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Pranjal Bora Group Head Luthra & Luthra Law Offices

Risk Management and Contract Structuring for Infrastructure Projects. Pranjal Bora Group Head Luthra & Luthra Law Offices. Project Risk Risk during construction period Risk during operating period Mitigation of risks through adequate provisions in contracts Political Risk

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Pranjal Bora Group Head Luthra & Luthra Law Offices

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  1. Risk Management and Contract Structuring for Infrastructure Projects Pranjal Bora Group Head Luthra & Luthra Law Offices

  2. Project Risk • Risk during construction period • Risk during operating period • Mitigation of risks through adequate provisions in contracts • Political Risk • Political risks in large scale projects may include land acquisition issues and political intervention • Political risks are typically addressed through carefully drafted ‘force majeure’ provisions in project contracts • Also, obtaining requisite permits and approvals, local labour laws, changes in laws are at times viewed as political risks • Certain political, financial and commercial risks coverage may be obtained from export credit agencies

  3. Tendering and pricing • Realistic time frames • Realistic costing • Technical qualification • Precise details – the owner should clearly specify the technical requirements of the project • Close out all deviations from the bid documents at the tendering stage • Lump sum pricing

  4. Bankability Issues • Contractual Risk Allocations • Factors affecting bankability • a fixed completion date; • a fixed completion price; • no or limited technology risk; • output/performance guarantees; • liquidated damages for both delay and performance; • security/guarantees from the contractor and/or its parent company; • caps on liability; and • restrictions on the ability of the contractor to claim extensions of time and additional costs.

  5. Step in Rights/ Cure Rights of Lenders • Direct Agreement • Assignability of sub-contracts in cases of termination • Contractor’s Solvency and Security Packages • Contractors consortium / Single Contractors • Lock in Restriction • Security packages • Advance payment guarantee • Performance guarantee • Parent company guarantee

  6. Contract Structuring • Single consolidated EPC Contract • Split EPC Contracts • Onshore Supply and Services Contract • Offshore Supply and Services Contract • Wrap Contract • Single Point Responsibility

  7. Contract Administration • Organization Structure of the Contractors • Designated representatives • Kick off meetings • Hand over / transition policy • Dynamic policy – ability to improvise

  8. Disputes / Managing Claims • Multi-tier Dispute Resolution Mechanism • Technical Experts • Proper Documentation • Notice Period • Professional and Lawyers having substantial project / construction experience

  9. THANK YOULuthra & LuthraLaw Offices

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