United Arab Emirates: Towards A Clearer Framework Of Public- Private Partnerships

Last Updated: 11 December 2017
Article by The Business Year

On August 16 2017, the Lebanese Parliament voted for the bill on public-private partnership agreements (the "New Law"). The long-awaited law is now enacted and represents a step closer to the global standards and a response to the expectations of the international players.

Following restored political stability at the end of 2016, initiatives to boost the Lebanese economy are taking steps forward every month, showing the commitment of both the government and parliament to rejuvenate the country.

In efforts to achieve these goals, we are witnessing a growing recognition worldwide that synergy between public and private can add new and complementary instruments to meet service and infrastructure needs in an extensive range of areas, where development is indispensable for the economic growth. One of the main success factors for these policies is adopting the appropriate project delivery method and the relevant type; both need to be based on a clear and transparent legal framework.


By the term public private partnerships (PPP), we usually mean long-term agreements between the public and private sectors, focused on providing public services and building infrastructure by relying on the private investors' financial capabilities, know-how, as well as their management and operational skills. However, a broadly recognized definition does not yet exist.

PPPs typically do not include simple management, maintenance and operational contracts, turnkey projects, leases, or concessions given by the state to a private company. In the latter, the role of public authorities is secondary; remuneration of the private party is commonly based on a fixed fee or rate and the arrangement is for a shorter term, between two and five years. In PPPs, instead, the public sector is more involved and can establish a joint venture with the private party; remuneration is linked to performance and the length of each project is usually at least 20 years.


In this field, the function of the private sector lies mainly in rendering services that were previously under the public control and management, more efficiently to justify the value-for-money trade-off. Moreover, facing constraints on public funding, governments are increasingly turning to private companies to access a multitude of financial schemes more easily without exacerbating public debt.

It is worth noting a number of potential advantages that the public sector can benefit from when using PPPs: ensuring open market access and competition, and therefore making the country more competitive and attractive; introducing new technology and innovation; developing local sector capabilities through joint ventures with multinational firms; and creating subcontracting opportunities for locals companies.

Successful PPPs are based on several conditions, primarily starting from an appropriate legal and institutional framework (suitable laws and their consequent enforcement), transparency regarding the related project costs, the associated risks and profits, and monitoring procedures. PPPs can take a variety of structures and contractual forms; irrespective of the type, which will be discussed according to the relevant sector and the public authorities involved, ranging from individual ministries to local municipalities, it is crucial to establish roadmaps, action plans, and standardized steps to attract investors.


Regardless of an incomplete legal framework, over the years Lebanon has pursued several private participations in infrastructure and services, implementing a number of projects through a particular form of structure financing, known as Build-Operate-Transfer (BOT). In BOT, a private company finances, designs, builds, and operates the public entity project for a fixed period of time (with no ownership) and then transfers it back to the public sector. To date, BOTs have been used as the basis for tenders for GSM services for telecommunications, waste recycling, and postal services.

The regulatory framework in force until now consisted of: the Public Accounting Law, issued by Decree No. 14969 of 1963; the Tenders Regulation issued by Decree No. 2866/1959; the so-called "Investment Law," Decree No. 360 enacted in 2001 to attract private investments in a wide range of sectors industry, agriculture, agro-processing, tourism, IT, communication, information, and other sectors; and Law No. 5 of 1967 related to projects of touristic benefit, such as hotels, restaurants, indoor sport centers, islands, and touristic ports. In 2000, a Privatization Framework Law (No. 228) entered into force setting up the general privatization framework (including PPPs) by regulating operations and defining terms and fields of implementation, and establishing the Higher Council for Privatization (HCP).

Furthermore, in 2002, two acts were enacted to regulate the privatization projects in specific sectors, namely: the Telecommunication Law, No. 431, and the Regulation of the Electricity Sector, No. 462. The latter was never implemented, yet it was updated in 2014 (Law 288/2014) and one year later the Law 54/2015 extended the term of Law No. 28 until April 30, 2018, allowing temporary licensing by the Council of Ministers until the establishment of the National Electricity Regulatory Authority (still not constituted).


The General Assembly voted the bill on PPPs after only a month from the approval of the Finance Parliamentary Subcommittees on July 12, 2017. The new act is generally in line with current trends and expectations from the international market, applying the principle of transparency throughout the public tender process/procurement.

With 18 articles, the law on PPPs establishes the regulatory outline of the contracts that the government will use to entrust private investors to build and/or manage the equipment and the infrastructures in quite a few areas, among which electricity, telecommunications, and civil aviation are expressly included.

