Legal framework for PPPs

GCC governments need to adapt some aspects of their existing legal frameworks to ensure that PPP contracts can be enacted smoothly. These include procurement laws, public financial management laws, and some sector laws and regulatory frameworks. As the GCC states have civil law systems, dedicated PPP legislation that adapts all relevant laws in one place is recommended.

The major elements of a dedicated legal framework for PPPs include a definition of a PPP, tendering guidelines, contractual frameworks, implementation guidelines, and an institutional framework definition (see Exhibit 7).

Dedicated legislation provides the private sector with requisite safeguards. It increases confidence and transparency. It establishes a unified and standardized contractual framework with clear guidelines to avoid additional costs and potential complications. In addition, it outlines defined roles and responsibilities for the different government entities involved in PPPs.

PPP legislation in the GCC can set out high-level principles or can be supported by more detailed regulations. This depends on the country-specific context including existing laws and current level of investor confidence. In any case, GCC governments should avoid rigid frameworks and instead design the PPP framework so that it can be adapted over time.

Exhibit 7
The key elements of a PPP legal framework mitigate risk and enhance transparency for private investors

Source: "Adopting the Public Private Partnerships Model and its role in attracting Foreign Direct Investment," PwC and DUBAI FDI, January 2016 (https://www.pwc.com/m1/en/publications/documents/adopting-ppp-and-its-role-in-attracting-fdi-dubai.pdf); Karim Aly, George Atalla, and Mirian Itani, "Partnerships for transformation: Using public-private partnerships in the GCC," Strategy&, 2012 (http://www.strategyand.pwc.com/reports/partnerships-transformation-using-public-private); "The EPEC PPP Guide - A Note on Legal Frameworks for PPP" (http://www.eib.org/epec/g2g/annex/2-legal-frameworks/); Strategy& analysis