The Procuring Authority needs to keep in mind that it should not consider the Project Company as the only private partner; in fact, it is working with several private partners or private parties (including the Project Company, its equity investors, lenders, construction contractors and operations contractors). All these parties play different roles, and although it is important to remember that the Project Company is responsible for managing these relationships, the Procuring Authority should still be considerate of their existence and the interests of those parties after financial close.
For example, the Procuring Authority could invite the additional stakeholders to induction seminars to help improve their understanding of the government’s objectives of the project, or to invite the additional stakeholders to other meetings between the Procuring Authority and the Project Company, as relevant. This must be done while diligently observing relevant confidentiality requirements.
In several jurisdictions, the Procuring Authority will also agree with the Project Company and the construction contractor that it will have the opportunity to step in and cure a default related to non-payment to the construction contractor where the Project Company has not paid the construction contractor. Potential Project Company non-payments should be monitored to ensure the construction contractor can deliver the construction works and will not fall into financial difficulties. Procuring Authority step-in rights are detailed in Chapter 7 (Default and termination).One useful approach is to include the construction contractor in the dialogue between the Procuring Authority and the Project Company where there is a dispute over construction scope changes or other issues. The construction contractor will ultimately need to agree to the arrangements agreed between the Procuring Authority and the Project Company and involving the construction contractor at an early stage is likely to provide the most beneficial outcomes. Disputes are detailed in Chapter 5 (Disputes).