Decree

Arabic

Issued by Transport General Authority Decision 107/46/1

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1․ Preamble

1․1 Review date:

Date	Version	Amendment details
October 2024	1	Version one

1․2 Main document:

This document must be read in conjunction with Guideline 01: Main Document, which contains all definitions and standards used in the set of guides and guidance documents․

1․3 Definitions:

The following phrases and terms have—wherever mentioned in this guide—the meaning assigned to each of them, unless the context requires otherwise:

Authority: Transport General Authority․

Local content: The total spending in the Kingdom through the participation of Saudi elements in the workforce, goods, services, assets, technology, and the like․

Local content percentage: A percentage indicating the amount of spending on Saudi elements in the contract or establishment, as compared to the total spending on either․

Baseline: The local content percentage in the commercial establishment when it submits an application for a license or license renewal․

Local content certificate: A document issued by the Local Content and Government Procurement Authority showing the baseline of an establishment․

Guideline: Local Content Percentage Template: A guide issued by the Local Content and Government Procurement Authority and published on its website, detailing the mechanism for filling out the local content percentage template (baseline)․

2․ Introduction

2․1 Objective:

This guide aims to explain the methodologies and tools for measuring local content and developing it so that it becomes the main reference for coordinating local content development efforts in the railway transport sector in the Kingdom, that is through clarifying the requirements necessary to measure the local content baseline for establishments operating in the sector, in addition to clarifying the local content requirements for companies operating in the railway transport sector, in a manner that does not conflict with the applicable laws and regulations․

The Transport General Authority and the Local Content and Government Procurement Authority seek to develop local content in the railway transport sector, by aligning the targeted plans to increase local content submitted by railway service providers with the strategic objectives of the railway transport sector and following up on their implementation with the aim of enhancing the contribution of local content to the national economy in a sustainable manner․

2․2 Scope of Operation

The guide and directives in this regard apply to:

(a) Railway service providers licensed by the authority and whose license has at least 12 months remaining․

(b) Railway service providers wishing to renew an existing license for a period not less than 12 months․

(c) Issuance of a new license for a period of not less than 12 months․

Railway services subject to the scope of this guide include the following activities:

1․ Operation and management of infrastructure․

2‏․ Maintenance of railway infrastructure components․

3․ Management and operation of container handling areas connected to the network․

4․ Operation of stations․

5․ Carriage of passengers by railways between cities․

6․ Carriage of passengers by railways within cities․

7․ Carriage of goods by railways within cities․

8․ Carriage of goods by railways between cities․

9․ Maintenance of trains, carriages, and equipment․

The requirements set out in this guide are without prejudice to any local content obligations of the licensee under any other legal instruments․

3․ Pillars for measuring local content percentage

The Local Content and Government Procurement Authority has created a methodology to measure the local content percentage, and that is through determining the total spending through the participation of Saudi elements in goods and services, employee compensation, asset depreciation, capacity development, and the like․^[1]

The methodology for measuring the local content percentage includes four main pillars:

The Local Content and Government Procurement Authority has created a methodology to measure the local content percentage, and this is done through determining the total spending through the participation of Saudi elements in goods and services, employee compensation, asset depreciation, capacity development, and the like․

The methodology for measuring the local content percentage includes four main pillars:

Local content percentage	Local content in goods and services Net cost of goods and services	Local content in asset depreciation Net cost of asset depreciation
	Local content in capabilities development Net cost of capabilities development	Local content in employee compensation Net employee compensation

4․ Measuring local content and its mechanisms

4․1 Measuring the baseline of the establishments:

The baseline of an establishment is measured based on the pillars mentioned in section 3 of this guide, using a template—under specific controls—that enables the establishment to calculate its local content percentage, and measure the details of its historical local content performance for the period of the last completed financial year․^[2]

If an establishment wishes to obtain a local content certificate, it shall visit one of the audit offices approved by the Local Content and Government Procurement Authority to review the form and complete the subsequent procedures․

5․ Local content requirements in Transport General Authority licenses

The requirements related to local content must be submitted to the Transport General Authority in accordance with the scope of application of the guide as follows:

– Local content certificate (baseline at the level of the establishment) as described in section 4․1 of the guide․

– A plan for nationalising jobs related to railway transport sector activities, at the baseline level of the establishment, as per the license period, provided that it includes—at least—the following details:

