Abstract
This chapter describes the key stages in bidding out PPP projects—Request for Qualification (RfQ) and Request for Proposal (RfP). It also describes the key elements of the Model Concession Agreement in terms of performance requirements, payment mechanism, dispute resolution mechanism, and termination provisions. While each PPP contract is unique, there is a need for standardization of the process and documentation involved in such contracts. Model standardized documents are generic with provision for project-specific flexibility that aims at imparting transparency, consistency, and predictability to the procurement process, ensuring objective, and expeditious decision making.
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Notes
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Financial closure means that adequate financing for the project has been arranged, both the contract as well as the financing documentation have been signed, and the specified condition precedents required of the public authority and the concessionaire have been met.
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In monopoly markets, competition in the market is precluded. Competitive bidding for provision of services in such markets ensures that there is competition for the market, thus competing away the monopoly rents that could be available to such monopoly service providers.
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Careful selection of qualification criteria is important to avoid including firms that are poorly qualified and excluding firms that could make good partners (e.g., smaller firms).
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Government of India (2009).
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The final concession agreement would be signed between the public authority and the winning bidder at the award of contract stage.
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Government of India recommends that this cost be fixed at the rate of Rs. 20,000 for every Rs. 1 billion of the estimated project cost. The authority may, in its discretion, raise this to up to Rs. 50,000 per Rs. 1 billion of the estimated project cost.
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Grant shall be payable by the authority to the concessionaire and the premium shall be payable by the concessionaire to the authority, as the case may be. These are examples of a single bidding parameter. Other examples of bidding parameters could be the highest price of the assets, the highest share of revenue, etc.
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For example, it may be stated that the bid shall be summarily rejected if it is not accompanied by the bid security to be provided as a demand draft or an acceptable bank guarantee. The bid security shall be refundable no later than 60 days from the bid due date except for the selected bidder.
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“Most economically advantageous offer” is a bidding parameter formed by combining quality as well as price in some proportion.
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“Variant bids” are alternative and improved solutions proposed by bidders.
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For example, road tolls have been linked to inflation to the extent of 40% of Wholesale Price Index in India in the Model Concession Agreement owing to the fixed interest rate charged for debt, which is the major source of financing in project financed PPP projects.
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Private party default triggers include failure to complete construction, persistent failure to meet performance standards, and insolvency of the project company.
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Pratap, K.V., Chakrabarti, R. (2017). Designing and Structuring PPP Transactions. In: Public-Private Partnerships in Infrastructure . India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-3355-1_7
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DOI: https://doi.org/10.1007/978-981-10-3355-1_7
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