Modelled on international best practices and regional experiences, the Sultanate’s newly legislated Privatisation and Public Private Partnership (PPP) laws have the potential to enhance Oman’s appeal as a competitive investment destination, according to a key expert associated with the drafting of the landmark statutes.
Abraham Akkawi (pictured), PPP and Privatisation Expert at the Office of the Minister — Ministry of Finance, said the new laws promulgated by Royal Decrees 51/2019 and 52/2019 last month, enshrine the principles of transparency, equity and non-discrimination, which are imperative to creating a robust, business-friendly environment for local and foreign investment inflows.
“The two new laws provide clarity and transparency in the privatisation and PPP processes,” said Akkawi. “Consequently, they enhance the competitiveness of Oman and will hopefully attract the right investors from within Oman and outside, to develop new services and/or invest and buy existing companies. The laws are not an end in themselves, but seek to make sure the investment community — internal and external — knows there is a process, which is open, transparent, fair and so on, and that there are recourses, in case something happens.”
The Expert, who has been associated with the drafting of the PPP Law from the outset, says the statute is “based on international best practices and regional experiences”.
“Other GCC countries have similar laws, and so we wanted to learn from them as well. We also did a lot of outreach to developers, investors, and operators of public services, to make sure the PPP law is consistent with their views and international perspectives as well. So it’s 100 per cent based on international best practices, with an Omani context, of course.”
Commenting on the significance of the Privatisation Law, Akkawi said the statute will have a transformative effect on public services placed in private hands. “A key feature of a Privatisation Law is to look at any government-owned entity that is delivering a commercial service, transform it into an efficient organisation and bring in the private sector to own it through any means, whether an IPO or not, or strategic investors, and to bring return to the government for that commercial service.
So any of the companies the government currently owns — for example, the six holding companies and those under them — could be part of the privatisation process, as long as the target for privatisation makes sense financially to the government and to the market. So the objective is to push government-owned entities into private hands and deliver better services.”
Privatisation will also have beneficial implications for the Omani bourse, the Expert pointed out. “With privatisation comes the enhancement of the stock market, because all of the opportunities from the government will end up directly or indirectly on the stock market to enhance the stock market, with commercially viable services the government is currently delivering.”
The Public Private Partnership (PPP) Law, on the other hand, will see the private sector playing a role in the delivery of public services or infrastructure under a PPP-based contractual arrangement with the government structured as a concession for a specific period of time. The private sector will typically design, build, fund, operate (or not operate) and maintain the infrastructure needed to deliver the stated public service under a concession agreement that usually has a start and an end, Akkawi explained.
“Thus, under privatisation, the government will seek to monetize certain assets, attract investments and make some money out of them, while letting the private sector deliver that commercial service. PPP on the other hand is a public service that the government wants to provide to constituents by bringing in the private sector to deliver the service on its behalf under a contract with a term. It either case, the goal is to reduce the burden on the government, without a doubt,” he added.
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