A look at regulatory framework for public transport projects; including setting up local firms

Riyadh city

The Saudi Cabinet recently approved the regulatory framework for public transport projects.

In coordination with the National Center for Privatization (NCP), the municipality of each region, city, governorate or any entity determined by the Privatization Supervisory Committee (PSC) in the public transport sector will prepare the articles of incorporation and association of the local transport company, which will be established under the regulatory framework.

The Cabinet’s resolution included updating contracts and statutes of existing transport companies owned by government agencies and taking the necessary legal measures in this regard.

The update will consider determination of the ownership of each local transport firm.

In addition, the board of directors in each company must include a representative from the Ministry of Transport and Logistics as well as the Ministry of Municipal, Rural Affairs and Housing, the development authority of the province, city or governorate, the Public Transport Authority (PTA), in addition to independent non-executive members whose number is not less than half of the members, who have experience in project management or financing field.

The mayor of the province, city or governorate presides over its board of directors.

The local transport firm should focus on preparing detailed design studies for public transport projects and their supporting projects, conducting contracts, tender documents and qualifications for public transport projects and their supporting projects in coordination with the concerned authorities.

The local firm should also target managing and supervising the implementation, operation, and maintenance of public transport projects and their supporting undertakings. This is in addition to developing and operating the regions surrounding public transport stations.

The local transport firm will be able to invest its own assets with interest, determine the prices and categories of tickets for public transportation in agreement with PTA, besides submitting views and suggestions in coordinating with relevant government entities.

PSC has to assign the tasks entrusted to local transport company to whomever is deemed appropriate, in case found unfitting to establish a local firm in a certain province, city or governorate.