Saudi Cabinet sets cap for estimated value of infrastructure, public service projects

The Saudi Council of Ministers

The Saudi Council of Ministers approved a maximum limit for the estimated value of any infrastructure or public service project, stipulated in paragraph (1) of Article 7 of the Privatization Law issued in 2021. The limit shall be SAR 200 million for projects to carry out works or secure purchases related to an infrastructure or public service project, and SAR 50 million for projects to transfer assets related to infrastructure or public services from any government agency to the private sector.

The estimated value of infrastructure projects or public services projects that are meant for implementation or securing purchases, stipulated in paragraphs (1) and (2) of this item, will be calculated based on the total expected nominal value throughout the duration of the project implementation. The calculation will be made by the government agency, which is legally concerned with the project, taking into account the minimum of the capital and operational expenditures related to the project, plus the value of any state-owned assets that the private party is granted rights to, including the transfer of ownership of the assets, if any, as well as the estimated financial obligations incurred by the state's public treasury and the financial revenues expected to be obtained by the government.

As for the estimated value of projects to transfer ownership of assets related to infrastructure or public service to any government agency, the calculation will be based on the value estimated by the government agency concerned with the project’s system for the assets whose ownership is to be transferred to the private party.

According to the Umm Al-Qura newspaper, this decree will be implemented from the beginning of 2024, without prejudice to infrastructure or public service projects that have obtained the necessary legal approvals before the effective date of this decree.