In force
Saudi Privatization Law
نظام التخصيص
Sets the framework for privatizing government assets and services in Saudi Arabia. It concerns government entities, investors and private-sector partners.
- Articles
- 45
- In force
- 45
- Amended
- 0
- Issued
- 5/8/1442 AH
Issued by: مرسوم ملكي رقم (م/63) وتاريخ 1442/8/5هـ · قرار مجلس الوزراء رقم (436) وتاريخ 1442/8/3هـ
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Privatization Law by topic
Scope and Aims of the Privatization Law6 articlesAuthorities Responsible for Privatization Projects5 articlesFinancial Support for Privatization Projects2 articlesTendering and Awarding Privatization Projects8 articlesThe Privatization Project Company2 articlesConcluding and Financing a Privatization Contract5 articlesDuration and Extension of a Partnership Contract2 articlesAmending and Terminating a Partnership Contract4 articlesPrivate Party's Obligations to Beneficiaries4 articlesReal Estate in Privatization Projects3 articlesWorkers in Privatization Projects1 articleGrievances Against Tendering and Awarding1 articlePrivatization Contract Disputes and Arbitration1 articlePrivatization Project Register and Conflicts of Interest3 articles
Articles of the Saudi Privatization Law
- Article 1The article defines the terms of the Privatization Law, including privatization, public-private partnership, asset ownership transfer, private party, subsidiary contract and unsolicited offer.
- Article 2The article leaves it to the regulatory rules issued by the Council of Ministers to identify the competent authority for approvals, the executing entity that studies, offers and awards projects and concludes contracts, and the related entities.
- Article 3The article sets the government's aims in privatization projects, including rationalizing spending, increasing revenues, raising service quality, encouraging the private sector, widening citizens' participation and creating jobs.
- Article 4The Privatization Law applies to contracts of ministries, government bodies and government companies more than 50% owned that are set up to carry out a privatization project. It does not apply to earlier contracts unless amended, extended or renewed after it takes effect.
- Article 5The article leaves it to the Implementing Regulations to specify the privatization methods available for public-private partnerships or asset ownership transfers, and the conditions and controls for each method.
- Article 6The executing entity must carry out a comprehensive analysis and study when requesting approval from the Ministry or the competent authority, and the competent authority issues its approval only after the Ministry of Finance approves.
- Article 7A government infrastructure or public service project whose estimated value exceeds a limit set by the Council of Ministers, or whose contract lasts five years or more, is referred to the Center for a preliminary study within 60 working days.
- Article 8The article sets the Ministry of Finance's tasks in privatization: verifying funds before offering, securing funds to cover government obligations, and approving additional obligations and financial and credit support.
- Article 9On the recommendation of the Center's board of directors, the Council of Economic and Development Affairs may decide to treat or not treat any infrastructure or public service project as a privatization project.
- Article 10The Council of Ministers or its delegate, on the recommendation of the Ministry of Finance, may approve financial and credit support for a privatization project if the contract or subsidiary contracts do not provide for it.
- Article 11Where a license or permit needed for a privatization project cannot be issued or is delayed by the competent government entity, the Council of Economic and Development Affairs issues its direction to it on the basis of a report prepared by the executing entity.
- Article 12Privatization projects are generally offered through public competition, and may be offered through limited competition, direct contracting or other means suited to the project; the regulations set the rules for each means.
- Article 13The executing entity may cancel the offering of a privatization project at any time before signing the contract, with the competent authority's approval, in the public interest. Competitors are not entitled to compensation unless the Center's board of directors decides otherwise.
- Article 14The executing entity may require the best bidder to set up a project company as the private party. Government bodies may hold shares in it with approval, and transferring or pledging the private party's shares without the contract's controls or approval is void.
- Article 15If a project company's losses reach the limit set by the laws during the contract term, it need not increase or reduce its capital or dissolve. The executing entity submits proposals to the Council of Economic and Development Affairs to decide on its continuation.
- Article 16Privatization contracts are concluded in the government's name, with the executing entity representing it, and only with a private party. A body with public legal personality may not contract with the government as a private party.
- Article 17No government entity may conclude a privatization contract without the competent authority's approval, and a contract concluded in breach is void unless the competent authority ratifies it.
- Article 18With written approval from the contracting authority, the private party may take financing and mortgage its own project assets, but may never sell or mortgage State-owned assets.
- Article 19At the private party's request and with the competent authority's approval, the contracting authority issues a certificate confirming that the competent authority approved the contract and that it and its documents are subject to the Law.
