Enhancing Public-Private Partnerships in Infrastructure Projects: Future Proposals

1. UNCITRALThird International Colloquium on Public-Private Partnerships (PPPs)23-24 October 2017, Vienna Experts for Chapter IV October 2017

2. PROPOSALS FOR CHAPTER IV 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 issues • What contract(s) should be covered? • Parties (groups of owners) • Different project models • Different risk constructs

3. PROPOSALS FOR CHAPTER IV 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 list • Role of “model provisions” • Party autonomy and/or legal prescription • Core terms and conditions (existence or content)? • “Boilerplate clauses”

4. PROPOSALS FOR CHAPTER IV Possible future work on PPPs • Governing law - Legislative Recommendation 41, • Model Provision 29 • Explicit choice of law for project agreement • Does it cover dispute settlement? • Other contracts for the project? • Could the recommendations be shortened • Too descriptive? • Any further need for revision?

5. PROPOSALS FOR CHAPTER IV 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 framework • eg approvals process

6. PROPOSALS FOR CHAPTER IV 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 activity • Associated activities?

7. PROPOSALS FOR CHAPTER IV Possible future work on PPPs Ownership of assets- Legislative Recommendation 44-5, Model Provisions 31-33 • Authority to transfer ownership • Clarity on ownership of assets • Definition(s) of “ownership” • Third parties • Handover of assets (end of project) • Civil/Administrative law restrictions? • Granting all necessary rights • Easements (variants) • The project site

8. PROPOSALS FOR CHAPTER IV 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 authority • Direct payments • Shadow tolls • – poor track record, so as exceptional arrangements? • Purchase commitments

9. PROPOSALS FOR CHAPTER IV 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 36-37 • Amendments?

10. PROPOSALS FOR CHAPTER IV Possible future work on PPPs Construction works - Legislative Recommendation 52 • Interaction with planning and procurement process • Functional specifications • Variations • Responsibility for design obligation • Ensuring responsibility for meeting obligations on design and technical standards • Monitoring and possibility of suspension • Quality guarantees (mandatory, negotiable)

11. PROPOSALS FOR CHAPTER IV 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 parties • Continuity of service • Resilience • Transparency and disclosure • Open contracting/key terms • Rules by concessionaire require regulatory agency or contracting authority approval

12. PROPOSALS FOR CHAPTER IV Possible future work on PPPs Other operational issues • Expand guidance to include • Subcontracting arrangements and liability • Procedures for reporting obligations • Procedures for monitoring the concessionaire’s performance, controls and oversight • Role of Auditing/Oversight Agency • Third parties’ access to the reports

13. PROPOSALS FOR CHAPTER IV Possible future work on PPPs General contractual arrangements - Legislative Recommendations 56-60 • Expand to include new provisions on • Refinancing • Operational health, safety and environmental standards • Contract management • Joint liability and subcontractor arrangements • Performance bonds, guarantees and insurance obligations • Liabilities and exclusions

14. PROPOSALS FOR CHAPTER IV 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 concerns • New provisions to cover • All circumstances for modification of contracts during their term • When modifications are allowed • Notice provisions • Model risk matrices • Negotiating changes

15. PROPOSALS FOR CHAPTER IV 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

16. PROPOSALS FOR CHAPTER IV 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 42 • Any need for revision?