www.pppinindia.gov.inPPP TOOLKIT
PPP TOOLKIT for Improving PPP
Decision-Making Processes
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Sector: State Highway  |  Module 2: Work through the PPP process

Contract finalisation and award

Once the preferred bidder has been selected the Concession Agreement can be finalised. The procurement will have reached technical closure once the contract is signed.

One of the goals of a well designed RFP is to be sure the bidders are well informed of the requirements, conditions and obligations under the contract. By submitting their bids the bidders have implicitly accepted the defining terms of the contract as set out in the draft Concession Agreement:

  • The draft Concession Agreement will have been included in the RFP and it is expected that its terms are well understood and accepted by bidders.
  • This is particularly so where a model Concession Agreement is used.
  • Bidders will have been given opportunity to comment on the CA during bid preparation (at the pre-bid meeting and in written comments and requests for clarification). The Sponsor should have already incorporated any suggested changes that it found acceptable and sent an updated CA to bidders prior to bid submission.
  • The evaluation parameters will also have been clearly spelt out in the RFP and bidders should have prepared their bids to fit within these parameters.

The preferred bid should have already satisfied the base terms of the Concession Agreement. Therefore, negotiation with the preferred bidder on the main terms of the contract is not encouraged in India.

However, there may be a limited number of select areas that need to be discussed before the contract can be finalised. The Sponsor should allow for a consultative process with the preferred bidder to finalise these issues.

It is important that the Sponsor explains the purpose of the finalisation process and clearly states the non-negotiable items at the start of the consultation.

It is useful to remember that the public and private parties are each entering into a long-term partnership with the other. This partnership should be based on trust and mutual respect. The process of building this relationship must now have begun and this attitude should guide all interactions between the parties.

Once finalisation is complete the contract can be signed and the project will have been awarded.

The selected private partner will then need to bring the project to financial closure, which occurs when all equity and debt financing has been committed. The contract is likely to have conditions related to the timing and achievement of financial close. These are designed to ensure that the private partner moves to financial close in a timely manner without causing undue delay to the project.

If the PPP includes a VGF component then final VGF approval may be required at this stage.

 

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