Issuance of Usufruct Regulations and Environmental Permits Regulations at SEZAD

July 25, 2015

 H.E. Yahya bin Said bin Abdullah Al Jabri, Chairman of Duqm Special Economic Zone Authority (SEZAD), issued two decisions pertaining to the issuance of Usufruct Regulations and Environmental Permits Regulations at SEZAD. These Regulations shall come into effect from Monday, July 27, 2015, after they are published in the official gazette on Sunday 26th July 2015. The issuance of these two Regulations comes in implementation of the Royal Decrees related to SEZD (Duqm Special Economic Zone). 

The Environmental Permits Regulations has allowed projects at SEZD a period of a calendar year to meet the obligatory requirements to obtain these permits. 
Regulations of the Usufruct of Land Owned by the State
Usufruct Regulations stipulate that SEZAD is the only authorized party to license the usufruct of land owned by the State within SEZD, and that no party or individual shall take advantage of said lands without obtaining a prior usufruct permit from SEZAD. The Regulation also stipulates that the usufruct of these lands will be in exchange of a remuneration specified by SEZAD’s Board of Directors after obtaining the approval of the Ministry of Finance, in order for the project to commence or expand its operations, or to build residential buildings for the project’s employees. Moreover, licensing the usufruct of the aforementioned lands to government authorities, places of worship, NGOs, and charities shall be in exchange of a nominal sum or with waiver of the remuneration whatsoever, as decided by SEZAD’s Board of Directors and after obtaining the approval of the Ministry of Finance. 
The Regulation emphasized that the right to usufruct is an in rem temporary right, which expires with the conclusion of the specified period, or with the expiration of the project, whichever occurs earlier. The Regulations explained that the right to usufruct of lands owned by the State is valid for the period of the operations and shall not exceed 50 calendar years, subject to renewal upon the beneficiary’s request and SEZAD’s approval.
The Regulation stated the rights and obligations of SEZAD and the beneficiary, pointing out that SEZAD shall commit to providing the land subject to the right of usufruct to the beneficiary free of any rights that might obstruct the beneficiary’s right, according to what is agreed upon in the usufruct agreement. In addition, the beneficiary shall register the right to usufruct and all actions taken pertaining to this right, whether by waiving such right to another or by mortgaging it to SEZAD. Moreover, the beneficiary shall surrender the land to SEZAD in its original condition and shall remove from it all buildings, facilities or waste, unless agreed otherwise. 
Environmental Permits Regulation
The Regulation of Environmental Permits confirmed the importance of preserving the environment to all projects that are being set up at SEZD, and confirmed that SEZAD is the only authorized party to issue environmental permits and to take all necessary measures pertaining to the environment. 
The Regulation explained that projects should not commence or modify their operations before obtaining an environmental permit from SEZAD, and emphasized that SEZAD shall only issue environmental permits to projects after verifying the projects’ fulfillment of all obligatory requirements according to the Law and this Regulation.
SEZAD - according to the provisions of this Regulation - shall issue a preliminary environmental permit, which is granted prior to the commencement of construction, this permit is valid for one year subject to renewal for a similar period or periods. Additionally, SEZAD shall issue the final environmental permit after the completion of construction activities; this permit shall be valid for a period of two calendar years, subject to renewal for a similar period or periods. Moreover, SEZAD may issue temporary environmental permits for temporary projects and infrastructure projects and their supplementary projects, and these permits shall be valid for one year subject to renewal. 
This Regulation stated that SEZAD has the right to conduct required on-site inspections in all stages of the project, in order to verify adherence to prescribed environmental requirements and standards. 
The Regulation also stipulate that SEZAD has the right to conduct field inspections on projects to verify their adherence to the Law, this regulation and any other environmental standards and requirements specified by SEZAD. The project must be notified three days prior to conducting periodic inspections and follow-up inspections which are conducted to verify the correction of environmental violations recorded in the periodic report within the period specified by SEZAD, however, spot checks are to be decided by SEZAD. 
In the event wherein a project violates its specified obligations according to the Law, this Regulation or any other decisions and directives issued by SEZAD, the Regulation stipulates that SEZAD may take one or more of the following measures:
  1. Warn and notify the project to correct the situation within a specified period. 
  2. Impose an administrative fine not exceeding (200,000) O.R. 
  3. Suspend the project’s operations for a period not exceeding (6) months. 
  4. Cancellation of the environmental permit.
SEZAD may not suspend the project’s operations or cancel its environmental permit until after the project has been warned and notified of the recorded violations, provide the project with a specified period to correct these violations, and the expiration of said period