In general, Project Co bears the risk of loss or damage to the Project Assets during the Term, including in respect of repairing or reinstating the Project Assets as this risk is insured. If the State directs Project Co to repair or reinstate the Project Assets, the State will also notify Project Co of the standard to which it requires Project Co to repair or reinstate the Project Assets and Project Co must submit a plan to the State for the repair or reinstatement of the Project Assets.
The only circumstances in which the State will pay Project Co for its cost of repairing or reinstating any loss or damage to the Project Assets is if:
• the loss or damage to the Project Assets was caused by a Day 1 Uninsurable Risk or an Uninsurable Risk or the Insurance fails to respond as a result of a State Insurance Breach; or
• the State directs that the Project Assets are to be repaired or reinstated to different specifications or standards that are different to the then current specifications or standards.
In each case the repair or reinstatement of the Project Assets will be treated as a State Initiated Modification and relief and compensation will be provided in accordance with Item 10, Table 1 of the Change Compensation Principles.
The compensation payable to Project Co will be the amount Project Co would have been entitled to recover under any Insurances, if the relevant Extension Event had been insurable under the Insurances, provided that the aggregate costs do not exceed the amount that is equal to the insurance proceeds that would have been payable under the relevant Insurance less any amount in respect of loss of equity return or loss of Project Co's profit. As Uninsurable Risks and Day 1 Uninsurable Risks are beyond both parties control, this is an appropriate risk allocation. Any extension to the Date for Acceptance as a consequence of the rebuild or repair will be addressed under the Modification Order. (See section 2.43.2.4 for an explanation of Project Co's entitlement to delay costs for loss or damage caused by Day 1 Uninsurable Risks or Uninsurable Risks). The State will otherwise indemnify Project Co for all other Liabilities incurred by Project Co as a consequence of the loss or damage up to the aforementioned cap.
If the State requires all or any part of the Project Assets to be repaired or reinstated to a different specification or standard, Project Co's entitlements for that 'modified' part of the reinstatement will be the difference between the cost of repair or reinstatement to the different specification or standard and the cost of repair and reinstatement to the current standard or specification.
If the State elects not to rebuild or repair the Project Assets and the damage is Major Loss or Damage, the State must terminate the Project Deed as if for a Force Majeure Event.
If the State elects not to rebuild the Project Asset and it is not Major Loss or Damage and the loss or damage is due to an Uninsurable Risk or Day 1 Uninsurable Risk then the State may omit that part of the Project Assets as a Modification.