Draft PSP law to boost investor confidence in Saudi: opinion

The draft Private Sector Participation (PSP) law, published by Saudi Arabia’s National Centre for Privatization & Public Private Partnership (NCP), is a welcome development for foreign investors seeking to enter the lucrative Saudi market, MEED reported, citing Tim Armsby, partner, Pinsent Masons.

In line with the Vision 2030 plan, the draft PSP law, published in July, will boost participation in 10 key sectors with public-private partnerships (PPPs) already being planned for projects in the education, health and transport sectors.

This year, the state-owned Water & Electricity Company has already launched a series of water and wastewater projects with private sector support.

According to Armsby, the draft law would exempt PSP projects from the scope of certain laws, including the government tenders and procurement law.

The draft law also clarifies that PSPs will not be considered administrative contracts and enshrines the principle that foreign legal entities will be entitled to the same treatment as national entities.

In addition, it also provides for the provision of government support (including guarantees), expressly allows for the use of arbitration, and exempts PSP contracts from the application of the provisions of paragraphs B, C, D and F of Article 13 of The Law of the Board of Grievances.

"These provisions will most definitely be welcomed by private sector participants looking at the Kingdom," Armsby noted.

Meanwhile, the draft law will provide more transparency on several aspects of PPPs, which will undoubtedly give the private sector and foreign investors increased confidence about conducting business in Saudi Arabia.

It will also ensure there is a consistent approach to the pipeline of projects and the overarching role of the NCP would ensure that projects are delivered in an efficient manner relying on a standardized approach where relevant, said Armsby.

"Moreover, we are sure to see further changes to the nation’s regulatory framework in the coming years in support of Saudi Arabia’s impressive ambitions to emerge as an investment powerhouse in the region," he added.