(a) Job titles in the establishment․

(b) Current nationalisation percentage for each job title․

(c) Targeted nationalisation percentage for each job title․

– A plan to develop local content in goods and services and to develop the capabilities of the establishment, as per the license period․ This must be explained by the following mechanism, including but not limited to:

‏(a) A list of goods that represent at least 70% of the total projected spending on goods․

(b) A list of services that represent at least 70% of the total projected spending on services․

(c) The current and expected country of origin of the goods mentioned in point (a)

(d) The current and expected country of origin of the service providers mentioned in point (b)․

(e) The current and projected volume of spending on training Saudi employees․

(f) The current and projected volume of spending on research and development․

(g) The current and projected spending on supplier development․

6․ Railway project licensees

Licensees, in accordance with the scope of this guide, shall carry out the following:

1․ Developing internal policies and procedures to contribute to raising the local content percentage․

2․ Submitting an annual report on the local content percentage, which was measured based on the methodology approved by the Local Content and Government Procurement Authority․ The annual report must include the following:

(a) All efforts related to developing local content that the establishment worked on during the period․

(b) Annual reports must be submitted one year after submitting the plan for nationalising jobs related to railway transport sector activities, the plan for developing local content in goods and services, and developing capabilities․

3․ A responsible person must be appointed to represent the licensee as a focal point between the entity and the authority in matters related to local content․ This person must be well qualified and at an appropriate level to bear responsibility for the local content requirements of the licensee․

7․ Improving the performance of licensees

If the annual report submitted by the licensee shows so, the authority may carry out the following:

1․ In the event that the performance of the railway service provider in local content is noticeably weak compared to its peers, the Transport General Authority shall provide support to the licensee, by holding meetings and discussing this matter to identify the elements and improvement inputs that can be made to achieve the necessary improvements․

2․ In the event that performance continues to be below the standard, the Transport General Transport Authority may coordinate with the licensee or project owner and propose or impose a plan to improve the local content performance of the licensee, in coordination with the Local Content and Government Procurement Authority․

3․ The Transport General Authority shall monitor the process of delivering and implementing the performance improvement plan․

Annexes

Local content concept

https://lcgpa․gov․sa/ar/LocalContent/Pages/default․aspx

Templates and guidelines for measuring local content, and a list of audit offices

https://lcgpa․gov․sa/ar/LocalContent/Pages/Measure-Local-Content․aspx

[1]The local content concept and measurement pillars can be viewed on the website of the Local Content and Government Procurement Authority․

[2]The local content measurement template and instructions for filling out the form, in addition to the list of approved audit offices, can be viewed on the local content measurement templates and guidelines section and the audit offices section on the website of the Local Content and Government Procurement Authority․

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Published in Umm Al-Qura 5062 issued on 27 December 2024.

Arabic

Issued by Board of Directors Decision D/2/25/2024 dated 29 Jumada Al-Awwal 1446 [1 December 2024]

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Article 1

The following words and phrases—wherever they appear in these controls—have the meanings assigned to each of them, unless the context requires otherwise:

Kingdom: The Kingdom of Saudi Arabia.

Controls: The Controls for Government Entities Renting Real Estate Outside the Kingdom of Saudi Arabia.

Authority: The State Properties General Authority.

Government entities: Ministries, government agencies, authorities, public institutions and establishments, and agencies with independent public legal personality desiring to rent real estate outside the Kingdom.

Head of the government entity: A minister, a chairman of the board of directors, or a senior official in a government entity that does not have a chairman of the board of directors, or his authorised representative.

Government entity personnel: Whoever works for a government entity or provides a service to it on a permanent or temporary basis, including personnel of diplomatic missions.

Mission: An embassy, a permanent delegation to international or regional organizations, a consulate, or the offices abroad that are subordinate to the Ministry of Foreign Affairs.

Head of the mission: Whoever is selected to work in this capacity.

Host state: The state in which the real estate to be rented is located.

Lessor: The owner of the real estate or the person who has the right to rent it in accordance with the laws of the host state.

Renewal: An agreement between the parties to the contract to re-sign the expired contract, or one that is about to expire, under the same terms and conditions of the previous contract or with amendments to it.

Article 2

A government entity shall not rent real estate outside the Kingdom except when there is a serious need for it after obtaining the approval of the authority, while complying with the following:

1․ That the government entity does not have real estate that meets its needs, is usable, and is not being utilized.

2․ That the authority does not have real estate that meets the needs of the government entity.

