PPP Contract Negotiation, Strategy & Legal Agreements

5 days 3-7 Sep 2018, London UK £4,995.00 + VAT* Download brochure Add to basket
5 days 26-30 Nov 2018, Singapore Singapore $5,795.00 Download brochure Add to basket

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Overview

Over the past decade, many countries have initiated major infrastructure sector reforms that separated policy making from service delivery and promoted projects with various forms of private sector participation or public private partnerships (PPPs). This unique five day training course has been developed to provide an understanding to developing and implementing successful and robust PPP contracts and legal agreements.

This course is about setting out the key parameters that make for successful and robust PPP agreements, parting from key principles for their design and implementation all the way to practical aspects of contractual and legal implications of PPPs. Since these types of contracts are long term contracts, it is important that their development is based on an adequate risk allocation between the public and private sector, apportioning risk according to the maxim of the ‘person best paced to manage such a risk’.

This course parts from setting out the basic elements for considering Private Participation in developing infrastructure, and then looks at how to best plan the process of introducing private expertise and finance. As many PPPs are actively used to provide public services, the course will delve into the importance of involving different stakeholders in the design of the arrangement. This leads on to an appropriate allocation of risks and responsibilities between the parties and how that is represented within a contractual arrangement. Finally, an overview of the fiscal impact of PPPs, and the need for governments to adequately manage direct and contingent liabilities related to such agreements will be looked at. Ultimately, it is this combination of issues and topics whose careful combination can lead to the successful design, implementation and monitoring of PPP schemes for infrastructure.

Course objectives

  • Provide an introduction to and context for developing infrastructure financing solutions by using PPPs
  • Describe the process of developing a project from the concept stage to implementation and contract supervision
  • Present a set of tools and techniques that can be used as a basis for sound and rigorous evaluation, decision making, monitoring and control of PPPs
  • Understand the main principles and techniques for robust PPP contract design
  • Provide a basic primer of commercial terms and their implications in different legal environments where PPPs take place
  • Link risk assessment to contract clauses by understanding the critical business aspects that are to be enshrined in a contract
  • Given the fact that PPPs have the added challenge of being a long term arrangements, afford practical insights and techniques to effectively introduce clauses that allow modifications and changes to the original terms of the contract without jeopardizing the overall business relationship

 
Methodology

The design of the course combines theory with relevant case studies as well as interactive participatory discussions. The course strikes a balance between qualitative and qualitative metrics, using case studies to illustrate core concepts or to address sometimes counter positions - the public and private perspectives when undertaking a PPP project. Role playing will also be used to showcase policy issues and their applicability with financial and bankability issues common in PPP design, development and monitoring. Further, the course provides different techniques available to practitioners to deal with critical issue of PPP design and risk allocation and how these are translated into legal arrangements. Importantly, through interactive discussions and case studies, it will illustrate the way in which change is managed in different PPPs. It will also provide course attendants with specific and practical techniques for drafting form scratch PPP agreement, based on proven pragmatic and practical techniques based on best international practice.

Who should attend

  • Government officials, ministries and public sector agencies
  • Investment planning commissions
  • Project developers, sponsors and consultants
  • Senior investment and credit analysts
  • Commercial, Business Development, Bid and Acquisitions Managers
  • Lawyers and legal counsel
  • Project financiers
  • Credit, Risk and Investment officers
  • Chief Financial Officers and Controllers
  • Infrastructure and structured finance specialists

 

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

London
Cledan Mandri-Perrott
Dr Cledan Mandri-Perrott, is a seasoned project financier and investment banker. Having started his career in the operational arm of the second largest water company in the United Kingdom, and a FT100 company, he was critical in support of the international expansion of the Severn Trent Group helping secure highly profitable business for the company in Portugal, Belgium, Mexico, United States, Argentina, Chile and Trinidad and Tobago. For the latter he was part of the  acquisition team and went on to lead the company as its Director to successfully manage a business (serving over 1.2 million people) which achieved financial turnaround from a loss making entity (US$120 million deficit) in less than three years.

From there he established an advisory arm for the Severn Trent International Group and led a number of Public Private Partnerships (PPPs) advisory mandates growing it to an annual turnover of US$ 12 million. From there, Dr Mandri-Perrott worked as the co-head of the newly established Infrastructure Finance Group of the renowned PA Consulting Group in London and Birmingham, advising both private clients and governments on structuring and financing PPPs. From 2003 to 2005 he founded a boutique advisory firm with offices in Washington DC and Buenos Aires which focused on financial advisory services, dispute resolution and legal advice. During this time he grew the business to 29 staff. Notable clients during his tenure were the Prime Minister’s Office of the Hashemite Kingdom of Jordan, the ABB Group and Bilfinger Berger which he advised on three major acquisitions.

After selling the venture to his partners for family reasons, Dr Mandri-Perrott, joined the World Bank Group in 2006 and quickly rose to become a leading figure on PPPs and Project finance becoming a founding member of the World Bank’s Global PPP Expert Group. Since 2012, he was one of a handful of staff that opened the World Bank Group’s office in Singapore, where he now heads the Infrastructure Finance and PPP Centre advising governments on project finance issues bringing together public and private funds both from traditional commercial lenders as well as pension and institutional investors. In sum he has advised on more than twenty PPPs which successfully closed with a cumulative value of over US$4 billion. A graduate in Civil Engineering from Surrey University, he also holds an MSc in Business and Finance, an LLM in commercial and transaction law from the University of Dundee, and a PhD in Project Finance from the University of Groningen. He is a visiting professor at the National University of Singapore’s Lee Kwan Yew School of Public Policy, as well as the Singapore National University’s ALPINE programme.
Singapore
Cledan Mandri-Perrott
The instructor is a Lead Financial Officer at the Singapore Global Infrastructure Centre of Excellence and a member of the World Bank’s Global Expert Team for PublicPrivate Partnerships. He has over 18 years’ experience in developing and implementing project finance transactions. Prior to the World Bank, he advised Governments and Private clients on multimillion dollar infrastructure projects. He has strong regulatory background and designed and implemented regulatory policy frameworks. He has practical operational experience having managed a utility in Trinidad and Tobago. He has gained a reputation as a pragmatic problem solver helping resolve regulatory and PPP disputes. He has written extensively on issues of PPP and infrastructure and is a regular presenter and trainer on PPP related topics. A graduate in Civil Engineering, he also holds an MSc in Business and Finance, an LLM in commercial and transaction law, and a PhD in Project Finance from the University of Groningen.

Venue

London

Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Singapore

4-5 Star Hotel in Singapore

All of our courses are held in 4 – 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.

Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. Course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

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Agenda

Agendas are localised, please select your preferred location.

Day 1

An overview of PPP (definition, reason for using, championing)

  • History of PFI’s and PPP’s
  • Reasons for choosing PPP
  • Project championing
  • Alternatives to PPP
  • Role of Lawyers in PPP and Legal Systems

Planning for PPPs (feasibility studies, process check list, analysing investment decisions)

  • Structure of PPP deals
  • Key problems being faced by the sector and ways private participation can address the problems
  • Key areas of responsibility
  • Appointing  government advisers, writing and communicating Government Investment plans, and state planning decisions
  • Determining the best allocation of responsibilities and risks between operator and the contracting authority
  • Writing business cases, financial models, comparators, guidelines

Exercise 1 Bidding & Tendering

PPP Risk identification, mitigation and allocation

  • Overview of key risks, Business cases (List of risks),
  • Value for Money and Risk
  • Risk appraisal, identification
  • ‘Bankability’ and the need for contractual security
  • Risk under PPP Contract, key contractual clauses
  • Proper allocation

[Case study of risk assessment

  • Differentiation of risk given different perspectives
  • Estimating probability of risk
  • Value judgment of risk and implication of risk
  • Qualification vs ‘emotion’ of risk]

Day  2


Legal Issues in setting up/running PPP’s

  • Constitution, Enabling legislation and regulations
  • Supporting legislation in procurement ,company law, contract law, land law, zoning, financing, employment, capital markets, admin law and utilities
  • Standard Model clauses and contracts
  • MOJ Opinions
  • Working with and being transaction advisors

Financing PPP’s and Legal Documents

  • Types of Financing, main constraints
  • Structure of financing over time
  • Financing Documents-role of public and private sectors
  • Banks, Capital markets, Islamic Financing Options, VGF, Multilateral agencies - World Bank, PIAFF, IFC
  • Fiscal impact of PPPs, risk management framework, management of contingent liabilities

Exercise Bidding before Multilaterals

Procurement process (bidding, evaluation & selection)

  • Types of procurement
  • Procurement Legislation
  • PPP Contracts  v tendering rand procurement rules

Day 3


Negotiation of PPP Document

  • Acting for public bodies or private sector
  • Technique of negotiation: Dance of Seven Veils; clear understanding of documents; know your position; reaching a median position
  • Fair resumption of risk allocation
  • Good people who can negotiate

Exercise 3 going through PPP agreement Case study

Structuring PPP’s and Upstream & Sector Policy

  • Upstream policy implications and their effect on PPP agreements
  • Identifying MDA responsible for infrastructure services, the responsibility of other MDA’s, and their relation to PPP agreements
  • Market structure
  • Competition and regulation
  • Implications of different legal jurisprudence environments, local courts, and legal precedence

Government prioritization-Selecting projects, Budgeting

  • NIP, Investment Plan
  • State Planning Review and investigation
  • Value for money and Business cases
  • Budgeting review and project liaison
  • Project management of PPPs and elements thereof

Day 4


Components of PPP Legal Agreements

  • PPP Agreement, reflection of risk profile and RJP
  • Finance Agreement
  • PPP ≡ Model
  • Support contracts, building contracts, O & M Contracts, Service Agreements

Key Contractual Clauses

  • Estimating probability of risk, developing a risk matrix, use of ‘heads of terms’ for risk allocation prior to contract drafting
  • Standardisation, credit committees, institutional investors
  • Dealing with change within a PPP agreement: tariff resets, transition periods, extension of contract terms
  • Conflicts within a PPP

Day 5


Contract management, monitoring & evaluation

  • Start of the Beginning
  • Statistics –cost, value ,expertise
  • Monitoring team- private sector or public sector
  • Communicate success story

Dispute Resolution

  • The dispute resolution procedure, expedited dispute resolution, expert panels
  • Arbitral awards
  • Management of renegotiations
  • Facilitation and negotiation, Mediation and Arbitration
  • Risk mitigation instruments and guarantees
  • Choice of law and jurisdiction

Implementing and closing PPP

  • OBC’s > FBC’s
  • Negotiation> Commercial Close> Financial Close
  • Legal Close and conditions Precedent satisfaction
  • Post close formalities

Case Studies 

  • Nigeria railways OBC
  • Lagos Lekki lekki roadway
  • Albania hydro Case study
  • India airports Hyderabad

Course summary

Module 1: PPP Contract Negotiation & Strategy (Days 1-2)

Day 1

Introduction

Opening remarks

This is to brief the participants on the overall objectives of the programme. An overview of the course will be provided and the ‘rules of engagement’ will be set out.

Planning the process of introducing private participation

Objective: This session will look at the issues governments should consider when looking at involving the private sector, including:

  • Documenting particular problems or challenges being faced by the sector and diagnosing the underlying cases of the problems
  • Determine whether private participation can address the problems

The session starts with a section analysing key issues related to provision of services including:

  • Key areas of responsibility and how can they be defined?
  • Key risks related to these responsibilities, and how can they be defined?
  • We look at ways of determining the best allocation of responsibilities and risks between the operator and the contracting authority
  • The implication of involving different stakeholders in the process of consultation and implementation of the PPP

Risk allocation and contract design

Objective: This session will cover the important task of establishing an efficient allocation of project risks between the public and private sector parties. This risk allocation subsequently forms the basis for many elements of main contractual documents that will provide the legal and commercial basis for a successful PPP. Aspects covered will include:

  • Overview of key risks in a PPP project
  • The principle of value for money in relation to risk allocation
  • The importance of ‘bankability’ and the need for contractual security
  • Key contractual clauses

Case study and worked example of risk assessment

Objective: This session will look at applying some of the basic concepts of risk allocation by describing a real case study (likely in roads, water or energy), and splitting the group into different roles of sponsor, lender and grantor. The project will be assessed against same risk factors, eg land acquisition, rights of way, political and expropriation risk etc. Each team will present its risk assessment against a pre-defined risk matrix. At the end of the session the following learning outcomes are expected:

  • Differentiation of risk given different perspectives
  • Estimating probability of risk
  • Value judgment of risk and implication of risk
  • Quantification vs ‘emotion’ of risk

Concluding remarks

Preparing and managing the bidding process

Objective: This session will cover the key tasks required in preparing a PPP project for tendering and then managing the subsequent bidding process. Topics will include:

  • The importance of market sounding
  • Engaging with advisors (legal, financial and technical)
  • Preparing key documents (e.g. the RFQ, RFP)
  • Bidding and negotiation procedures
  • The Preferred Bidder Stage
  • Financial and contract close and the swap process

Summary and learning issues

Objective: Every day will conclude with a wrap up of core principles of each one of the sessions, drawing out each of the learning outcome for each session. This wil be done in the form or a real case study eg. Tanzania Water Dar es Salaam failed lease contract (contract was terminated early due to ineffectual risk allocation between parties), or other appropriate case study.

Day 2

Principles for debt financing and the interest of the private sector

Objective: This session will cover important issues related to project financing to be addressed before and during the procurement of PPP projects.

  • How are PPP projects financed?
  • What are the main constraints of project financing?
  • How a project’s financing is structured over time?
  • What are the main difference between typical construction financing and PPP financing?
  • What are the main typical financial risks involved for investors in PPP projects and how are these typically managed?
  • How can investors and lenders expectation be usefully managed throughout a PPP procurement process?

Managing the preparation of the contractual documentation

Objective: This session will outline the process of preparing the suite of contractual documents that are required for a successful PPP project. The session will interact with participants by doing a quick survey of the different experiences amongst the students, by asking each to outline their experience to date in preparing contractual documents and any issues/problems they currently face. The course leader / teacher will then present an overview of the process and share best-practice. This will be followed by an interactive Q&A session.

Managing prequalfication and bidding process

Objective: This session will cover the procurement of PPP projects, focusing more specifically on the selection of proposals/bidders. The session will also solicit experiences from the audience. In addition the session will show different PQ and bidding specifications in different sectors.

Fiscal impact of PPPs, risk management framework, management of contingent liabilities

Objective: This session will look at the issues that arise in terms of obligations from government and the public sector in PPPs. Some of these obligations are direct (ie explicit) yet others are contingent. Despite being contingent, these should be adequately understood and provided for. The session will therefore look at:

  • Mechanisms to distinguish between direct and indirect liabilities
  • Liability treatment depending on national legislation and accounting treatment (Eg EU Eurostat approach etc)
  • Mechanisms to deal with contingent liability, valuation and probabilistic scenario testing
  • Some of these principles will be illustrated by recent examples (eg toll roads in Spain and Portugal) where some of these issues led to catastrophic failure of high profile road PPPs.

Wrap up and conclusions

  • Course review questionnaire to assess course
  • Distribution of reading material
  • Overall Q&A


Module 2: Structuring & Managing PPP Legal Agreements (Days 3-5)

Day 3

Introduction

Opening remarks
This is to brief the participants on the overall objectives of the second part of the programme for the structuring and management of PPP agreements, and how this links to the first two days.

  • Upstream policy implications and their effect on PPP contractual agreements
  • Objective: In this session we specifically link the legal arrangements that are developed under PPP agreements and how they relate to upstream and sector policy. This involves three broad topics , including:
  • How do we define an appropriate Market structure
  • How do we identify the level of Government to be responsible for infrastructure services and what are the responsibilities of other levels of Government, and how these relate to PPP contractual agreements?
  • Competition and regulation – how can we establish competition and how does it get reflected in a PPP agreement e.g. how to deal with monopoly arrangements etc.
  • Implications of different legal jurisprudence environments
  • Objective: This session is intended to assess implications of different legal jurisprudence environments. Specifically:
  • Why does the system matter and how do I link contractual obligations with legal regime?
  • Contracts and local courts – the implications of legal precedence and how it can affect contract design

In order to illustrate these fundamental differences for contract drafting and its implication different examples will be providing, comparing and contrasting civil and Anglo-Saxon jurisprudence. Furthermore, examples will be provided as to how these ‘shape’ certain contractual arrangements.

