Transfer provisions apply to aspects related to the transfer of the PPP facility to the LGU. It particularly concerns PPP projects which have a 'transfer phase' (i.e. Build-Operate-Transfer, Rehabilitate-Operate-Transfer, Build-Transfer, or Build-Lease Transfer).
Several contract provisions may be included to ensure that the PPP facility is in working condition before its control and ownership is transferred to the LGU. It should provide service in the manner and quality it was set out to perform. Among these provisions that should be incorporated and examined are the following:
● Pre-agreed schedule of maintenance and an adequate supply of spare parts;
● Responsibilities of the operator;
● Assurances that the facility is operating in good condition;
● Assurances of compliance with good industry standards practices; and
● Joint inspection of the facility prior to actual turnover.
Project transfer provisions in the PPP contract should specify several important considerations and must indicate:
● Who bears the responsibility for securing the required licenses and permits (generally, the government) upon transfer;
● Whether warranties should be given by the private partner, regarding the condition of the facility on the date of transfer;
● Scope and content of training to be given to ensure continued smooth operations once the transfer is effected;
● An inventory count; and
● Assurance that the PPP facility should be free from all liens and encumbrances.
Rights of private investors and LGU during the period of PPP project transfer. At the time of hand over of PPP project ownership to the LGU, the private investor obtains and can exercise a distinct set or rights and privileges. At a minimum, the following rights are held by the private investor during transfer phase of the PPP project life:
● To appoint and remove consultants
● To purchase replacement equipment
● To manage and supervise the transfer
● To establish maintenance procedures
● Uninterrupted use and possession of the facility until transfer is finished
● Selection of any third party maintenance
The government, on the other, hand has the following rights:
● Regular inspection visits
● Submission by the proponent of a maintenance plan
● Submission by the proponent of maintenance manuals