The Project Deed sets out the terms on which any State Contribution will be paid by the State (see section 2.39). On termination of the Project Deed, any future obligation of the State to pay any State Contribution will cease (on the basis that the required conditions for that payment to become due and payable will not be satisfied).
To the extent that any State Contribution has already become due and payable at the time the Project Deed is terminated but has not been paid by the State, this is an amount owing by the State to Project Co and the Termination Payments Schedule provides for this to be treated as follows:
• Default Termination Payment: the State Contribution can be taken into account either as part of the value of the New Contract (as determined under the competitive retender process or calculated by the independent expert) or as an amount owing by the State to Project Co, but not both: and
• Force Majeure Termination Payment and Termination for Convenience Payment: the State Contribution is not counted as an amount owing by the State to Project Co, but when calculating the Project Debt component of the Termination Payment as at the Expiry Date, the impact of any modelled payment of the State Contribution on the amount of debt forecast to be owing on the Expiry Date is disregarded. This prevents the value of the Project Debt component being reduced by the modelled application of a State Contribution which is due and payable to Project Co but has not been paid by the State. Accordingly, Project Co will receive the benefit of the State Contribution due and payable as part of the Project Debt component of the Termination Payment.
If a Project Deed also provides for ongoing (milestone-based) State Contributions during the Development Phase, the appropriate treatment of these under the Termination Payments Schedule will need to be considered on a project specific basis. In particular, to the extent that State Contributions are required by the State and/or modelled to be applied to directly pay the D&C Contractor rather than to reduce Project Debt, the appropriate treatment of those amounts in the calculation for a Force Majeure Termination Payment or a Termination for Convenience Payment will need to be considered.