What noteworthy provisions are contained in the new law? The new law came into force on 18 November 2015. A summary of some of the key provisions are set out below: –– There is flexibility as to what form of contract can be used (management/ operating agreements, leases, concessions etc) –– The new law applies to all government agencies that are funded by the state budget –– Projects in the power and water sector are not covered by this new law –– A private sector developer is permitted to make an unsolicited PPP proposal –– Ultimate oversight for the PPP lies with the market soundings and undertake initial “strawman” work from potential bidders prior to officially going to the market with an RFP –– A detailed RFP needs to be fully developed before any new PPP project can be put out to tender –– Bidders are permitted to form consortia –– The government may take an equity stake in the project spv –– Save in exceptional cases, all projects must be executed through an spv whose sole purpose is to undertake the relevant PPP project –– The form of PPP contract has to provide clear terms in relation to a number of matters, including Emiratisation quotas and environmental protections Dubai Financial Audit Department –– A public body is permitted to take
and (iii) changing the key role of the public sector from “investor and developer” to “policy maker and regulator”. Given Dubai’s breathtaking growth over the last few decades, it is no surprise to see this change in emphasis. Why is a new law needed in Dubai? Most PPP style projects could be implemented in Dubai without this new law. Whatever potential legal and regulatory impediments may exist for a particular infrastructure sector or project can almost certainly be overcome by appropriate contract drafting. So why pass a new law? Most importantly, this new law sends a clear statement of policy intent to the developer, investor and lender community. The new law says to the market that (i) this style of project is welcome and has the full backing of the state, and (ii) you can expect future “dealflow.” The second reason is particularly important because bidding for this type of project is time consuming and complex, and the front end bid costs are high. Normally, bidders and lenders will need to engage their own legal, financial and technical consultants to assess the proposed contractual framework and suite of project documents, with lenders passing their costs on to the bidder. What this means is that the developer community will not normally be interested in focusing on a jurisdiction where there are occasional ad hoc PPP deals; they would rather commit to a market where there are multiple bid opportunities so that, if they invest the time and money, the chances are that they will eventually succeed in winning a project.
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