By Badri and Salim El Meouchi LLP, Chadia El Meouchi, Carine Farran, Zouheir El Baba and Tarek Eid
The State of Qatar has recently issued a new PPP Law setting out the rules and procedures for undertaking Public-Private Partnership (PPP) projects.
The PPP Law provides a legal framework governing the entry of public and private sector entities into PPP agreements for projects of various forms including BOT, BTO, BOOT, OM and so forth.
Under the supervision of a PPP Committee, the governmental authority or concerned administration concluding the project should assess the desired project and launch the selection procedures of the private counterparty through a number of procurement methods set out in the PPP Law. Bidders in a PPP project are expected to meet a number of financial and technical qualifications determined prior to the selection procedures.
By structuring and regulating PPP projects, the Qatari government intends to instill transparency, due process and equality in the tendering process for private investments in Qatari projects. This, combined with a number of benefits granted to the private partner under a PPP project such as exemptions on nationality requirements will undoubtedly encourage major actors to invest in Qatar.
For more details, see below.
Qatar National Vision 2030: new PPP law unveiled to promote private participation in major infrastructure projects #qatar #PPP #infrastructure @elmeouchilawTweet
“Qatar National Vision 2030” issued by virtue of Emiri Decision number 44 of 2008 provides the base for the development of a national strategy aiding in the advancement of developmental objectives.
The General Secretariat for Development Planning, under the guidance of the country’s higher administration, is responsible for coordinating the efforts for the development of the global national strategy through discussions and partnership including the private sector and civil society. The involvement of the private sector is further emphasized by a statement that achieving this vision is a national responsibility which requires the development of the necessary institutional and administrative capacities, providing public services with competence and transparency, supporting cooperation and fruitful partnerships between the public and private sectors and providing a dynamic environment for the business sector. This vision further provides that the Government guarantees the freedom of economic activity on the basis of social justice and balanced cooperation between the public and private activities in order to achieve economic and social development, increase production, achieve prosperity for the citizens and increase their living standards and provide them with work opportunities in accordance with the law and the Constitution.
In line with the above, on May 31, 2020, Qatar issued law number 12 governing partnerships between the public and private sectors (the “PPP Law”).
Partnerships between the public and the private sector must henceforth take place through a partnership agreement executed in accordance with the provisions of the PPP Law and the general partnership policy adopted by the Council of Ministers based on the recommendation of the Minister of Commerce and Industry. An exemption from the application of the PPP Law can be granted by approval of the Council of Ministers.
Partnership under the PPP Law should be one of the following types of contracts:
– Allocation of lands through leases or provision of rights to use these lands for their development by private sector entities;
– Build Operate and Transfer (BOT) type;
– Build Transfer and Operate (BTO) type;
– Build Own Operate and Transfer (BOOT) type;
– Operate and Maintenance (OM) type; and
– Any other form adopted by the Council of Ministers based on the recommendation of the Minister of Commerce and Industry.
The governmental authority or concerned administration may at its discretion or based on the proposal of the private sector identify a project to be executed through a PPP and present it to the Minister of Commerce and Industry to be approved. After that, the governmental authority concluding the partnership agreement with the private sector must prepare a report on the project concept including a briefing, a presentation on its suitability for execution through a PPP and a determination of the responsibilities of each party; this report must be presented to the Minister of Commerce and Industry for its submission with the minister’s recommendations to the president of the Council of Ministers for the latter to decide on its adoption prior to the preparation of the project study by the governmental authority as detailed below.
A PPP Committee must be appointed to assess and supervise each PPP project. The governmental authority concluding the partnership agreement with the private sector in coordination with the PPP Committee must prepare a project study addressing notably (i) the strategic and operational benefits for executing the project, (ii) the description of the project, type of contract, duration of the partnership, and (iii) a determination of the duties of the governmental authority and the project company. The project study must be presented to the Minister of Commerce and Industry for its submission with his recommendations to the president of the Council of Ministers for the latter to decide on its adoption.
The governmental authority, in coordination with the PPP Committee, should prepare the documents for the offering of the project including among others (i) the general information related to the project and needed to prepare the bid and present it, (ii) the technical and financial qualifications of the project and any other conditions that should be met by the bidders and (iii) the form of the project company and the conditions that it should meet.
