Model Conssession
Model Conssession
Model Conssession
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MCA - DEFINITION
Commencement Date
• Date on which physical possession of the project site is
delivered by GOI to the concessionaire, which shall not be
later than 30 days from the date of agreement
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MCA - DEFINITIONS
Equity
• Representing the equity share capital of the concessionaire and
shall include the funds advanced by any member of the
consortium or by any of its share holders to the concessionaire
for meeting equity component of the total project cost
Financial Close
• Date on which the financing documents providing for funding by
the lenders have become effective and the concessionaire has
immediate access to such funding under the financing
documents
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DEFINITIONS cont..
Escrow Account
• Account which the concessionaire shall open and maintain with a
bank in which all inflows and outflows of cash on account of
capital and revenue receipts and expenditure shall be credited
and debited
Independent Consultant
• NHAI shall appoint a consulting engineering firm or body
corporate out of the three names proposed by concessionaire
from the panel of 5 consultants proposed by NHAI
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CONCESSION & PROJECT SITE
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CONCESSION & PROJECT SITE
Peaceful Possession
Environmental clearance:
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FEE
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OBLIGATIONS AND UNDERTAKINGS
General
• Investigate, study, design, construct, operate and maintain the
project asset/project facility
• Obtain all applicable permits in conformity with applicable
laws
• Procure and maintain in full force and effect, appropriate
proprietary rights, licenses, agreements and permissions for
materials, methods, processes and systems
• Provide all assistance to IE for performance of duties and
services
• Provide reports to steering committee on regular basis
• Appoint, supervise, monitor and control the activities of
contractors
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OBLIGATIONS AND UNDERTAKINGS
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OBLIGATIONS AND UNDERTAKINGS
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OBLIGATIONS AND UNDERTAKINGS
Implementation Period
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OBLIGATIONS AND UNDERTAKINGS
• Concessionaire shall
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OBLIGATIONS AND UNDERTAKINGS
GOI
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INDEPENDENT ENGINEER
• Concessionaire within 30 days submit to GOI a panel consisting
of at least three reputed firms / companies / body
corporates or combination
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STEERING GROUP
• Comprising of representative each from GOI, STG, and the
concessionaire within 60days of agreement
• Functions
– Hold meeting once in 3 months to review progress during
implementation period and once in 6 months during operations
period
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DRAWINGS
• Preparation of drawings by concessionaire
• Review and approval
– Within 15 days of receipt of drawings IE shall review the same
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PROJECT IMPLEMENTATION AND
OPERATION
• Concessionaire shall furnish quarterly reports to the steering
group on actual progress
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PROJECT IMPLEMENTATION AND
OPERATION
• Suspending the construction works by steering group other than
default or breach of agreement
– Project completion schedule and scheduled project completion date
gets extended
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PROJECT IMPLEMENTATION AND
OPERATION
• Tests
– At least 30 days prior to likely completion of project –
concessionaire shall notify IE and steering group, at least 10 days
prior notice of the actual date.
