Concession contracts
Concessions may be awarded to a concessionaire under two types of contractual arrangements:
Build, operate, transfer (BOT) contracts.
Franchise: Under a franchise arrangement the concessionaire provides services that are fully specified by the franchising authority.
Build, operate, transfer (BOT)
A build-operate-transfer (BOT) contract is a model used to finance large projects, typically infrastructure projects developed through public-private partnerships.
BOT projects are normally large-scale, greenfield infrastructure projects that would otherwise be financed, built, and operated solely by the government. Under a build-operate-transfer (BOT) contract, an entity—usually a government—grants a concession to a private company to finance, build, and operate a project for a period of 20 to 30 years, hoping to earn a profit. After that period, the project is returned to the public entity that originally granted the concession.
Build, own, operate, transfer (BOOT)
In a BOOT project, the contracted company maintains ownership of the subsidiary for many years to decades to recoup the costs of the build. After the contacted period is over, ownership is then transferred. BOOT is mainly used by governments for large infrastructure projects.
Build, own, operate (BOO)
A project delivery mechanism in which a government entity sells to a private sector party the right to construct a project according to agreed design specifications and to operate the project for a specified time.
Engineering Procurement Construction and Finance PPP (EPC+F) & EPC
The EPC and EPC+F are too much in practice in PPP and other Public and private complex projects.
The EPC is an Engineering, Procurement, and Construction (EPC) contracts are the contracts used primarily in complex industrial and infrastructure projects like power plants, bridges, dams etc. EPC contracts involve a deal between the owner and a contractor, who is required to deliver certain design, construction, logistics, transport procurement and Finance to deliver a complete project to the owner. The PPP facilitators submit its experience and finance capability documents and place a performance security in favor of project owner. The projects owner pays minimum 20% and maximum 40% as advance payment to the PPP facilitator. The PPP facilitator will be responsible for completing the project in a fixed time and delivering it to the owner. The owner and PPP facilitator agrees about suitable wages and investment return duration. The owner will also be responsible for giving reasonable security to the PPP facilitator to insure the refund of the principal investment of the PPP facilitator.
Bank Instruments Services Agreement
To obtain loans or finance for any project or business both private and public sectors generally need to have valued Bank security. To manage such situation generally the Privat or Public sectors signs a Bank Instruments Service Agreement (BISA) under a special legal DBA contract.
Bank Securities Managing and utilizing.
The Public or Private entity firms converts/exchanges its cash funds to a Bank instrument such is MTN, LTN, SBLC, BG, CD, and the owner reserve the ownership for itself but granting the managing right to a PPP Facilitator to utilize it to earn or generate the target funds for subject humanitarian project in fixed time. The advantages of the cash owner ether Public or Private entity are that to purchase the 100 million or 1 billion MTN at 30 t0 40% only and further place it with a PPP Facilitator under a management contract for defined project and defined profit in defined time and return the instrument at the maturity date back to the owner and the owner will call or withdraw its instrument. So, the owner could earn in instrument and cold to complete its project(s) through dividends of its instrument(s).
BBO (Buy-Build-Operate).
In this model the government sells the facility to the private entity. The private party renovates and operates the facility.
DB (Design-Build)
DB is a type of PPP model in which the private party has an additional responsibility of designing the framework of the project. It reduces time and complications and helps the public entity save money as only a single party is involved. It burdens the private party with an additional responsibility.
DBF (Design-Build-Finance)
DCMF (Design-Construct-Maintain-Finance) is a framework in which the private party designs and constructs the project, and then is leased back to the property. The DCMF is like EPCF, but the DCMF is a modern PPP model.
Management Agreements-
Under management agreement the public entity transfers the management of the asset, business, property etc. to the private party for a particular period.
O&M (Operations and Maintenance)
The O&M is an arrangement where the private party takes the responsibility of maintaining and operating the public property/project for the specific amount of time with certain obligations which are specified in the operation and maintenance agreement.
Non-refundable project funding
The PPP Facilitator and project owner enter to humanitarian project execution agreement and the owner provides/deliver an agreed Bank instrument in favor of PPP Facilitator to obtain credit line and complete the project and return the instrument to its owner upon execution of the project.
CFD (Contracts
These types of PPP are contracts between investors and financial institutions in which investors take a position on the future value of an asset. The difference between the open and closing trade prices is cash-settled.
Subsidy PPP Contracts
Several subsidy forms that are commonly adopted in PPP projects have been considered and examined. The subsidy contract means that the PPP Facilitator supplies the strategic goods to Public or private entity with special discount/less price. Such subsidy ratio or percentage is minimum 20% and maximum 50%. The PPP Subsidy contracts can be signed with the Public or Private sector only for the following products.
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- Flour or wheat
- Sugar
- Edible oil
- Supplies for education students.
- Rice
- Beans
- Pea
- Gas, Diesel, and Patrol only for social use,
The main structure of such subsidy contracts is that the public sectors place or deliver a one year and one day security or payment guarantee in favor of PPP Facilitator and the PPP Facilitator will be responsible to supply the product(s) to the Public or Contractual party according to specified timeline.
The special purpose and vision of such contracts is to prevent the population from poetry and food crisis in the country. Such types of contracts cannot be sanctioned because they are only for peoples not for Governments.
Thanks
PPP Union