3․ That there is no vacant space within state-owned real estate in the same city that can be used to meet the needs of the government entity, after obtaining the approval of the government entity utilizing the real estate, and without prejudice to the work of any other government entity sharing the same real estate.

4․ That the government entity has the required financial approval to rent and utilize the real estate.

5․ That the government entity obtains the approval of the Ministry of Foreign Affairs if it desires to rent an office or a separate building outside the headquarters of a mission.

6․ Considering the balance between the interest of buying and renting in accordance with the plan for real estate needs of the government entity outside the Kingdom.

Article 3

Except for those whose housing is stipulated by the laws, housing for government entity personnel is not considered a need that permits renting. If the purpose of renting is to house personnel whose housing is required by the laws, then the amounts paid by the government entity for rent must not exceed the cash accommodation stipend for the beneficiary at the time of renting, extension, or renewal. Matters for which royal decrees, orders, or decisions have been issued are exempted from this.

Article 4

The following conditions must be met in real estate intended to be rented:

1․ That it is free from construction defects.

2․ That it meets the required licensing requirements from the competent entities in the host state.

3․ That its specifications are consistent with the needs of the government entity.

4․ That the area of the real estate required to be rented is within the limits of the needs of the government entity desiring to rent in accordance with the standards approved by the authority.

5․ That it is insured by the lessor—if available—in accordance with the laws of the host state.

6․ That there is no violation issued against it from any competent entity that affects its use, and that it is not the subject of a dispute.

7․ That it does not belong to a personnel of the authority or the government entity, to a relative of his up to the third degree, or to anyone who has a direct influence on the rental process.

8․ That the real estate does not belong to a person whose dealing with is prohibited in accordance with the laws, regulations, and decisions issued by the relevant entities in the Kingdom or the host state.

Article 5

1․ A government entity shall submit an application to rent real estate outside the Kingdom, accompanied by financial appropriations and approvals—if any—in accordance with the form prepared for this purpose, which must include the following:

(a) The type of real estate required and its location.

(b) The purpose of renting the real estate.

(c) The duration of real estate rental.

(d) Technical and security specifications of the real estate.

2․ ‏The application must be returned to the government entity for correction or completion of documents within 15 working days.

3․ ‏The authority shall review the rental application and issue its decision to approve it after coordination with the entities desiring to rent in the same city—to avoid competition among them and to achieve efficiency in the rental process—or reject it, or offer a state-owned real estate that meets the needs of the government entity, within a period not exceeding 15 working days from the date of completion of the application, and the authority may extend it for a similar period. In the event that the authority rejects the application, the decision must be reasoned.

Article 6

1․ After the initial approval of the authority of the rental application, the government entity shall provide offers from marketing and brokerage companies and real estate consultancies, with a minimum of three offers and within the limits of its financial appropriations. The government entity shall exercise the necessary professional care when providing the offers, and the government agency may—as an exception—suffice with submitting one offer that is accompanied by reasons.

2․ The authority may provide additional offers or alternative offers to those submitted by a government entity, and may seek assistance from whomever it deems to be of expertise and competence from outside its personnel.

3․ The authority shall review the offers and verify their compatibility with the needs of the government entity.

4․ It is permitted for offers to include basic amenities, furnishing, and technical and security requirements that enable the government entity to use the real estate.

5․ ‏The authority shall issue its approval of the appropriate offers within a period not exceeding 15 working days from the date of receipt of the offers, and the authority may extend this period for a similar period. The authority shall notify the government entity of the decision in order to complete the legal procedures.

Article 7

1․ ‏The government entity shall form a technical committee with no less than three members.

2‏. The committee shall—in coordination with the head of the mission or his authorised representative—examine the approved offers in order to evaluate them from a technical, security, and financial perspective, shall ensure their suitability to the needs of the government entity, shall recommend the appropriate ones of them, and shall prepare a report on this within a period not exceeding 30 days from the date of the formation of the committee.

3․ The committee shall negotiate with real estate owners in order to reach the best possible price offer in line with the prevailing prices in the city.

4․ The government entity shall submit the report—provided in paragraph 2 of this article—to the head of the government entity or his authorised representative in order to complete the legal procedures.

Article 8

The government entity shall communicate with the relevant security agencies in to order ensure that the selected real estate does not belong to persons or entities prohibited to deal with.

Article 9

1․ ‏The contract must be for a period not exceeding five years, and automatically renews for a similar period or periods—after the approval of the authority—with a maximum of 20 years from the date of signing the contract, unless one party notifies the other of its unwillingness to renew, at least 60 days before the end date of the contract, taking into account the laws of the host state regarding the provisions for notifying unwillingness to renew.