Interesting elements can be seen from both the public and the private sector's points of view.

The Public Party

From the public side, the action plan involves three stages: one internal, concerning the conception and preparation of projects within the institutions and the concerned authorities; a second external, regarding the selection of the private partner; and the last one operational, including implementation and monitoring.

The initiative of projects is alternatively given to the following authorities: a minister or the president of HCP or the president of the municipality/municipality federation, when the project is on a local scale. HCP's secretariat then prepares a feasibility study of the PPP to evaluate if the PPP is the most suitable means by which pursue a specific objective. These early considerations are essential in the context of public services, since the protection of public interests is at stake.

After approving the project, HCP creates a project committee presided over by a representative of its Secretary General. The committee then choses the financial, legal, and technical advisors, creating a team that also includes representatives of the concerned minister and will assist the project throughout its entire life and development.

The committee prepares a full study, analyzing all financial, economic, legal, and technical aspects, and the criteria for qualifying the private partner and the possibility of securing the necessary funds. It presents its recommendations to HCP. If the Council of Ministers (or the municipality/municipality federation) approves the project, the committee proceeds with the selection process for the partner, in respect of the principles of transparency, freedom of participation, and equal treatment of the participating entities.

The Committee compiles a motivated report about the chosen companies; if the HCP approves it the qualified entities are subsequently announced.

It should be highlighted that the above procedure is inapplicable if there are less than three candidates, while according to the current laws (art. 38 of the Tenders Regulations) when only one proposal is submitted to the Central Tenders Committee, it is accepted if the proposed price is below the estimated price. In the PPP selection, instead, the private sector is once again invited to participate in the project if less than three candidates present offers. In case of a second bid, however, after the approval of HCP, two offers are sufficient.

The Private Party

In PPP agreements, the selection of the private partner usually involves a two-step process that consists of a request for qualifications to determine qualified candidates and a request for proposals whereby bidders relay their business plans to the public authority for review and consideration.

The New Law does not specify the procedure that the HCP will follow, but there is no reference made in the criteria to the lowest bidder being preferential. On the contrary, the evaluation process will be likely based on the "best value" to the public institution for the duration of the partnership. In fact, it is provided that after the bid round is closed, technical offers are studied first, and only the matching offers will be reviewed from the financial point of view. At least two should be accepted or the project is proposed another time to insure competitiveness.

From the perspective of private investors, the New Law also contains attractive features. Consistent with the provisions of the Lebanese Code of Commerce (LCC) and the rules of the Code of Obligations and Contracts on Partnership Agreements, a joint stock company (Société Anonyme Libanaise, or SAL) must be incorporated by the private partner for the purpose of doing business with the government. Nonetheless, exceptions are made to the general rules: namely, the nationality condition of the shareholder is not applicable, neither one-third of capital must be owned by Lebanese shareholders, nor the majority of the board must be Lebanese. Finally, the foreign General Manager is not obliged to apply for a working visa.

From an accounting point of view, one auditor can be appointed instead of two; and last but not least, the SAL is not subject to the control of the Court of Auditors.

While one auditor can well serve the purpose of showing the true and fair financial activity of the company, the exemption from the control of the Court raises doubts in terms of the principle of transparency and anti-corruption policy.

In fact, by virtue of Article 223 of the Public Accountancy Act, promulgated on January 16th, 1951, the Audit Court shall supervise the management of public funds. With no control, it is difficult to determine whether public funds are properly or improperly placed.

Moreover, since the public interest must be protected, a constant control should be guaranteed about public expenditures. PPP arrangements should not be entered into merely for the sake of engaging in a PPP project. A comprehensive analysis of the costs and benefits of private sector involvement must be undertaken to ensure that specific agreements enhance the public benefit, as opposed to other alternative procurement models.

The Contract

As final points, the New Law lists the mandatory provisions of the PPP agreement that will be signed by the public and the private partners. Among those, it is noteworthy to consider that in case of non-fulfilment of obligations, penalties are envisaged for both parties, not just the private one as is custom. Furthermore, mediation proceedings are expressly mentioned together with domestic and international arbitration as conflict resolution methods that can be included in the contract.


This law is the most tangible action undertaken in many years to improve the efficiency of public services. It is, however, just the first piece of a broader regulatory framework that needs to be put in place. The new legislative act contains many gaps: details need to be clarified and decrees have to be issued in specific sectors. Given the long-term nature of these arrangements and the complexity associated, it is also difficult to identify at this point all possible contingencies during the project development. Nonetheless, we hope that many of these issues will be addressed when the law is fully implemented.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions