As renegotiation can have significant financial (direct and contingent) implications for the Procuring Authority, some form of fiscal oversight similar to the one used in the original PPP contract approval mechanism will typically be required. Regulatory frameworks typically separate responsibility for the approval of amendments from the Procuring Authority personnel who manage the renegotiation.
Oversight measures include procurement laws (to address instances where the risk allocation changes significantly and other bidders could have been more successful under the new structure) and state aid laws (to address instances where an unjustified benefit is granted to the Project Company).
Some specific examples of oversight include relevant thresholds on the project capital value, such as regulation in Chile, which prescribes a limit of 20% of approved capital value for renegotiations before Ministry of Finance approval is required; and a similar threshold in South Africa, which requires any 'material' amendment to be approved by its National Treasury. The applicable law may also distinguish between renegotiations and scope changes, and provide different thresholds.
There may also be merit in the establishment of independent technical panels capable of assessing the merits of a renegotiation. An independent panel demonstrates government commitment to a structured process that is likely to improve market certainty and reduce opportunistic calls for renegotiation. For example, in the Philippines an Investment Coordination Committee evaluates the monetary implications of major projects.