Comparative Study of Contractual Clauses to Provide for the Smooth ...

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Comparative Study of Contractual Clauses for the Smooth Adjustment ofPhysical Infrastructure and Services through the Lifecycle of a PPP ProjectAugust 2012payments 9 . This suggests that the practical operation of the UK SOPC 4 is little differentfrom the NHAI Annuity Road Contract when it comes to payment for variations.The Australian Economic Infrastructure Principles and the NHAI Toll Road Contract areintended for use in projects in which the private party receives revenue from user charges,such as tolls. These Frameworks are less specific as to how the private party will be paid forvariations, compared to the other Frameworks that apply to projects in which governmentmakes unitary payments. This reflects the fact that variations in projects with user chargingmay positively or negatively affect the private party’s revenue, leading to a need fornegotiation between the parties in relation to this impact and consideration by governmentas to whether it should pay for the variation or allow the private party to increase the usercharges.9 National Audit Office, “Making Changes in Operational PFI Projects” (17 January 2008), page 8.(Available at http://www.nao.org.uk/publications/0708/making_changes_operational_pfi.aspx.)Page 20 of 35Foster Infrastructure
Comparative Study of Contractual Clauses for the Smooth Adjustment of Physical Infrastructure and Services through the Lifecycleof a PPP ProjectAugust 2012Table 5: How does government pay for variations?Australian SocialInfrastructurePrinciplesAustralian EconomicInfrastructurePrinciplesUK SOPC 4South AfricanStandardised PPPProvisionsNHAI Toll RoadContractNHAI Annuity RoadContractGovernment can electto either pay throughthe unitary payment,or the capital costscan be paid as a lumpsum and the operating/ maintenance costsare paid through theunitary payment(section 19.6(a))Government canmake progressivepayments, or pay asotherwise agreed(section 18.6(b))The default position isfor government to paythe capital costs as alump sum and theoperating /maintenance coststhrough the unitarypayment, but it ispossible for the capitalcosts to also be paidthrough the unitarypayment (section13.3.7)The capital costs arepaid through theunitary payments ifthe initial cost can befinanced by theprivate party;otherwise governmentmust pay the capitalcosts as a lump sum(section 50.4.1)The form of paymentis not specifiedGovernment can electto either pay a lumpsum or up to 4 halfyearlypayments, orcan pay through theunitary payments ifthe variation onlyaffects operating andmaintenance costs(not capital costs)(clause 7.2(e))Page 21 of 35Foster Infrastructure
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