1.  INTRODUCTION

PPP projects are characterized with a complex network of contractual agreements defining the roles and responsibilities of the various stakeholders to the project. Typical contractual structure of a PPP project comprises of concession agreement, construction contract, O&M contract, loan agreement, shareholders' agreement, and supplier's agreement. Amongst these contractual agreements, the concession agreement (or project agreement) is the most important agreement signed between the project company and the granting authority, wherein the project company is authorized to construct and operate the project for a specific time. The project agreement specifies how the risks associated with the project will be allocated between government and project company. The project company then delegates these responsibilities and risks to the other stakeholders such as financiers, constructors, suppliers, purchasers and O&M companies. The project company enters to contractual agreements (such as loan agreement, construction contract, supply agreement, and O&M agreement) with these stakeholders and the contractual provisions of these agreements are required to be on a back-to-back basis with the concession agreement. In view of this, the concession agreement also need to take into account the concerns of the other stakeholders like financiers, constructors, suppliers, purchasers and O&M companies, besides the project company.

2.    PROVISIONS OF PROJECT AGREEMENT

The content, structure, and wording of the project agreement are huge and could vary from one project to another for the same infrastructure sector. However, regardless of the infrastructure sector, and country and legal system, the project agreements will be found to contain the following categories of contractual provisions:

• Parties to the agreement and basic terms of project agreement.
  
  
• Rights and obligations of the parties during the project lifecycle in a chronological order.
  
  
• General obligations of the parties applicable to all phases.
  
  
• Provisions relating to definition and regulation of consequences of changed circumstances, and breach of contract.
  
  
• Assignment of project agreement, depending on the legal traditions of the contracting parties.
  
  
• Miscellaneous provisions (e.g. dispute resolution).
  

The description of the above-mentioned categories of contractual provisions is discussed in the following sub-sections.

2.1    Basic Terms of Concession

The project agreement normally begins by identifying the parties to the agreement. Recitals provide the background and context for the latter substantive sections of the agreement. The definitions of the terms that will be used in the context of the contractual provisions are also included in this category. The fundamental rights and obligations of both the government and the project company should be described early in the project agreement. The events that must take place before the project agreement becomes effective should also be included in this category as conditions precedent. Some of the typical condition precedents are: Evidence that both parties are properly organized and authorized to contract; Necessary permits and licenses have been obtained; Financing is in place and; all other conditions necessary to start construction have been properly satisfied or waived.