The governmental authority, in coordination with the PPP Committee, must then announce the PPP project. The PPP Contract must then be initiated as a two-stage tender, a limited tender in accordance with the determined standards or acceptance qualifications, practice, competition, a bid, a direct agreement or any other contracting method adopted by the Council of Ministers based on the recommendation of the Minister of Commerce and Industry.
The selection process for the winning bid must be transparent, and comply with freedom of competition, equality of chances and equitability; and the winning bidder is required to meet the financial and technical standards, restrictions, conditions and capacities adopted in the chosen field of specialization. The PPP Law also provides that the law organizing tenders and bids and the law governing the financial system of the government do not apply to the procedures of submissions, awards, and contracts and other such procedures applied in accordance with the provisions of the PPP Law.
The main terms of the PPP agreement are set out in the PPP Law and include the nature and scope of the works or services of the project company, the terms and conditions for their implementation, the reciprocal financial commitments and their relation to the financing method, the distribution of liability in case of a change of law, surprise events, and force majeure and the indemnities decided in each case, the duration of the contract (which should not exceed 30 years, unless otherwise extended in accordance with the PPP Law) and other issues. The PPP agreement must be subject to the Qatari law. The Qatari courts must be competent to decide on the disputes arising between the parties to the PPP agreement unless a different dispute resolution mechanism is approved by the president of the Council of Ministers based on the recommendation of the Minister of Commerce and Industry.
The bidders may present their bids under a consortium formed of more than one company.
The project should be operated by a project company established for this purpose; however the PPP Law provides that the governmental authority may allow the winning bidder to execute the project under the PPP agreement without establishing a project company if the winning bidder has the capacity to execute the project in its current situation and has the available financial and technical capacities, in accordance with the documents of the offering and the conditions of evaluation included in them.
The project company should also abide by a number of restrictions imposed by the PPP Law on its shares and assets. For example, the shares of the project company may not be transferred prior to the date of completion of the construction, equipment or development works; also the shares owned by the majority controlling the capital cannot be transferred after the said date without the prior approval of the Minister of Commerce and Industry. In addition, pledge of the shares of the project company for purposes other than financing or refinancing the object of the company are prohibited.
Although in some jurisdictions the direct collection of funds from users of utilities operated under PPP projects can be complicated due to conflicting laws and regulations, the PPP Law provides that the project company may collect fees or make profit or financial gain from the project or from its assets or from its users, in accordance with what is agreed upon with the governmental authority in the PPP agreement. The project company may also, after the approval of the governmental authority and presenting the necessary guarantees, obtain a loan from the banks operating within Qatar or outside of it in guarantee of its contractual rights and assets.
The PPP Law also offers the possibility for the PPP agreement to be amended if unexpected circumstances arise after the conclusion of the agreement, including changes in laws applicable at the time of conclusion of the agreement that disrupt the financial balance in the agreement in a way that would ensure the return of the balance.
At the end of the term of the PPP agreement, the ownership of the PPP project, its facilities and equipment are transferred to the government for no consideration or compensation, unless agreed otherwise in the PPP agreement.
The Minister of Commerce and Industry will issue decisions required for implementing the provisions of the PPP Law, and until such time that they are issued, the decisions in force will continue to apply provided that they do not contradict the provisions of the PPP Law.
The issuance of the PPP Law has certainly expanded the potential for private investments and development in Qatar.
The issuance of law number 1 of 2019 regulating non-Qatari capital investments in the economy and the decision of the Minister of Commerce and Industry number 44 of 2020 providing for the implementation of law number 1 of 2019 are prime examples of Qatar’s openness to foreign investments, which Qatar seeks to attract through a number of exemptions on nationality requirements, taxes (including income and import export taxes) and other exemptions that may be granted by the Council of Ministers to foreign investors.
The PPP Law added to these exemptions that the president of the Council of Ministers may, based on the recommendation of the Minister of Commerce and Industry, exempt the project company from all or some restrictions imposed by virtue of applicable laws on companies owned by non-Qataris, including with regard to ownership of real-estate, their use or their lease. It will be interesting to watch the development of the PPP projects in Qatar and the benefits they will bring to the country and the community, both for local and international investors and for the State.
Do not hesitate to contact us if you wish to find out more about the new Qatari PPP Law.
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