“Unsolicited Proposal” Under The Punjab Public Private Partnership Laws 2014

Executive Summary of
“UNSOLICITED PROPOSAL”

under
Punjab Public Private Partnership Act 2014
& Punjab Public Private Partnership Rules 2014

 

WHAT IS AN UNSOLICITED PROPOSAL?

A project proposal submitted by a private party to a Government Agency for a project.

 

WHAT ARE THE COMPONENTS OF AN UNSOLICITED PROPOSAL?

An unsolicited proposal shall consist of:

  • a feasibility study,
  • environmental impact statement,
  • a draft PPP agreement,
  • need for Government support and determination of the public private partnership modalities.

 

WHAT HAPPENS WHEN AN UNSOLICITED PROPOSAL IS SUBMITTED WITH THE GOVERNMENT AGENCY (GA)?

  • GA may request for the submission of an amended or modified proposal with additional information.
  • Within (10) ten days from the receipt of an unsolicited proposal, the GA will require the private party to submit details about legal, technical, managerial and financial capability of the party, as well as the cost of preparing the unsolicited bid with relevant supporting evidence for its consideration.
  • This information shall be submitted to the GA by the party within (15) fifteen days from the receipt of such requirement.
  • Within (15) fifteen days from the receipt of the information (stated above), the GA shall evaluate the unsolicited proposal and may submit the unsolicited proposal together with its recommendations to the PPP Cell which shall seek the input of the Risk Management Unit before submission of the proposal to the PPP Steering Committee for decision.
  • Decision of the PPP Steering Committee shall be communicated in writing by the GA to the party which submitted the proposal within seven days from the receipt of the decision of the Committee.

 

WHAT HAPPENS WHEN AN UNSOLICITED PROPOSAL IS APPROVED?

  • GA shall invite competitive bids for the project identified in the proposal by following the bid procedure (described in detail in sections 13 to 18 of the PPP Act).
  • The party submitting the unsolicited proposal shall not be required to be pre-qualified and may directly participate in the bidding process.
  • GA shall give the party which made the unsolicited proposal five percent additional weightage in technical scoring and first right to match or improve the best bid received in response to the call for bids, if its bid is not the best bid.
  • If the party which submitted the unsolicited bid fails to match the best bid, the GA shall direct the successful bidder to reimburse to the party which submitted the unsolicited proposal the cost of preparing the unsolicited bid.

 

WHAT SHOULD THE PPP AGREEMENT INCLUDE?

The draft PPP agreement must contain the following provisions:

  • type of the project;
  • general terms and conditions of contract;
  • special conditions of contract;
  • scope of works and services to be provided under the project;
  • main technical specifications and performance standards;
  • environmental and safety requirements;
  • implementation milestones and completion date of the project;
  • cost recovery scheme through user levies, including mechanism for their periodical adjustment;
  • performance bonds for construction works and operation;
  • minimum insurance coverage;
  • acceptance tests and procedures;
  • rights and obligations of the parties including risk sharing;
  • type and amount of Government support;
  • transfer of assets, if any, at the conclusion of the term of the PPP agreement;
  • warranty period and procedures after the transfer;
  • requirements and procedure for variations of the PPP agreement;
  • grounds for and effects of termination of the PPP agreement including force majeure;
  • procedures and venue for disputes resolution;
  • financial reporting by the private party; and
  • supervision mechanism of the Government Agency.

 

WHAT ARE THE SPECIFIC REQUIREMENT FOR PROJECT IMPLEMENTATION AND OPERATION?

  • The private party shall prepare a detailed design and implementation plan in accordance with the technical specifications contained in the PPP agreement, and shall submit these to the GA for consent prior to the start of the work.
  • The private party shall post a bond or furnish a bank guarantee, which shall be valid up to the acceptance of the completed works by the GA and for projects which include operation by the private party.
  • The private party shall also post or furnish another performance bond or bank guarantee upon the acceptance of the completed works to guarantee compliance with the operating parameters and standards specified in the PPP agreement.
  • Within (365) three hundred and sixty five days of the signing of the PPP agreement or such other period as is specified in the PPP agreement, the private party shall achieve financial closure for the project.
  • Generally no variations are allowed in the PPP agreement during the implementation and operation of the project. Variation can be made if the following requirements are met:
  • there is no increase in the agreed tariffs except the periodic formula-based tariff adjustments, unless the scope of works or performance standards are increased;
  • there is no reduction in the scope of works or performance standards, fundamental change in the contractual arrangement or extension of the term of the PPP agreement, except in cases of breach by the GA of its obligations;
  • there is no additional government guarantee or increase in the financial exposure of the Government; and
  • the variation in the PPP agreement is necessary due to an unforeseeable event beyond the control of the Government Agency or the private party.

 

WHAT ARE THE DIFFERENT TYPES OF PPP AGREEMENTS UNDER THE PPP ACT?

  • Build-and-Transfer (BT)
  • Build-Lease-and-Transfer (BLT)
  • Build-Operate-and-Transfer (BOT)
  • Build-Own-and-Operate (BOO)
  • Build-Own-Operate-Transfer (BOOT)
  • Build-Transfer-and-Operate (BTO)
  • Contract-Add-and-Operate (CAO)
  • Develop-Operate-and-Transfer (DOT)
  • Rehabilitate-Operate-and-Transfer (ROT)
  • Rehabilitate-Own-and-Operate (ROO)
  • Management Contract (MC)
  • Service Contract (SC)
  • Joint Venture(JV)
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