A renegotiation of a PPP contract involves a change to the original contract terms and conditions. This is distinct from an adjustment (such as a minor scope change), which is contemplated in the PPP contract.
The scale of the change determines whether a renegotiation of the contract will be required. Large changes with major cost implications and the potential to change the agreed risk profile often require a renegotiation. For example, a renegotiation may be required where major changes to the scope of the project are involved.
PPP contracts typically include several mechanisms, such as scope change provisions for minor scope changes and claims procedures, to manage circumstances that were not fully understood or envisaged at financial close, without the need for a renegotiation. Minor changes will generally fall under the scope change or variation provisions, rebalancing provisions or other similar provisions in the PPP contract. Claims and scope changes are detailed in Section 3.5 (Claims).
Simple correction of errors or clarification of contract drafting can also typically be dealt with under existing provisions in the PPP contract and do not require renegotiation.
Some jurisdictions have a concept of economic rebalancing, which allows changes to be made that in other jurisdictions would require a renegotiation. This concept is described in more detail below under the heading 'Economic rebalancing'.