Case study and discussion session: Each one of these issues outlined in session 10 and 11 will be explained by making reference to specific case studies in projects for toll roads (Senegal Diamando), Ports (Ghana), Metro (Sao Paolo Brazil and Dar es Salaam Rapid Bus Transport), Power generation (Azito Power, Kenya wind) and Health (Mozambique hospital). So for example, when dealing with early termination issues, the case study of Tanzania water lease contract will be used, etc.

  • Upstream policy implications and their effect on PPP contractual agreements
  • Objective: In this session we look at:
  • Where does VfM fit in the project evaluation cycle?
  • What is an adequate definition of VfM?
  • The linkage of VfM and the Public Sector Comparator
  • How to determine VfM?

Overview of case studies using the UK, Brazilian, Indian and Australia (Victoria) VfM methodology.

  • Summary and learning issues
  • Objective: Every day will conclude with a wrap up of core principles of each one of the sessions, drawing out each of the learning outcome for each session.

Day 4

Key Contractual Clauses

  • Objective: This session is divided into two given the quantity of contractual clauses that will be covered. The two sessions will look at some of the more critical contractual clauses encountered in PPP agreements. The starting point will be a discussion of the differences between Common and Civil Law legal traditions. In addition discussion will be had on:
  • Appropriate techniques for contract drafting
  • Estimating probability of risk
  • Developing a risk matrix (and setting out its minimum contents)
  • Use of ‘heads of terms’ as an instrument for risk allocation prior to contract drafting
  • Objective: This session will continue from the previous session but will specifically focus on:
  • Why standardisation is important and examples of where this approach has been successful
  • Role of credit committees and implications to key contract clauses
  • Institutional investors Clauses and risk allocation
  • Sample clauses and risk allocation
  • Objective: This session will continue from the previous session but will specifically focus on:
  • Clauses and risk allocation
  • Sample clauses
  • Standard clauses
  • Dealing with change within a PPP agreement (including tariff variation procedures – an often controversial set of provisions subject in some instances to regulatory approval)
  • How to manage change within a PPP including tariff resets, transition periods, extension of contract terms etc.
  • Objective: Building on the concepts of previous sessions, this session will be a structured discussion on:
  • Mechanisms to deal effectively with conflicts within a PPP
  • Back stopping of public sector obligations within the contract as a means of enhancing the project’s overall bankability
  • Other contractual clauses will be evaluated and their implication discussed by using relevant cases studies.

The session will interact with participants by doing a quick survey of the different experiences amongst the students, by asking each to outline their experience to date in preparing contractual documents and any issues/problems they currently face. The course leader will then present an overview of the process and share best-practice. This will be followed by an interactive Q&A session.

Day 5

Dispute Resolution and Managing Change within PPP Agreements

  • Objective: PPPs are long term contracts which by their nature will change. This session will look at mechanisms by which change can be managed within a contract, allowing flexibility to deal with change but at the same time ensuring contractual integrity. Particular focus will be on:
  • How to build clauses that allow for change e.g. tariff review processes, review procedures, milestone attainment etc.
  • Techniques to address change within a contract
  • Dealing with unforeseen circumstances
  • Case study example of Chile toll road programme of variable length contracts

The session is intended to be an introduction of the specifics of dispute resolution procedure in the session below.

  • Objective: building form the second session on Key Contract Clauses, this session will continue the discussion on how to manage change within a PPP agreement with a particular focus on:
  • The dispute resolution procedure
  • Expedited dispute resolution including expert panels
  • Arbitral awards
  • Managing the process of renegotiations
  • Venues for dispute resolution UNCITRAL, ICSID etc.
  • IFI Risk mitigation instruments and other forms of guarantees (political risk insurance etc.)

Case study: Review of conflicts e.g. Aguas Argentinas, Panama Canal expansion etc.

  • Group work
  • A specific worked session will be presented where the group will be split into grantor and sponsor. Each party will negotiate a mock PPP agreement. An interactive and moderated discussion will be done simulating:
  • Initial PPP negotiation with grantor
  • PPP negotiation to achieve financial close
  • Midterm tariff review
  • Early termination event
  • Wrap up and conclusions
  • Course review questionnaire to assess course
  • Distribution of reading material
  • Overall Q&A

Course summary and close

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