Article 7 of the Saudi Privatization Law
المادة 7 من نظام التخصيص
A 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.
Official text (Arabic)
This article has not been amended since the law was issued.
1- في حال صدور موافقة من الجهة المعنية نظامًا على مشروع بنية تحتيّة أو خدمة عامة لجهة حكومية، وكانت القيمة المقدرة للمشروع تتجاوز الحد الذي يُعيّنه مجلس الوزراء، أو كانت مدة العقد المرتبط بهذا المشروع -الأصلية أو بعد تمديده أو تجديده- (خمس) سنوات فأكثر، فتُحيل الوزارة الموضوع المتعلق بالمشروع إلى المركز-قبل البدء في طرح المشروع، أو إجراءات إبرام العقد، أو تجديده، أو تمديده بحسب الحال- لإعداد دراسة مبدئية عن مدى مناسبة تنفيذ المشروع من خلال التخصيص، والرفع بنتائج هذه الدراسة -خلال (ستين) يوم عمل من تاريخ استلام المركز للموضوع- إلى الوزارة؛ لاتخاذ ما تراه مناسبًا.
2- تضع الوزارة بالتنسيق مع المركز آلية للعمل بما تضمنته الفقرة (1) من هذه المادة، وعلى الجهات ذات العلاقة الالتزام بهذه الآلية.
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 7 explained in plain English
This article ensures that large or long government projects are first studied from the privatization angle before being carried out in the traditional ways.
When does it apply? If the statutorily competent body has approved an infrastructure or public service project for a government entity, and one of two conditions is met:
- The project's estimated value exceeds the limit set by the Council of Ministers (the text does not state this limit); or
- The contract term, original or after extension or renewal, is five years or more.
What happens?
- The Ministry of Finance refers the matter to the National Center for Privatization before starting the offering or the contract conclusion, renewal or extension procedures.
- The Center prepares a preliminary study on whether carrying out the project through privatization is suitable.
- It submits the results to the Ministry within 60 working days of receiving the matter, for the Ministry to take what it considers appropriate.
The Ministry also sets, in coordination with the Center, a mechanism for applying this, and the related entities must comply with it. The result is that the study does not require privatization, but helps the Ministry to decide.
Practical example
A government entity approved a project to operate maintenance facilities for seven years. Because the term exceeds five years, the Ministry of Finance refers the project to the National Center for Privatization before offering it, so that it studies within 60 working days whether it is best carried out through privatization.
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 7 of the Saudi Privatization Law
When is a government project referred to the National Center for Privatization?
If its estimated value exceeds the limit set by the Council of Ministers or its contract term is five years or more.
How long does the Center have to study the project?
The Center submits the results of its preliminary study to the Ministry within 60 working days of receiving the matter.
Is the result of the study binding?
The Center submits the results to the Ministry to take what it considers appropriate.
More articles on Authorities Responsible for Privatization Projects
- Article 2
The 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.
1- تحدد القواعد المنظمة -بحسب مشروع التخصيص- الجهة (الجهات) التي لها صلاحية إصدار الموافقات اللازمة لمشاريع التخصيص بما في ذلك الموافقة على طرح المشاريع، وترسيت
- Article 6
The 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.
1- يتعيّن على الجهة التنفيذية عند طلب موافقة الوزارة أو الجهة المختصة على أي من المهمات الموكولة إليها بموجب أحكام النظام؛ إجراء تحليل ودراسة شاملة لموضوع الطلب
- Article 11
Where 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.
دون الإخلال بأحكام العقد المتعلقة بتوزيع المخاطر بين أطراف العقد، عند تعذر إصدار رخصة، أو ترخيص، أو تصريح لازم لأي مشروع تخصيص، أو تأخر إصداره من قبل الجهة الحك
- Article 44
The 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.
يصدر مجلس إدارة المركز ما يأتي: 1- اللائحة التنفيذية. 2- نماذج المنافسة، ونماذج وثائق المنافسة، ونماذج العقود المتعلقة بمشاريع التخصيص. 3- نماذج البنود التعاقدي
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.