A new decree has been issued by the Ministry of Finance in the UAE with the aim of promoting private sector investment in federal government projects through public-private partnerships (PPPs).
The decree, known as Federal Decree-Law No 12 of 2023, applies to partnership projects proposed by federal entities that receive funding from the private sector, either partially or wholly.
The law came into effect on December 1. Its objectives include encouraging private sector participation in strategic and developmental projects, increasing investment in federal government projects of economic and social significance, and facilitating efficient implementation of strategic projects by the government.
The government also intends to leverage the financial, administrative, technical, and technological expertise available in the private sector. Additionally, the law seeks to expedite the execution of projects that provide added value to public funds, minimize financial and operational risks for the government, transform the management of infrastructure projects and public services, and enhance project competitiveness in local, regional, and global markets. The UAE is actively working to enhance the private sector’s contribution to overall economic growth.
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Operation 300bn
In line with Operation 300bn, the UAE introduced the National In-Country Value program, which aims to increase private sector participation in the economy, diversify output, and localize critical segments of the supply chain. Operation 300bn targets raising the industrial sector’s contribution to the GDP to AED300 billion ($81.68 billion) by 2031, up from AED133 billion in 2021. The new regulation on PPPs includes specific exemptions. These exemptions cover partnership contracts entered into before the enforcement of the law, projects below a specified value limit outlined in the Partnership Projects Manual, public asset and service privatization projects, as well as supply and procurement contracts related to national security specified in the manual. The exemptions also extend to federal entities, sectors, and projects exempted by UAE Cabinet decisions.
Clarity and guidance for federal entities
The implementation of this new law provides clarity and guidance to all federal entities, outlining the necessary processes and legal requirements for developing successful PPP projects. According to Alexander Sarac, a partner specializing in infrastructure projects and energy at the international law firm Addleshaw Goddard, this certainty and guidance will encourage various ministries and government entities to pursue PPP opportunities with confidence and efficiency. This development follows the adoption of PPP laws by the Abu Dhabi and Dubai governments in recent years. In 2020, Abu Dhabi introduced new procurement regulations for PPPs to foster collaboration between private and public entities and attract increased investment to the emirate.
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