– Punch list items to be cleared within 120 days from the issue
of PC or GOI will complete those items and take money from
concessionaire
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PROJECT IMPLEMENTATION AND
OPERATION
• Operation & Maintenance
– Ensuring smooth and uninterrupted flow of traffic
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FINANCING ARRANGEMENT
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SUPERVISION CHARGES
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INSURANCES
• GOI shall issue change of scope order with 15 days from the
date of recommendation
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CAPACITY AUGMENTATION AND
ADDITIONAL FACILITY
• After COD, government may decide to augment/increase the
capacity of the project
• GOI invite proposals from eligible persons, while Concessionaire
shall have the option to submit its proposal
• Bid document for capacity augmentation shall specify a termination
payment to be made to concessionaire
• If fails to give the lowest offer, concessionaire shall be given the
first right of refusal to match the preferred offer
• If concessionaire matches the preferred offer, the parties shall
enter into suitable agreement
• In such case concessionaire shall pay lowest bidder 0.1% of
estimated cost subject to max. of Rs. 10 lakhs towards
bidding cost of such bidder 30
CAPACITY AUGMENTATION AND
ADDITIONAL FACILITY
• If the concessionaire chooses not to submit offer /
declines to match the preferred offer, GOI shall be entitled
to terminate the agreement and pay to concessionaire of the
termination payment
Additional Facility
• GOI shall not construct and operate either itself or have the
same, built & operated on BOT basis
• GOI may build and operate such facility subject to the fee
charged for vehicles using such facility being at any not less
than 133% of fee for the time being charged for the
vehicles using the project facility
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FORCE MAJEURE
• Non Political event (Acts of god, radioactive contamination,
strikes or boycotts, any judgment or order of any court of
competent jurisdiction etc), Indirect political event (act of
war, industry wide strikes, public agitation), Political event
(change of law, expropriation etc)
• Effect of force majeure event
– No termination
– If occurs before COD, project completion date and concession
period extended by the period
– If occurs after COD, concessionaire make reasonable efforts to
operate the project, if unable to do, concession period shall be
extended as determined by steering committee for which toll
collection fee remains affected
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FORCE MAJEURE
• Allocation of costs
– Non political events parties shall bear the costs
– GOI may at its option reimburse the force majeure costs either
by cash / increasing the concession period
• Termination
– If extends for more than 120 days
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FORCE MAJEURE
• Termination Payment
– Non political events – 90% of the debt due less pending
insurance claims, if insurance not admitted and paid, 90% of claims
shall be paid
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EVENTS OF DEFAULT AND TERMINATION
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EVENTS OF DEFAULT AND TERMINATION
– Breach of any of its obligations and has not been cured within
30days from the date of written notice
– Delayed payment of any amount that has fallen due beyond 90 days
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EVENTS OF DEFAULT AND TERMINATION
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EVENTS OF DEFAULT AND TERMINATION
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EVENTS OF DEFAULT AND TERMINATION
Termination payments
• Within 30 days from the day of demand
• If fails to pay within 60days the interest rate at SBI PLR plus two
percent
Mode of Payment
• Credit directly to bank
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CHANGE IN LAW
• If there is increase in costs / reduction in net after tax return or
other financial burden, the aggregate financial effect of which
exceeds 2-3 million in any accounting year, the concessionaire
may notify the same to GOI/steering committee
41
HANDOVER AND DEFECT LIABILITY
PERIOD
• At the end of concession period, hand over vacant and peaceful
possession of project assets at no cost to GOI
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DISPUTE RESOLUTION
• Should attempt to amicable settlement within 15 days
• Not settled by amicably will be referred to arbitration as per
arbitration and conciliation act 1996
• Place of arbitration New Delhi
• Language – English
• Decision or award resulting from arbitration shall be final and
binding
• Fees and expenses
– Initially born and paid by respective parties
– Arbitrators may provide in the arbitral award for the reimbursement
to the prevailing part of its costs and expenses in bringing or
defending the claim
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REPRESENTATIONS AND WARRANTIES,
DISCLAIMER
• The aggregate equity share holding of the members of
consortium / sponsors in the issued and paid up equity share
capital shall not be less than
– 51% until expiry of 3 years following COD
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MISCELLANEOUS
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MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
Concession 15 years
Period
Bid Security 50 million
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MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
Shall not collect any fees from local personal
traffic and local commercial traffic in excess of
following discounted rates
Increase in fee biannually at
Fee 10% of prevailing rate for each •Local personal Traffic : 25% of applicable
2 yr. period fees
•Local Commercial Traffic : 50% of
applicable fees
Fee shall be deposited in ESCROW account
Governing
Steering Group NHAI
Authority
Within 15 days of receipt of Within 30 days of receipt of drawings
drawings For revised drawings within 15 days of receipt
