Article 20 of the Saudi Privatization Law
المادة 20 من نظام التخصيص
A 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.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تكون مدة عقد الشراكة بين القطاعين العام والخاص وفقًا لما يتفق عليه أطرافه، على ألّا تتجاوز مدته -الأصلية، أو بعد تجديده، أو تمديده- (ثلاثين) سنة من تاريخ توقيعه أو تاريخ نفاذه المتفق عليه في حال كان لاحقًا لتاريخ توقيع العقد. ويجوز للجهة المختصة -بناءً على توصية من الجهة التنفيذية- الموافقة على ما يأتي:
أ- أن تتجاوز مدة عقد الشراكة بين القطاعين العام والخاص الأصلية (ثلاثين) سنة.
ب- تمديد عقد الشراكة بين القطاعين العام والخاص أو تجديده بحيث تصبح مدته الإجمالية أكثر من (ثلاثين) سنة.
2- إذا انتهت مدة عقد الشراكة بين القطاعين العام والخاص، وأُعيد طرح مشروع الشراكة في عملية عطاء جديدة، وتمت ترسيته على الطرف الخاص نفسه الذي انتهت مدة عقده، فلا يعد ذلك تمديدًا أو تجديدًا لمدته، وذلك لأغراض احتساب مدة عقد الشراكة بين القطاعين العام والخاص الواردة في الفقرة (1) من هذه المادة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 20 explained in plain English
This article regulates the term of a public-private partnership contract:
First: the rule. The term is as agreed by the parties, provided it does not exceed 30 years, whether the original term or after renewal or extension. It runs from the date of signing, or from the agreed effective date if that is later than signing.
Second: the exception. The competent authority, on the recommendation of the contracting authority, may approve:
- An original term longer than 30 years.
- Extending or renewing the contract so that its total term exceeds 30 years.
Third: re-tendering. If the contract ends and the project is re-tendered in a new tender that the same private party wins, this is not treated as an extension or renewal for the purpose of the 30-year limit. In other words, the new contract's term starts afresh.
In practice, an investor can plan to recover its investment within 30 years as the baseline. A re-tender in a new tender starts a new term. Anyone negotiating the term of a contract should consult a lawyer who specializes in commercial matters and partnership contracts.
Practical example
A company signed a partnership contract to operate a regional airport for 25 years. When it ended, the project was re-tendered in a new tender and the same company won it with a 20-year contract. This is not counted as an extension, and it is not added to the first contract when applying the 30-year limit.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 20 of the Saudi Privatization Law
What is the maximum term of a public-private partnership contract?
30 years from the date of signing or the agreed effective date, including renewal and extension.
Can a partnership contract exceed 30 years?
Yes, with the approval of the competent authority on the recommendation of the contracting authority.
Is the same company winning a new tender an extension of the contract?
No. It is not treated as an extension or renewal for the purpose of calculating the 30-year term.
More articles on Duration and Extension of a Partnership Contract
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.