Most PPP contracts will require a degree of active contract management.
For some PPP contracts, the Procuring Authority may be able take a more limited role in contract management, if it is exposed to a lower level of risk with less onerous contractual obligations, or if the project is smaller and less complex. For example, in some power purchase agreements (PPAs), a Procuring Authority agrees to purchase energy generated by a Project Company over a certain period of time and provides limited oversight, such as administering performance reports, tariff changes, and performing periodic audits on asset condition and financial performance.
However, even in such cases, the Procuring Authority may also be responsible for the interface with related projects, such as a transmission line for an energy asset. The Procuring Authority would then be exposed to a higher level of risk and more onerous obligations with respect to delivery of the adjoining project. This must be carefully managed and a more active approach is often required.
| EXAMPLE Passive contract management in Brazil The energy regulator in Brazil, the National Electric Energy Agency (ANEEL) has recently signed 10 new hydroelectric plants, which have added 2,607 MW of generating capacity. Design, construction and operational requirements are the responsibility of the Project Company, which takes the energy demand risk, and hence the Procuring Authority focusses on a small number of performance indicators associated with the frequency and duration of failures in supply. |