On 20 September 2015, the Government of Dubai issued a new law (Law No.22 of 2015) creating the legal framework for greater collaboration and contractual partnership between the public and private sectors in respect of major projects in Dubai (the new PPP Law).
Current structure and financing of major projects in the Emirate
To date, there have been a small number of projects in Dubai that have been undertaken in partnership with the Government creating an operational concession. Most major projects have, however, been tendered and procured on a construct-only basis, with very few being let as design and build (D&B) or engineering, procurement, construction (EPC) contracts with the government entity taking over and operating the facilities once complete. This may well change with the introduction of and support for the new PPP Law.
Objectives and form of the new PPP Law
The aims of the new PPP Law are stated to include: lessening the burden on the Dubai Government's budget; procuring the best services at the best prices; and transferring knowledge and expertise to the public sector from the private sector.
The new PPP Law will apply to all government entities that form part of the general governmental budget, although off-budget government entities may be included with the approval of the Supreme Committee for Fiscal Policy. The new law will cover all projects undertaken by the Government within the Emirate of Dubai, with the exception of power and water projects (as governed by Law No.6 of 2011) and works contracts and the supply of materials and services (as governed by Law No. 6 of 1997).
Various corporate structures are permissible under the new PPP Law and it anticipates granting concessions to the private sector of up to 30 years' duration. Interestingly, proposals for PPP projects made by the private sector to the Government are expressly permitted.
A procedure for fair and transparent tendering and the award of PPP projects is set out in the new PPP Law. We anticipate more detail will be made available about this process (and the law in general) in the implementing regulations to be published in due course.
What's next for Dubai?
The new PPP Law will come into force in Dubai on 19 November 2015. It will be discussed in the context of financing and structuring major projects in the region by Dentons partners Udayan Mukherjee and Ian Dalley at the Middle East Projects Seminar on 3 November 2015 at the Capital Club, DIFC, Dubai.
Please RSVP here should you wish to attend this event.