Region: East Asia and Pacific
Keywords: Legal Framework
Varanasi Development Authority (VDA) and concessionaire
RFP - evaluation of financial bid - Upfront land premium payable in 10 equal annual instalments starting fourth year onwards ( 3 years moratorium) from the date of the signing of the Concession agreement. The proposal of the bidder quoting the highest upfront land premium shall be considered as the proposal having highest financial score.
Draft concession agreement
Concessionaire to develop a mixed use commercial and multi-level parking in Varanasi on Design, Build, Finance, Operate and Transfer PPP basis – in accordance with applicable laws. Minimum requirements:
Area equivalent to 50% of the total constructed parking area may be used for commercial, office and Recreational purposes for which parking provision will have to be made.
Duration – 35 years (can be renewed for 30 year durations up to total of 90 years)
Parking charges to be determined by concessionaire within the maximum permitted
Concessionaire to obtain all permits
Concessionaire permitted to mortgage up to 20% of land for raising finance.
Concessionaire to pay VDA premium on land
Contract specifies certain requirements for the car parks.
VDA to provide the project site free of encumbrances (10).
Construction period – for reasons not attributable to concessionaire, delays result in an extension of time (quite broadly drafted)(11.4)
Concessionaire not permitted to make changes of ownership other than with approval of VDA and only after initial period (relatively standard provision)
Representations and warranties – there are most of the standard provisions but there are also some reps on the part of the concessionaire which should in fact be covenants/ undertakings and be in a different section
Insurance provisions are relatively short – may also want to think about need to have VDA as co-insured?
Force Majeure – relatively standard FM events clause – private sector carries own costs in event of FM and so would need to look at insurance carefully
Termination – events that give rise to a termination event for default of concessionaire are quite broad and could include relatively minor defaults as well as major defaults. In such case the project site and all construction is transferred to VDA with no compensation – this is might be a difficult provision to get finance against. It is not known whether this provision has been changed prior to signature. There is no provision setting out termination events in case of authority default or termination in event of force majeure but there is a specification that in such a case of early termination concessionaire will be compensated its losses (to be determined by arbitrator in case of dispute).
Dispute resolution – relatively standard provision – conciliation and arbitration – arbitration local and under Conciliation and Arbitration Act
Governing law – laws of India
Boilerplate clauses - standard
There is no provision for change of scope or, as noted above, termination for VDA default or force majeure – otherwise there are quite a few standard provisions
Development_Underground_Multilevel_Parking_ Commercial_Complex _Varanasi_EN_2009
Updated: March 28, 2021