2․ As an exception to paragraph 1 of this article in cases of necessity determined by the government entity and in accordance with reasons accepted by the authority, it is permitted to renew the contract for additional periods exceeding 20 years, but not exceeding 30 years.

3․ The government entity shall notify the authority of its desire to renew or terminate the contract at least 120 days before the end date of the contract, in accordance with the form prepared for this purpose.

Article 10

1․ The head of the government entity or his authorised representative shall sign the contract in accordance with the financial appropriations.

2․ ‏The government entity shall manage the contract and pay its value.

3‏. The contract value must be paid in equal installments at the beginning of each contractual year of the contract term or according to the terms of the contract.

4․ The government entity shall provide the authority with a copy of the contract, and any amendment, renewal, or termination of it, in accordance with the controls.

5․ ‏The government entity or its authorized representative shall prepare a report upon receipt and delivery of the real estate, in accordance with the form prepared for this purpose, which must include the condition of the real estate and its amenities, and the government entity shall provide the authority with a copy of these reports within ten working days from the date of receipt or delivery of the real estate.

Article 11

The government entity may provide temporary headquarters for the mission or the technical offices affiliated with it or housing for the heads of missions or officials, and it may benefit from the options available in the host state, such as offices, furnished residential units, hotel apartments, and hotels, provided that the real estate is furnished and ready for use, for a period not exceeding one year, which may be renewed for a similar period after the approval of the head of the government entity within the limits of the financial appropriations of the government entity.

Article 12

Without prejudice to the provisions of the controls and as an exception to article 6, the government entity may directly rent real estate within the limits of the financial appropriations, in the following cases:

1․ Temporary headquarters of the mission or the technical offices affiliated with it or housing for heads of missions or officials.

2․ Permanent headquarters of mission offices or affiliated technical offices, the value of each contract of which does not exceed 300,000 (three hundred thousand) United States dollars annually.

3․ Permanent housing for the head of the mission or officials or for support services such as warehouses, parking lots, and the like, the value of each contract of which does not exceed 50,000 (fifty thousand) United States dollars annually.

Article 13

1․ Without prejudice to the provisions of the controls, two or more government entities may—after obtaining the approval of the authority‏—rent a single real estate that meets their needs in the host state in accordance with the form prepared for this purpose.

2․ The government entity shall undertake the procedures for the rental application, provided that the request specifies the area required for each government entity.

3․ The government entity that has the largest area of the rented property shall manage the contract, the costs of public services, and the costs of operating and maintaining the building. If the rented areas are equal, the responsibility must be borne by the entity that rented first.

4․ ‏Each government entity shall bear the costs of the basic amenities of the real estate public services, and the like, according to its area [utilized area ÷ total area] × total costs.

Article 14

1․ The government entity shall, when signing the contract, ensure that it complies with the controls, in a manner that does not conflict with the laws of the host state and prevailing customs, and that it includes the following:

(a) A text whereby the lessor bears the cost of carrying out remedial maintenance (corrective and refurbishment) of the basic amenities of the rented real estate at his own expense, and the lessor must not be compensated or his rent increased for carrying out remedial maintenance works that limit the use of the real estate during the term of the contract.

(b) A text that gives it the right to rescind the contract in the event of force majeure or emergency circumstances.

(c) A text obliging the lessor to bear the value and costs of marketing and brokerage.

(d) A text containing the applicable law.

2․ The government entity may bear—in accordance with the laws of the host state and prevailing customs—the insurance amount, and any fees or taxes resulting from the contract, unless it is exempted from that, under international agreements and treaties to which the Kingdom and the host state are a party.

3․ The government entity may acquire the real estate through a lease-to-own agreement in accordance with the Procedures Governing the Acquisition of Real Estate Outside the Kingdom.

Article 15

The government entity renting the real estate shall submit a periodic report to the authority on the condition of the rented real estate in accordance with the form prepared for this purpose.

Article 16

The procedures stipulated in the controls may be taken electronically.

Article 17

The authority shall issue the forms necessary to implement the provisions provided in the controls.

Article 18

The controls must be published in the official gazette, and come into force from the date of their publication.

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Published in Umm Al-Qura 5068 issued on 7 February 2025.

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Published in Umm Al-Qura 5057 issued on 22 November 2024.

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Published in Umm Al-Qura 5058 issued on 29 November 2024.