Buses Terminal and Municipal Market of Danlí- El Paraíso, Honduras

Region
Latin America and Caribbean
Country
Honduras
Publication Year
May,2016
Keywords
Transport

 

Parties:

Municipality of Danlí (Department El Paraíso) through the Mayor;La Sociedad Fliefil S.A. y Asociados, S. de R.L. de C.V. (Private Partner); Coalianza, Hondura’s PPP unit, is party to the contract as Arranger of the project .

Main Features: 

Public-private partnership for the design, financing, construction and transfer of the updates to the Danlí- El Paraíso Bus Terminal and Municipal Market space, including 600 commercial market stalls and 20 bus terminals (Clause I.) 

The Private Partner shall pay Coalianza a services provision fee equal to 2% of the contract value (Clause III.22 and XIV.16.)

The value of the contract is L.99,232,126.97 (lempiras), over $4 million US Dollars, approximately (Clause III.13 and V.)

The Private Partner is in charge of land’s physical characteristic and current infrastructure assessment previous to start of construction, and cannot demand additional costs for unknown circumstances of the construction area (Clause V.)

The agreement requires that the financial closing be done within the 6 months after the contract signing. Term that can be extended for another 30 work days. The agreement requires the financial contracts to have a clause in which the lenders have the obligation to notify the contracting entity and Coalianza, in immediate manner, if the financing be rendered ineffective, or the borrower falls in a termination cause (Clause VI.)      

The contract foresees a ten-month construction phase, with a contract period of a total of 14 months (Clause VIII and XV.) In case of additional works needed, and are agreed upon, they cannot surpass a 15% of the budget approved in the Engineer and environmental impact assessment (Clause X.)

There is a clause referred to as “fiscal stability” that indicates that during the term of the contract, this will not be affected by new taxes or increases on the current ones, either municipal or national (Clause XIII.)

The agreement includes guarantees for the completion of the contract and for the quality of construction, in accordance with the technical specifications of the project.

The contract includes a formula for rebalancing financial and economic equilibrium due exclusively to a change in law of public-private partnerships (Clause XXXII.)

There are several monetary penalties in case of breach of specific contractual obligations (Clause XVI.)

Term:

The period of the contract is 14 months from the date of signing (Clause XV.)

The contract can be ceded as long as Coalianza and the contracting entity approves it (Clause XI.)

The contract can be extended up to 30 calendar days only once as long as there is a justified and duly checked cause (Clause XXV.)

Pro-poor features: 

The market stalls will be transferred to private party, for a price that will be agreed on in the transfer agreement, for the construction of the upgrades. Upon completion of the works, the private company will then sell to small and medium enterprises who will own and profit from the commercial space and bus terminal stalls at a price preset by the Municipality. The private party may also rent to SMEs who are not able to purchase the real estate. Once the project is finished the public entity will keep the operation and maintenance of the common areas (Clause XXXI.)

Insurance provisions:

The private partner is required to acquire and maintain several insurance policies in addition to guarantees to support the project (Clause XIX and XX.)

Force Majeure: The FM clause indicates a non-exhaustive list of causes considered as FM events. The contract can be suspended, or partially or totally terminated, when both of the parties find it justified. In cases of natural disasters occurred during the execution of the project, it is the private partner who assumes the costs and should contract the corresponding insurance. It also accrues for termination of the contract (Clause XIV.15 and XXII.)

Termination:

Other than the standard termination causes, the agreement includes early termination of the contract for unjustified abandonment of the work, economic insolvency, force majeure, and when the fulfillment of the contract has turned impossible as a consequence of measures legally taken by the Republic of Honduras government (Clause XVII.)

Dispute Resolution:

The parties can have direct dealings, and when the controversy has not been resolved by this mechanism, it will resolved by conciliation and arbitration (Clause XXI.)

Governing Law:

Honduran Law (Clause XXIII.)

Anti-Corruption: 

There is a clause of no corruption and transparency in the agreement (Clause XXXIII.)

Other interesting features:

smart building, energy savings, ecological handling of solid waste, noise limits during the project`s construction, a system of fire risk management, high environmental and ecofriendly obligations, archeological objects’ protection, and special design for accessibility for persons with disabilities (Clause XXX.)

Related Information:

Tracking Reference:

Reviewed by: Angelica Toro; Sara Sigrist

Last Updated : Wed,2017-07-19