The JC Report on Government’s Decree Regarding Amending Some Rules of Regulating Private Sector

Before we get into the details of the article’s amendments in the Governmental decree, we need to shed the light on the philosophy of this decree and its purposes:

The Egyptian Governorate applied a new policy in 2006 to benefit from the local and foreigner private sector potentials that is related to the basic infrastructure, services and public utilities whether financially, operative or constructive, to reduce the financial burden on the state’s budget, as the Central Unit was established to participate with the Public Sector in the same year where a piece of land for the project is provided by the Administrative Department and deliver utilities at the borders of the project. Usually, the private sector provides the designing, financing, building, and operating activities, and deliver the project to the Administrative Department by the end of the contract period.

Since the issuance of Law No. 67 Year 2010, the practical experience of applying the Private Sector Contribution System (“PSCS”) revealed some obstacles in application. Some of which related to Administrative Departments’ lack of knowledge in the PSCS in Basic Infrastructure Projects and some others related to the complicated procedures that usually are forced on massive projects from the time of Feasibility study and until assigning the project to the winning investor.

In 18/1/2021 the Joint Commission (“JC”) held a meeting to discuss the decree under the rules of article No. (180), and in 11/10/2021, the JC continued discussing the decree during the Regular Second Session under the rules of first paragraph of Article (179). It is worth mentioning that Dr. Mohamed Maeet, The Minister of Finance, attended the meeting along with others.

However, and in order to understand the reasons why this decree was proposed, here’s some purposes:

• Expand the business patterns.

• Build new ways of contracting, that suits the nature of some projects, and that is through applying new methods of contracting such as (i.e., Direct contracting, contracting on an initiated project represented by the private sector, limited tenders… etc.)

• Set standards in choosing the applicable projects.

• Reintroduce the mechanism of selecting applicable projects.

• Censorship on selecting the applicable projects.

• Change the obligatory preparation stage in projects to be optional.

• Reduce the timeline of Offering stages to expedite the procedures process ahead of contracting.

• Allowing the elimination of the feasible tender if its price is unusually different.

• Allowing negotiating with the feasible tender owner if its value is unjustifiably more or less than the official governmental offer.

Here are the fundamental features of the decree:

The First Article: To be replaced by article numbers (2), (3), (4), (14, second paragraph), (15, first paragraph, section f), (32, final paragraph) and (39) of

Private Sector regulating law in the fundamental infrastructure, public utilities and services projects law No. (67) issued Year 2010, the following articles:

Article (2): Included expanding in business patterns which private sector applies in the fundamental infrastructure through stating designing, financing, utilizing, maintenance and operating works, some or all of it in which expands the contribution of the private sector in these projects.

Article (3): Reintroducing the mechanism of planning projects, which is usually executed through the contribution with the private sector, included within the economic and social plan of the country after the higher commission for contribution affairs’ approval.

Article (4): Forming a Joint Commission of specialized individuals from the Ministry of Finance and the Ministry of Planning and the Central Unit, and other ministries, so they study the submitted projects from the administrative entities under the contribution regulation rules of law.

Article (14), Paragraph 3: The amendment in this article stated that the specialized Minister must join the higher commission membership for contribution affairs, whilst looking the project issues.

Article (15), Paragraph 1, section B: Endorsement the projects plan, which is executed by the contribution regulations with the private sector, and approving each project listed in it.

Article (17): It is prohibited that any of the Administrative Authorities to start any procedure of the stated contracting methods in article (20), unless it is reviewed by the contributed Central Unit for the initial studies, especially prepared by the Administrative Authority to ensure allocating the required land for the project.

Article (18): This article was rephrased for the Administrative Authorities to apply the Central Unit recommendations for contribution.

Article (19): It is rephrased to include the principals binding while contracting, such as, financial, and economic balance, transparency of contracting, equal opportunities and equality amongst individuals in the centers, all according to the rules of law regulating.

Article (20): To regulate contracting mechanisms through creating new methods of contracting, suitable with the nature of some projects and fits the social and economic circumstances going in the country.

Article (21): It is rephrased to erase the word (qualified) mentioned in the current law, to keep up with the new amendments.

Article (23): The word (qualified) was erased from this article for the same reason in article (21), after amendments.

Article: (26): The word (qualified) was erased from this article for the same reason in article (21), after amendments.

Article (28), Paragraph 1: This article was rephrased to keep up with the preparation stage ahead of the approval stage in projects that requires so.

Article (32), Paragraph 1, Section f: The sentence (Value of economic feasible tender) with (Least value tender) mentioned in section (f).

Article (32) Last Paragraph: It allowed the exception of rules of article (31) of this law regarding negotiating.

Amendments made by the JC on the decree:

Article (1):

First article:

(2,3): The commission erased two articles from the decree represented by the government, as there are some current proposed projects based on these two articles, the government sought keeping the articles as is for the mean time.

Article (39): The commission rephrased this article to become as follows:

Grievances Committee is formed and headed by the Minister of Finance, and the membership of:

• Two of Vice Chairman of the State Council.

• Head of participation central unit.

• Experienced individuals unemployed by state.

This committee is specialized into looking at grievances of early issued decision.

Article (2): The commission replaced the current paragraph with the following one:

“Minister Responsible for Planning Affairs” phrase is replaced with “Minister responsible of economic development”. The sentence “Minister responsible of Parliament affairs” is replaced with “Minister responsible of Legal affairs”

Article (3): A new article is added under No. (3 repeated) with the purpose of keeping the original decision of article (3) in the governmental decree.

The Joint Commission Opinion:

The Joint Committee considers that the decree aims to expedite the completion of the procedures followed in contracting on projects with participation system along with the private sector, reintroduce new mechanisms to keep up with the Egyptian State’s aspiration in increasing the infrastructure, services and public utilities investments and encourage private sector contribution in financing such projects which lessens the State budget’s burdens.

All new amendments were published in the Official Gazette.

For further information or to discuss Government’s Decree in more detail, please contact: Muhammed Abu Daif m.abudaif@tcmglaw.com or Omar Abu Daif o.abudaif@tcmglaw.com