1.2.2.5 Continued availability payment -

Under the "government pays" model (see Section G, PPP Contracts in Context), it may be appropriate risk sharing for the Private Partner to (a) continue to be paid as if it is performing in full, (b) to be paid an adjusted amount to cover debt service costs (but not the operation and maintenance cost savings that may arise from not performing or lost profit), or (c) not to be paid at all. This will in part depend on the availability of insurance (such as business interruption insurance). Another possibility is to adjust the performance regime in respect of any part of the service that is able to be provided in order to reduce any payment deductions.

EMERGING AND DEVELOPED MARKET DIFFERENCES

The extent to which compensation is paid (or relief from deductions under the payment mechanism is granted) during the continuation of a Force Majeure event can vary according to jurisdiction. It is less common in some emerging markets for a Contracting Authority to make additional payments during a Force Majeure Event unless it is a political risk event considered within its control (i.e. a type of MAGA event as described in Section 2.2.1).

In developed markets (particularly some civil law jurisdictions), Contracting Authorities may be more willing to make payments However, in some jurisdictions, such as the UK, it is more common for the PPP Contract to identify specific risks that the Private Partner cannot bear (such as a volatile raw materials price) and provide expressly for financial relief on their occurrence.