UNCITRALThird International Colloquium on Public-Private Partnerships (PPPs) - PowerPoint Presentation

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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