What You Need to Know About Public Procurement for Terminals and Ports in the UAE?

Author: Hassan Elhais

Public procurement in the UAE is regulated under Cabinet Decision No. 4 of 2019 (UAE Procurement Law). The UAE Procurement Law applies to procurement, supply contracts, works and providing services which are performed by the Government, ministries or federal bodies affiliated with the government.

That said, the UAE Procurement Law does not apply to certain federal entities and procurements. Article 2 of the UAE Procurement Law exempts the following from the application of the procurement law.

  1. 1. Procurement for military use and pharmaceuticals.
  2. 2. Ministry of Defence and the Department of State Security.
  3. 3. Federal entities which are engaged in international agreements/obligations that are related to procurement performed by the said entities.
  4. 4. Certain fixed assets of the Budget relating to pending construction.
  5. 5. Partnership contracts with the private sector are classified as a partnership projects.
  6. 6. Any federal entity may be excluded from the provisions of the UAE Procurement Law by the council of ministers.
  7. At the local level, standalone procurement laws have been issued by several Emirates which are applicable to the concerned Emirate. For example, Dubai Law No. 12 of 2020 sets out the framework regulating the procurement procedure for government entities of Dubai.

The UAE Procurement Law under Article 25 recognises different methods of procurements, including tendering, direct solicitations, mumarasa (negotiation), competitive dialogue and contest, etc. and sets out the procedure to be followed for undertaking procurement under each of these methods.

Public Private Partnership – An Alternative

Apart from public procurement, public-private partnerships or PPP have been given strong impetus in the recent past. PPP is a contract between a government agency and a private entity for performing a public project. The level of partnership between the entities generally depends on the project being developed. PPP could take the form of service contracts, management contracts, finance leasing contracts, concession contracts, BOT and BOOT contracts, etc. All PPPs are risk-based partnerships with the nature & extent of risks depending on the project being undertaken. PPP contracts are typically on a long-term basis.

The private sector provides skills and capabilities to the project and typically contributes through finance, establishment, construction, development, operation, restoration, rehabilitation and maintenance of the project, amongst others.

PPP also attract foreign investment and promotes the economic growth of the country.

The Government of UAE issued Cabinet Decision No. 2/2017 setting out a high-level framework of guidelines and procedures for partnership with the private sector.

The Dubai Law No. 22 of 2015 is the relevant law for PPPs to be established in Dubai. Abu Dhabi has also issued Abu Dhabi Law No. 2 of 2019 and Abu Dhabi Administrative Decision No 179 of 2020 on the regulation of PPP in Abu Dhabi.

Terminals and Ports of the UAE

The UAE is a global hub for maritime trade, with several ports serving as key infrastructural destinations for trade. Ports and terminals have been developed in the UAE by the government or through partnerships with the private sector. Public-private partnerships are key for driving investments in the country, improving the quality of public services, reducing the burden of financial risks for the government and enabling the government to implement its projects efficiently.