Section 3 of Part 1 in Bidding Requirements Document: Project financial and technical elements

This section focuses on the results reached in the dialogue between the Project Committee and the qualified candidates within their effort to keep the project in line with the international best practices and the investors' expectations, a matter that contributes to the project success.

  Project Company Establishment and Shares Ownership

If the joint project nature requires establishing a company "project company", the applied details to be followed by the winning bidder in relation to establishing the company shall be included in the bidding requirements.

The Project Committee shall identify the deadline for submitting the project company statutes to the Project Committee, which in turn verifies that these statutes comply with the applicable laws and the bidding requirements document in preparation for approving them. This paragraph also includes any requirements relating to the project company form, whether the federal government will participate in its establishment and its contribution in its capital, and the number of the government representatives in the company board and the votes they have in respect of some strategic matters.

The Project Committee may develop a suggested draft for the project company statute and submit it to the participants as part of the bidding requirements document to make their comments based on the previous meetings and discussions made during the dialogue with the qualified candidates, a matter that accelerates the awarding process and prevent any surprises.

In this paragraph, the Project Committee seeks to make sure that project company complies with the corporate governance. For this purpose, the committee is entitled to require the participants to provide a detailed plan for the corporate governance to be followed.

  Financing Structure

The purpose of this paragraph of bidding requirements document is to ensure the bidders' commitment to provide financing. The Project Committee requests details about the financing sources such as the equities and debts. It may impose a specific financing structure that limits the debt financing, or may identify a specific range for the debts to equity ratio, provided that the project company shall not exceed such ratio, and relate this condition with a deadline to be identified by the Project Committee. The financing structure differs from one project to another, so the Project Committee depends in its requirements in this regard on the results reached in the dialogue made with the qualified candidates before issuing the bidding requirements document, ensuring that these requirements are in line with the bidders' expectations and the international practices and experiences.

  Minimum Technical, Legal and Financial Requirements

This paragraph of bidding requirements includes the minimum technical and financial requirements to make sure that the submitted bids meets the expected objectives of the project as set out during the project design and study phase.

At the technical level, the requirements relate to achievement of the required outcomes, appropriateness of the design, development and operation elements for the targeted service specifications, the bid conformity to the standard followed specifications, achievement of the technical safety elements, the use of proven technologies, easiness of the project operation and maintenance, the environment protection and the expected quality of services and their conformity with the performance standards and indicators identified in the bidding requirements, and the availability of sufficient measures to ensure their continuity.

At the legal aspect, the requirements relate to the structure of the alliance submitting the bid and its legal status and the legal status of the companies participating therein (including any bankruptcy record or conviction of committing crimes), the conditions of subcontracting, the suggested amendments to the PPP contract draft, and any increase in the risks resulting from these amendments in comparison with the risks matrix prepared in the project study and design phase.

At the financial level, the requirements include an accurate and comprehensive financial model based on assumptions and scenarios required by the Project Committee. The financial bid shall explain all forms and conditions of financing, explain the method followed by the Project Committee to manage the risks, and meet the minimum requirements and conditions of financing.

In this paragraph of bidding requirements document, the Project Committee identifies the requirements that shall be met by the bids to comply with the conditions. These requirements vary from one project to another. In most cases, these requirements are divided into two types, the first type is obligatory requirements that shall be met, and the second type may be deviated in a limited way according to the provisions of the bidding requirements to provide acceptable bids. It shall be noted that these requirements shall not limit or kill the spirit of innovation nor be cumbersome to a level that would lead to excluding strong bids without reasonable grounds in an early phase due to not meeting one of these requirements.