Region: East Asia and Pacific
Keywords: Transport, Rail, Contractual Provisions
This is a standard form Project Deed issued by the Victorian state government for linear infrastructure (e.g. roads, rail) PPP projects, based on an “availability” model.
Key features of the agreement:
- Approvals and land tenure – the State is responsible for obtaining an agreed set of approvals required for the project (determined on a project specific basis), but Project Co is responsible for obtaining all other approvals required to carry out the project. Land acquisition requirements are determined on a project-by-project basis.
- No delay Liquidated Damages – liquidated damages are not payable by Project Co for delay in achieving Commercial Acceptance. Project Co’s only financial exposure is lost service payments during the delay.
- Payments – the State makes a contribution to the project costs after Commercial Acceptance is achieved. The balance of project costs is recovered by Project Co through monthly Service Payment, which is subject to abatement based availability and other KPIs.
- Change in law – the Project Co is generally entitled to pass through cost increases resulting from a change in law (provided it was not foreseeable at the time the project deed was entered into).
- Step in rights – the State has a right to step-in and operate the infrastructure in the event of a Major Default by Project Co and during certain emergencies.
- Ownership and control – ownership of the infrastructure is vested in the State. At the end of the term, control of the infrastructure must be handed back to the State.
- Early termination payment – compensation is payable by the State in the event of early determination (typically calculated with reference to Project Co’s financing costs and equity investment).
The Victorian government publishes a broad range of standard form PPP documents for infrastructure projects on its website.
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Updated: October 25, 2021