Beruflich Dokumente
Kultur Dokumente
Syed Ahmad Hassan Shah HASSAN KAUNAIN NAFEES Legal Practitioners & Advisers
Perspective
Parties ! ! Private Party local or foreign Government
Nature ! ! ! Concessions BOT, BLT, BOO, BOOT, O&M, TOR PPP more, better, affordable and timely Privatization complete or strategic management or equity stake
Shareholders Agreement
SPONSORS
OFFTAKER
Concession Agreement
SUPPLIER
PROJECT
OPERATOR
O&M Agreement
LENDERS
CONTRACTOR
The 3 Rs
! Risk ! Responsibility ! Reward ! Identification of Risk: ! Project Risk, Political Risk, Economic Risk etc. ! Allocation of Responsibility: ! Initial mitigation measures ! Determination of party obligations ! Sharing of Reward: ! incentive for efficient and economical performance cost plus, rate of return, security for payment
Key Concern #1
! Inadequate or incomplete knowledge or omission to consider relevant information breeds uncertainty of outcome
! Sovereign Immunity ! Integrity Pact Other Risks: ! Political ! Economic ! Environment ! Force Majeure
Allocation of Risks
Risk Type Pre-Construction (Site Availability) Cost overruns (machinery, material) Security Risk Consequence Delay in Start, cross-over impact on other obligations Mitigation Measure Who should procure land? Allocation Government or Investor or Joint Investor
Increase in Project cost Fixed price? (financing); decrease in Turnkey? returns, cash flows & profits Liquidated Damages Stoppage, delays, closure On ground security; Insurance; compensation Reconciliation, mediation, arbitration
Government
Dispute Risk
Joint
Political Risk
Government
! Economic Costs not limited to: ! Mere contract value, or ! Accounting Costs of an entity ! These include Opportunity Costs cost of resources of all interconnected parties money that could have been made by all parties ! Every breach if not remedied is monetized
Key Concern #2
Legal Certainty
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Concluding Concern
If we have paid enough for the wrongdoings of our politicians or the bureaucracy must we now turn to pay for the follies of our courts?