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Insights on Project Finance in Qatar

By: Ribal Fattal – Senior Associate

After successfully hosting of the FIFA World Cup Qatar 2022™, Qatar plans to host other major events in the near future, including the AFC Asian Cup 2023, the Formula 1 Qatar Grand Prix 2023, Expo 2023 Doha, the Category A1 International Horticultural Exhibition, and the 2030 Asian Games.

In addition to those events, Qatar is also engaging in other projects such as large-scale energy, oil and gas, infrastructure, construction, leisure and hospitality for, among other purposes, achieving the Qatar National Vision 2030.

Whilst there is no specific law addressing project finance in Qatar, nonetheless, there are provisions that deal with certain aspects of project financing arrangements that may be taken from, inter alia, Law No. 22 of 2004 (Civil Code), Law No. 11 of 2015 (Commercial Companies Law), Law No. 27 of 2006 (Trade Law), Law No. 13 of 2012 (QCB Law), Law No. 8 of 2012 (QFMA Law), Law No. 16 of 2021 (Movable Assets Security Law), and Law No. 12 of 2020 (the PPP Law), in addition to other legislations.

Most project finance arrangements, if not all, require issuing a particular type of security to the lenders. Based on experience, most of the commonly used types in the Qatari market are the assignment of contractual rights (such as receivables), real estate mortgages, pledging of shares, bank account pledges, Letters of Credit, bank guarantees, and Parent Company Guarantees.

Each security pertaining to a project finance arrangement must be considered diligently, and the process of perfecting such security differs depending on its type. For example, the process for pledging of shares in a company not listed on the Qatar Stock Exchange (“QSE”) differs from the process of pledging shares in a company listed on the QSE, although there are some similarities.

Furthermore, the assignment of rights, such as receivables, requires that the acknowledgement by the debtor be a date certain in order for the assignment to be effective vis-à-vis third parties. This means that the instrument of acknowledgement of the assignment of rights has to be notarised before the Notarisation Department at the Ministry of Justice.

The project finance sector in Qatar is relatively mature, but like any project finance arrangement careful due diligence is required, especially by the lenders, to understand the necessary conditions, requirements, steps to be met and procedures to be followed in order to perfect each form of security or collateral granted in lieu of a project financing.