- Article 20A partnership contract may not exceed 30 years including extensions and renewals, though the competent authority may allow more on the contracting authority's recommendation; re-awarding to the same party after a new tender is not an extension.
- Article 21Within the contract's controls, when the public interest requires and with the competent authority's approval, the contracting authority may amend a partnership contract in writing or suspend the project; the Implementing Regulations set the effects and compensation unless the contract does.
- Article 22This article lets the competent authority extend or renew a partnership contract in cases of delay due to circumstances beyond control, suspension of the project, recovery of additional costs, or changes to specifications in the public interest.
- Article 23The private party must treat beneficiaries with full equality and may not refuse to provide services or tie them to other services, unless the contract provides otherwise.
- Article 24With the competent authority's approval, the private party may be given the right to collect fees and public revenues under the contract, without imposing any additional charge on beneficiaries unless the contract provides.
- Article 25A partnership contract may not be assigned without written approval from the contracting authority, while subcontracting is allowed and the private party remains directly responsible.
- Article 26This article requires the private party to provide the information, documents and reports that let the contracting authority supervise performance of the contract, and to enable its authorized representatives to carry out monitoring tasks, within the contract's controls.
- Article 27A privatization contract may include a delay fine, penalty clause or compensation for breach, and if the contract so provides the contracting authority may perform it itself or through others after notifying the private party and it fails to correct the breach.
- Article 28With the competent authority's approval, the contracting authority may terminate a partnership contract unilaterally for material breach after notice, bankruptcy, the public interest, or cases set in the contract; the contract determines the effects and compensation.
- Article 29The contracting authority may transfer, amend or terminate existing government contracts without the counterparty's consent where the project requires it, while preserving the counterparty's right to compensation.
- Article 30A private party exercising its contractual rights is not engaged in monopolistic practice unless a suitable alternative that does not affect competition exists, subject to the competent authority's approval.
- Article 31The Center maintains a register of privatization projects open to entities and the public; the contracting authority and private party must supply it with information, and project documents may not be published before the Center publishes them without approval.
- Article 32The Center's Board sets the rules for tenders and procurement in privatization contracts and for State leasing and vacating of real estate in coordination with the State Properties Authority, and the general laws apply where there is no special provision.
- Article 33With the Ministry of Human Resources' approval, a privatization project may be exempted from some employment rules, such as the localization ratio, termination and contract term, while protecting transferred workers' rights, with alternative provisions prepared by the Ministry.
- Article 34A privatization contract is governed by the Law and Saudi laws, and with the competent authority's approval the parties may agree on arbitration and the applicable law; the private party's disputes with third parties are not governed by this Law.
- Article 35Arabic is the language of privatization tender documents and of concluding contracts and subsidiary contracts, and another language may be used after the competent authority's approval.
- Article 36This article applies to foreign investors the same criteria and procedures as local ones in tendering and awarding privatization projects, and gives them the same treatment in everything arising from the Law or the contract.
- Article 37With the competent authority's approval, a foreign private party may lease real estate inside Makkah and Madinah for the contract term solely to carry out the project, and the lease ends if it does not remove a violation within the set period.
- Article 38Real estate may be expropriated, or temporarily taken possession of, where needed to carry out a privatization project under the public-interest expropriation rules, and the parties may agree that the private party bears the cost of compensation.
- Article 39This article creates a committee for grievances about the tendering and award of privatization projects; a grievance must be filed within 10 working days with a bank guarantee of between one and five million riyals.
- Article 40The Implementing Regulations set the rules for implementing the Privatization Law, including the project document, project priorities, selecting consultants, monitoring contracts, the effect of emergencies, and criteria for treating a project as privatization.
- Article 41This article refers to the Implementing Regulations the rules on unsolicited offers from permitted sectors, their conditions, procedures and the offeror's rights; an offer goes to the contracting authority for initial study, then proceeds under the Law if suitable.
- Article 42This article requires anyone who learns confidential information through their job or work, or holds documents not authorized for publication about a privatization project, to keep them confidential and not disclose them except as the laws allow.
- Article 43This article bars the contracting authority's staff, its consultants and participating employees from any interest or benefit in a privatization project for themselves or their spouses, ascendants or descendants, and requires immediate disclosure and abstaining from participation.
- Article 44The Board of Directors of the National Center for Privatization issues the Implementing Regulations, tender templates and documents, contract templates, and templates of mandatory and guidance contract clauses for privatization projects.
- Article 45The Privatization Law repeals any provisions that conflict with it and takes effect 120 days after its publication in the Official Gazette.