private sector entity, which intends to operate a project in Qatar under the PPP Law’s umbrella, through setting up a company in Qatar whereby the envisaged PPP project can be executed. The PPP Law grants such company certain exemptions relating to the restrictions imposed on non-Qatari entities to own real estate in Qatar provided that the Prime Minister’s approval is obtained.
It is envisaged that the PPP Law should achieve certain benefits to the economy and specifically to the private sector through, inter alia, the following:
a) Alleviating the risks associated with the project, increasing and enhancing the creditability of the project through granting financing flexibility and achieving tax revenues.
b) Maintaining the disclosure and accountability in the State’s resources.
c) Providing economic incentives to the private sector and encouraging it to participate in the State’s mega projects.
d) Regulating the incentives and exceptions to be granted to the private sector contracting party and its subcontractors.
e) Encouraging and maintaining competition, innovation and consumer protection.
3. APPLICATION OF THE PPP LAW TO MAJOR PROJECTS IN QATAR
Since the enactment of the PPP Law in 2020 it has been a major tool of public-private cooperation.
The PPP Law is currently used in a couple of major construction projects across the State of Qatar involving different economic sectors such as education and infrastructure.
By way of example, the PPP Law was relied upon to form the partnership arrangement between Dar Al Eloum Company and the Ministry of Education and Higher Education on 1 September 2020 to build, operate, and maintain 8 schools across the State of Qatar in cooperation with the ministry for a period of 25 years. In addition, the PPP Law was also relied upon as a governing framework for the partnership entered into between the private sector, represented by Barwa Real Estate Company, and the Ministry of Municipality and Environment, for major parking projects in Doha to help reduce traffic congestion.
In conclusion, the PPP Law will shape a new era of private sector’s participation and involvement in the economic activities along with the governmental sector, and be a factor in ensuring Qatar achieves the objectives of Qatar’s National Vision 2030.
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