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Generally, refinancing is not considered a downside risk but an upside benefit. When the project performs well, the private partner will have the ability to renegotiate the debt on better terms or refinance the debt, including an increase in the debt level so as to amortize share capital early (“...
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This risk refers to the risk for the public partner of a worsening in the performance of the project if the new shareholder (when there is a change in control) is not as capable as, and does not have the capacity, of the original partner.
It is common practice to require the private partner to...
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The risk of changes in law refers to the risk of changes that may affect the project outcome, impacting on the costs (capital costs by means of new investments) or current operating costs (higher maintenance costs or higher operating costs).
Law is broadly defined for this purpose as laws,...
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Setting aside the potential limits established by the procurement regulations in a number of countries, changes in scope of works (changing the design prescriptions) and changes in service requirements are always a risk event to be allocated clearly to the public partner.
This is one of the areas...
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Force majeure has been introduced in this chapter (see section 5.6).
As described in the referred section, force majeure may have different meanings (and therefore a different scope in terms of events included within the category or general term) in different jurisdictions, and it may even be a...
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Vandalism is the risk of intentioned acts against the asset or parts of the asset. Generally, vandalism is a risk to be allocated to the private partner, as it is the economic owner of the asset and as such has the first responsibility to protect the asset’s physical and operational state.
However...
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A risk originally insurable (at the inception of the contract), and for which a requirement to be so insured has been included in the contract, may become uninsurable during the life of the contract. Unless specifically imputable to the private partner, this risk (of becoming uninsurable) should...
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From the perspective of the public partner, early termination risk is mainly a budgetary risk (in addition to the concern of how the service will be provided after the termination, at least until the private partner is replaced by a new contractor) which relates to the ability to meet the...
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Body of Knowledge:
Tendering and Awarding the Contract
This phase covers the period from the launching of the project to the point of financial close. This chapter assumes that the government has chosen to tender the project, rather than negotiating directly with a potential private sector contractor. The benefits of choosing a tender process are...
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Body of Knowledge:
Tendering and Awarding the Contract
During the previous phase, the contract structure was developed (with particular attention to financial and risk elements), the tender package was drafted, and authorization was sought to launch the tender process. See figure 6.1.
This phase covers the period from the launch of the project (which...
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Body of Knowledge:
Tendering and Awarding the Contract
The objectives of this phase are as follows:
To conduct a smooth procurement process and avoid interruptions and re-scheduling.
To deliver a contract that will demonstrate Value for Money (VfM) and will benefit both parties.
To secure a prompt, rapid, and effective approval for signature.
To...
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Body of Knowledge:
Tendering and Awarding the Contract
Most of the features and characteristics of the tender process will be the same as in any public procurement process, but some stages and steps have specific characteristics and features. Special considerations inherent to the particular complexities of PPPs are listed below.
Time to prepare and...
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Body of Knowledge:
Tendering and Awarding the Contract
Generally, there are four main stages into which any tender process may be divided.
Pre-qualification (in open tenders with a pre-qualification stage) or short listing (in a process with a short listing or pre-selection of candidates).
Bid period – from launching through bid submission or...
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Body of Knowledge:
Tendering and Awarding the Contract
As introduced in section 2 of chapter 5, it is essential to give the bidders sufficient time to prepare a sound and high quality offer. Especially in open tender models, one of the common pitfalls in a PPP procurement is that the procuring authority allows bidders insufficient time for this work....
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Body of Knowledge:
Tendering and Awarding the Contract
The following section applies to any open tender process, including those with a previous pre-qualification phase. In processes with such a pre-qualification phase, the RFP is only issued when the qualification process has been concluded.
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Body of Knowledge:
Tendering and Awarding the Contract
Launching is the milestone that triggers the tender process. Tender documents are published through standard government processes, often in the official government bulletin or journal, on a centralized procurement website, or in regional or national newspapers.
Sometimes, in the case of procurement...
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Body of Knowledge:
Tendering and Awarding the Contract
The bid stage occurs with the issue of an invitation to tender to the deadline for bid submission.
This stage is, by definition, a private sector stage. During this time, prospective bidders assess the project and the proposed contract, and prepare their bids (appendix 6A explains the bid...
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Body of Knowledge:
Tendering and Awarding the Contract
It is good practice for the procuring authority to allow requests for clarification of the contract and the RFP, but the procuring authority should retain discretion about whether to respond. The procuring authority should provide a response wherever this will assist bidders to provide a better bid...
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Body of Knowledge:
Tendering and Awarding the Contract
As a result of questions asked by bidders through the clarification process, it may become apparent that the procuring authority needs to materially change aspects of the contract, tender requirements, or criteria.
Conducting a proper appraisal and structuring/drafting process, through meaningful...