For revised drawings also 15 of such drawings
Review of Drawings
days NHAI is not liable for failure to provide
comments / observations
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MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
Submission of As-
Within 90days of COD Within 90days of COD
built drawings
5% of project cost spread over 0.01% of total project cost per week
180 days delay
Maintenance
Within 120 days Within 180days
Manual
Within 120 days from the date of agreement
Within 60 (30 + 30) days from
Independent Initially for a term of 3 years
the date of agreement
Consultant / One half of remuneration shall be paid by
remuneration shall be included in
Engineer concessionaire
Bid price
Not less than 12 months inspect Not less than 30 months nor more than 36
Defect Liability the project facility months conduct a join inspect inspection
Inspection report within 15 days Inspection report with in 90 days
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MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
2nd inspection not less than 9 months and not
more than 12 months
Within 30 days inspection report
Termination due to
Total debt due* + 110 % of Total debt due + out standing subordinated
Indirect Political
equity debt + 110% of equity*
Event
Total debt due* + 150 % of Total debt due + 120% of subordinated debt +
Termination due to
equity 150% of equity*
Political event 50
MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
10 million
Parties shall meet within 30 days of
notification by concessionaire
If no agreement then within 90 days
Change in Law Max up to 2-3 million concessionaire will give written notice
NHAI shall do payment within 15 days of
notice or with interest @ SBI PLR if payment
delayed beyond 15 days
Same is applicable for reduction in price
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CONCESSION AGREEMENT
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HYBRID ANUITY MODEL
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REQUEST FOR PROPOSAL
RFP comprises of
–Instructions to Bidders
–Evaluation of Bids
–Pre-Bid Conference
–Miscellaneous
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REQUEST FOR PROPOSAL
Scope of Work
• Prior to along the bid, bidder has to pay Rs. 50,000 as cost of
RFP process (10,000 for every 100 cr project)
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BIDDING PROCESS
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INSTRUCTIONS TO BIDDERS (ITB)
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INSTRUCTIONS TO BIDDERS (ITB)
In case of consortium
Cost of Bidding
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INSTRUCTIONS TO BIDDERS (ITB)
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INSTRUCTIONS TO BIDDERS (ITB)
Technical Bid
Financial Bid
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EVALUATION OF BIDS
• Tests of responsiveness
– As per format
– Documents listed
– Power of attorney
– Integrity pact
– Bid security
– Financial Capacity
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EVALUATION OF BIDS
Selection of Bidder
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MCA FOR BOT PROJECTS
Article Clause Hybrid Annuity Model
Additional Performance 10% of the difference between estimated project cost and bid
Security project cost
Project Milestone
If COD is achieved as per date then penalty shall be
refunded without interest
If project is not completed & COD not achieved within 270
days then project will be terminated
Damages for breach of Higher of 0.2% of performance security / 0.1% of cost of such
maintenance obligations repair for each day of delay
40% of the bid cost adjusted for price multiple index, shall be
in 5 equal instalments of 8% each during the construction
Payment of Bid project period
cost Remaining bid project cost, shall be adjusted for price multiple
index, payable in 30 instalments commencing from 180th day
of COD
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MCA FOR BOT PROJECTS
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MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Biannual payments
O&M expenses shall be borne by concessionaire
O & M payments
Each instalment shall be product of amount quoted * price
index multiple
Termination notice for If force majeure event subsists for a period of 180 days or
Force Majeure more within a continuous period of 365 days
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EVALUATION OF BIDS
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EVALUATION OF BIDS
Concessionaire Default
Cure period of 60 days
Performance security shall be encashed, fresh performance
security within 15 days
Cure period 120 days
Not achieving milestone in 120 days
31 Termination
COD not occurring as per defined date
Punch list items not cleared
Financial default
Change in ownership
Concessionaire adjudged bankrupt
Failed to fulfil obligation
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MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Authority Default
cure period 90 days
Failed to make any payment
Right of way & other clearances within 180 days
Concessionaire Default
After COD:
65% of all sum of annuity payments including interest
Before COD:
Refer table
Authority Default
Prior to COD: 80% of such un paid claims
Termination Payment
150% of adjusted equity
After COD:
Sum of annuity payments remaining with interest
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MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
If no agreement is reached in 90 days, within 15 days either
party shall settle the claim
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PROJECT FACILITIES
• Toll plazas
• Roadside Furniture
• Pedestrian facilities
• Tree Plantation
• Major bridges
• Minor bridges
• Truck lay-bys
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APPLICABLE PERMITS
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PROJECT COMPLETION SCHEDULE
• Milestone 2 – 270th day from the appointed date, not less than
35% of the capital cost
• Mile Stone 3 – 365th day from the appointed date, not less than
75% of the capital cost
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