RIYADH — The Energy Supplies Law, approved by the Saudi Council of Ministers on Tuesday, is expected to have several advantages that contribute to improving the efficiency of energy supply and promote a low-carbon circular economy.

The law stipulates the formation of a committee, with representatives of 15 bodies, to study executive regulations and approve privatization criteria.

The law aims to privatize the energy sector, including electricity supply, oil refineries, petrochemicals, water desalination, mining, agriculture, construction and related sectors, Asharq Al-Awsat newspaper reported.

The law will have several economic benefits. It will help increase the country's gross domestic product (GDP), create job opportunities in various regions, provide opportunities for public participation, and enable the development of manufacturing industries to produce value-added and strategic materials.

The economic benefits also include optimal privatization of economic and sustainable projects benefiting from supportive government programs, and flexibility in the transfer and use of hydrocarbons, in addition to enhancing local content by empowering human resources, production chains, research and development, innovation and social impact.

According to the provisions of the law, no costs will be shared by the state, citizens, or residents, while the costs for the industrial and commercial sectors will be unmeasurable.

Regarding the regulatory impact, the law is expected to contribute to achieving optimal energy privatization, facilitating the application process, and following up on applications, in addition to clarifying the necessary requirements for the investor. It is expected that this law will obtain the support of investors in the private sector due to its contribution to improving transparency levels and clarity.

The law clarifies the procedures required to obtain supplies and the role of the Ministry of Energy in carrying out the optimal privatization for consumers. It regulates the relationship between the government and the private entity to carry out related activities.

As per the provisions of the law, the privatization committee will be chaired by the minister and its members include representatives with the rank of no less than 15th or the equivalent from several authorities, most notably the Ministry of Energy, Ministry of Finance, Ministry of Communications and Information Technology, Ministry of Economy and Planning, Ministry of Industry and Mineral Resources and Ministry of Investment, in addition to two field experts to be appointed by the chairman of the Higher Committee for Hydrocarbon Affairs based on nominations by the minister, taking into account the principle of non-conflict of interests in their selection.

The committee is responsible for studying and reviewing the executive regulations of the law, and approving the criteria for the privatization of the energy sector proposed by the ministry in order to achieve optimal uses and the highest value for the national economy in the Kingdom and contribute to raising and diversifying the national economy, in addition to achieving the goals of the energy mix and raising the efficiency levels of utilization.

The committee will promote local content and the circular carbon economy, and manage greenhouse gases, in accordance with the strategies adopted by the Higher Committee for Hydrocarbon Affairs and the Supreme Committee for Energy Mix Affairs to produce electricity and empower the renewable energy sector.

A license must be obtained from the Ministry of Energy to practice activities related to natural gas and its liquids, which include transportation, processing, retailing, gas technology and assembly, storage, local distribution, import, export and sale, as well as establishing, owning and operating private networks and facilities in accordance with the provisions of the executive regulations that define license fees and annual fees to be paid.

The law confirms that the licensee must insure against his civil liability for damages resulting from his management of any activity subject to this law as determined by the executive regulations. Upon the expiry of the license, ownership of all material assets, which the ministry decides not to abandon, will be reverted to the state, and it will be handed over to it in good condition with the exception of normal use unless the license states otherwise.


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