2324 October 2017 Vienna Experts for Chapter IV October 2017 Possible future work on PPPs Scope of Chapter Construction and operation of infrastructure legislative framework and project agreements ID: 739811
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UNCITRALThird International Colloquium on Public-Private Partnerships (PPPs)23-24 October 2017, Vienna
Experts for Chapter IV
October 2017Slide2
Possible future work on PPPs
Scope of Chapter:
Construction and operation of infrastructure: legislative framework and project agreement(s)
General remarks – project agreement(s)Terminology issuesWhat contract(s) should be covered? Parties (groups of owners)Different project modelsDifferent risk constructs
PROPOSALS FOR CHAPTER IVSlide3
Possible future work on PPPs
Contents of project agreements
- Legislative Recommendation 40,
Model Provision 28“The concession contract shall provide for such matters as the parties deem appropriate”Illustrative listRole of “model provisions”
Party autonomy and/or legal prescriptionCore terms and conditions (existence or content)?“Boilerplate clauses”
PROPOSALS FOR CHAPTER IVSlide4
Possible future work on PPPs
Governing law -
Legislative Recommendation 41,
Model Provision 29Explicit choice of law for project agreementDoes it cover dispute settlement?Other contracts for the project?Could the recommendations be shortenedToo descriptive?
Any further need for revision?
PROPOSALS FOR CHAPTER IVSlide5
Possible future work on PPPs
Conclusion of project agreement
Need for explicit legislative provision on procedures?
Reduce time and costs“Final negotiations” – scope?Interaction with legislative framework for planning, institutional frameworkeg approvals process
PROPOSALS FOR CHAPTER IVSlide6
Possible future work on PPPs
Organization of project partner - Legislative Recommendations 42-43, Model Provision 30
Mandatory seat in host country for (new) project company?
Time-frame for establishing project company?Permitted scope of activityAssociated activities?
PROPOSALS FOR CHAPTER IVSlide7
Possible future work on PPPs
Ownership of assets- Legislative Recommendation 44-5, Model Provisions 31-33
Authority to transfer ownership
Clarity on ownership of assetsDefinition(s) of “ownership”Third partiesHandover of assets (end of project)Civil/Administrative law restrictions?
Granting all necessary rightsEasements (variants)The project site
PROPOSALS FOR CHAPTER IVSlide8
Possible future work on PPPs
Financial arrangements - Legislative Recommendations 46-49, Model Provisions 34-35
Tariffs
Who may change them? Conditions?Government control? Competition?Financial obligations of the contracting authorityDirect paymentsShadow tolls
– poor track record, so as exceptional arrangements?Purchase commitments
PROPOSALS FOR CHAPTER IVSlide9
Possible future work on PPPs
Security interests – Legislative Recommendation 49, Model Provision 35
Amendments?
Assignment and transfer of controlling interest/concession - Legislative Recommendations 50-51, Model Provisions 36-37Amendments?
PROPOSALS FOR CHAPTER IVSlide10
Possible future work on PPPs
Construction works - Legislative Recommendation 52
Interaction with planning and procurement process
Functional specificationsVariationsResponsibility for design obligationEnsuring responsibility for meeting obligations on design and technical standardsMonitoring and possibility of suspension
Quality guarantees (mandatory, negotiable)
PROPOSALS FOR CHAPTER IVSlide11
Possible future work on PPPs
Operation of Infrastructure - Legislative Recommendations 53-55, Model Provision 38
Performance standards – to become mandatory
Solutions where satisfaction is measured by third partiesContinuity of serviceResilienceTransparency and disclosureOpen contracting/key terms
Rules by concessionaire require regulatory agency or contracting authority approval
PROPOSALS FOR CHAPTER IVSlide12
Possible future work on PPPs
Other operational issues
Expand guidance to include
Subcontracting arrangements and liabilityProcedures for reporting obligationsProcedures for monitoring the concessionaire’s performance, controls and oversightRole of Auditing/Oversight AgencyThird parties’ access to the reports
PROPOSALS FOR CHAPTER IVSlide13
Possible future work on PPPs
General contractual arrangements - Legislative Recommendations 56-60
Expand to include new provisions on
RefinancingOperational health, safety and environmental standardsContract managementJoint liability and subcontractor arrangementsPerformance bonds, guarantees and insurance obligations
Liabilities and exclusions
PROPOSALS FOR CHAPTER IVSlide14
Possible future work on PPPs
Legislative and regulatory changes and changes in economic conditions - Legislative Recommendations 58(c), Model Provisions 39-40
Revision of project agreement
Governance/abuse concernsNew provisions to coverAll circumstances for modification of contracts during their termWhen modifications are allowedNotice provisions
Model risk matricesNegotiating changes
PROPOSALS FOR CHAPTER IVSlide15
Possible future work on PPPs
Legislative and regulatory changes and changes in economic conditions - Legislative Recommendations 58(c), Model Provisions 39-40 (continued)
Consequences of change
Refinancing benefits to be split?“Rebalancing the contract” Force majeure
PROPOSALS FOR CHAPTER IVSlide16
Possible future work on PPPs
Step-in rights for the contracting authority
- Legislative Recommendation 59, Model Provision 41
Any need for revision?Step-in rights for the lenders - Legislative Recommendation 60, Model Provision 42Any need for revision?
PROPOSALS FOR CHAPTER IV