Within the framework of the State’s endeavour to develop infrastructure and improve the quality of public services, and with the aim of attracting private sector expertise for strategic projects that contribute to advancing economic and social development, Cabinet Decision No. (507) of 2025 establishes the legislative and regulatory framework for public-private partnership contracts. It sets clear and transparent rules ensuring a balance between public interest and investor interests, through detailed principles and standards that uphold transparency and governance in contracting procedures, thereby enhancing the efficiency of public service delivery and infrastructure development in alignment with the State’s economic and developmental policies.

A review of Libya’s legal and economic context indicates that this decision will have a significant impact on multiple levels, particularly as it comes at an exceptional time marked by weak governmental institutions, uneven application of legislation, and legal uncertainty in critical sectors. Any new regulatory framework, if properly implemented, thus carries substantial value. Legally, the decision provides unprecedented clarity in defining the rights and obligations of all parties involved, strengthening the rule of law, reducing disputes related to contracts and projects, consolidating transparency and accountability, and creating a reference for judicial and administrative authorities in resolving future disputes. Economically, the decision fosters an environment conducive to both domestic and foreign investment by ensuring stability of financial and regulatory obligations, encouraging the transfer of technology and modern expertise, opening new avenues for sustainable job creation, and supporting infrastructure development. Effective implementation further ensures project sustainability, adherence to standards, and minimizes risks associated with corruption or mismanagement, reflecting positively on the national economy. Ultimately, the decision demonstrates the State’s capacity to assert its regulatory role amid political and security challenges, laying the foundation for lasting trust between the public and private sectors, provided strict compliance and diligent monitoring ensure the intended legal and economic impact.

However, a careful reading of the text reveals notable strengths alongside challenges that require refinement and development to achieve the desired objectives.

1. Scope and Project Definition:

Article 2 limits the regulation’s scope to projects not funded by the public treasury, aligning with the partnership philosophy of reducing fiscal burdens. Yet, it excludes contracts governed by special legislation or designated by the Supreme Committee. Such broad exceptions may exempt major projects from the transparency and competition mechanisms, opening the door to unregulated administrative discretion. These exceptions require stricter definition to prevent personal criteria from undermining an objective oversight system.

2. Institutional Structure of the Public-Private Partnership Authority:

Article 5 establishes a general authority with wide powers, including policy formulation, contract approval, and study validation. While this framework provides strong centralized authority, it raises two issues:

• Bureaucratic inflation: Multiple hierarchical levels may slow procedures and extend project timelines, especially where speed and flexibility are required.
• Overlap of powers: Concentrating broad powers in the Director General risks conflicts with the autonomy of owner entities, potentially creating tension between administrative independence and centralised decision-making.

3. Partnership Methods and Risk Allocation:

Article 14 identifies nine partnership methods, including Build-Operate-Transfer, concessions, and management contracts. While this flexibility is positive, the regulation does not precisely define risk allocation between parties, which is central to partnership contracts. Absence of detailed provisions regarding construction, financing, and operational risks may result in contractual imbalances detrimental to either the public or private sector depending on circumstances.

4. Transparency and Competition Guarantees:

The regulation enshrines transparency and publicity in Article 20, requiring media and electronic platform announcements under Article 30. This is a positive step in minimizing favouritism. However, granting an additional 10% advantage to the private sector proposing the project (Article 15) may breach equal opportunity principles, creating preemptive discrimination and weakening free competition, particularly given recent signs of market monopolisation in Libya.

5. Role of Owner Entities and Project Committees:

The regulation assigns owner entities responsibilities for study preparation, contract proposals, and project monitoring (Article 17) and establishes multi-disciplinary project committees (Article 18). These provisions aim to balance the authority of the centralised PPP Authority and the independence of owner entities. However, overlapping powers may lead to dual oversight, slowing implementation and raising concerns about transparency and integrity. Clear delineation of responsibilities is essential to prevent institutional conflict.

6. Environmental and Social Considerations:

Article 4 emphasises environmental risk assessment and service quality, reflecting awareness of sustainable development. Yet, the absence of detailed requirements binding private partners to produce environmental and social impact reports weakens practical enforcement, particularly given Libya’s fragile environmental monitoring capacity.

7. Monitoring Mechanisms and Sanctions:

Despite granting wide powers to the authority about approval and termination (Articles 6 and 8), the regulation lacks a clear sanctioning framework for breaches by private partners, relying instead on general legislative references. The unique nature of partnership contracts necessitates a dedicated sanctions system (overdue fines, guarantee forfeiture, early termination) to ensure continuity of public services.

Conclusion and Recommendations:

Considering the above, the PPP regulation stands for an important legislative step toward proving a modern legal mechanism for infrastructure development and economic growth. However, in its current form, it raises several points for consideration:

1. Clearer legal provisions for risk allocation.
2. Revision of exceptions about scope.
3. Reduction of bureaucratic complexity between the Authority and committees.
4. Reconsideration of the 10% advantage to preserve competitive principles.
5. Incorporation of specific sanctions for partnership contract breaches.
6. Strengthening mandatory environmental and social obligations.

Implementing these recommendations will ensure that public-private partnership contracts evolve from mere regulatory texts into practical tools for achieving sustainable development and sound governance in Libya.