contractual structure alain françois september 10 th, 2012

Contractual Structure

Alain François

September 10th, 2012

Het Fairway consortium bestaat uit KPMG Advisory burg. CVBA , Eubelius burg. CVBA en Collis BV 2

Agenda

• Our input : some specifics re the Belgian tolling contract

• Your input: (foreign) tolling contract experience


Type of contract

• DBFMO

Design, Build, Finance, Maintain and Operate equipment and technical infrastructure for the provision of services in accordance with the requirements of the Regions/Sofico


Parties

• On the one hand : SSP

• On the other hand : Interregional Entity,

Flemish Region,

Brussels-Capital Region,

Walloon-Region and

Sofico (+ other concessionaires)


Contract matter

• Both Road Charge System and Road Vignette System

• Equipment and infrastructure for application and enforcement of the two systems

• Application– For both: CRM (call center …)– For Road Charge System:

Service points and logistics OBU’s Back office IT system for registration, verification, processing and billing

– For Road Vignette System: Sales channels foreign vehicles

• Enforcement– Stationary and flexible roadside equipment– Infrastructure Mobile teams– Infrastructure back office


Terms of payment

• No payments during design and construction period (ESA 95 requirements)

• Availability payments during operational period

• Fixed and variable component• Deductions based on KPI performance


Availability fee

• Fixed component:

• Repayment and remuneration of financing facilities used to fund the capital expenditures

• Fixed costs associated with project management, maintenance and operation

• Costs associated with enforcement

• Variable component:

• Cost of vignettes and active OBU’s (including a/o data communication costs)


Time frame

• 1 to 1,5 years design and construction

• Fixed operational period of 12 years counting from availability

• Possible extension by 3 periods of 1 year each


ESA 95 requirements

• ESA 95 neutrality of the tolling project: need for a sector classification of the PPP assets and related financial flows off the government’s balance sheet

• Possible impact on a/o:– Risk allocation– Clauses re liability, penalties, liquidated damages and deductions– Clauses re early termination

• Advice INR-ICN and possibly Eurostat


Liability of the SSP

• Basic principles of Belgian law

• Unlimited liability covering direct and indirect damages• Freedom of contract limited by mandatory rules, rules of

public order and the general principles of good faith and fair dealing

• Possible limitations of liability

• Remediation period• Qualification of errors• Penalties• Liquidated damages• Deductions


Early termination of contract

• Breach by the Regions/IE/concessionaire

• Breach by the SSP

• Force majeure


Risks allocated to the SSP

• re allocation contractual obligations

design, construction and planning, completion, maintenance, availability, interfaces, financial risk

• re performance of the contract:

a/o misconduct under the contract, violation of legislation, technical defect, security problems, loss of data, unpaid registered kilometers, miscalculation of toll amounts, delays and unavailability, creditor risk, vandalism


Warranties

• Delay and liquidated damages

• Design and construction defects

• Default (warranty not exceeding the average monthly toll transaction amount paid by the SSP: see Decision 2009/750/EC, Annex I.1)

• Final maintenance and renewal audit


Agenda

• Your input!


Important disclosure

This presentation is intended for market consultation purposes only and its content may be subject to change. This presentation does not provide technical, financial, nor legal advice and does not intend to grant any rights to its addressees and readers.

contractual structure alain françois september 10 th, 2012

Documents

eubelius burg

cvba en collis bv

office slide

eurostat slide

vandalism slide

regionssofico slide

kpi performance slide

renewal audit slide