In some circumstances, the State may wish to take over some or all of Project Co's obligations for a period, including where there is a need to discharge a statutory duty, prevent or mitigate a serious risk to health or safety.
Step-in rights for the State are triggered when:
• a Major Default occurs (and Project Co is not complying with its obligations with respect to the Major Default or an Emergency occurs or the State is entitled by Law to discharge a statutory power or duty);
• a State Cure Notice has been issued by the D&C Contractor or the Services Contractor in accordance with the D&C Contractor Direct Deed or the Services Contractor Direct Deed (as the case may be);
• a Default Termination Event occurs;
• an Emergency occurs;
• the State is entitled by Law to act to discharge a statutory power or duty; or
• any Project Activities are suspended following the occurrence of an Intervening Event.
The nature and cause of the event that leads the State to exercise its rights of step-in will determine its treatment with respect to Abatement of Service Payments and responsibility for the State's Liability for the step-in. The general principle that is applied is:
• step-in caused by Project Co - the Service Payments will be subject to Abatement to the extent the Services are not being provided in accordance with the Project Deed and Project Co will be responsible for any other Liability incurred by the State or a State Associate in connection with the exercise of the State's step-in rights; and
• step-in not caused by Project Co or a Force Majeure Event - the State's exercise of its rights will be:
- in relation to any Development Activities, a Compensable Extension Event;
- in relation to any Services or other obligations under the Project Deed during the Operational Phase, an Intervening Event (as Project Co will continue to receive the Service Payment notwithstanding the Services are suspended and Project Co should not incur any additional costs as a result of the step-in); and
• where the exercise by the State of its step in rights is the result of a Force Majeure Event, that exercise of rights will itself be treated as a Force Majeure Event, and therefore an Extension Event or an Intervening Event (as the case may be) (refer to section 2.27.2).