Where the PPP contract is terminated and retendered, the choice of the substitute Project Company will require the Procuring Authority's approval.
The Procuring Authority must determine that the new Project Company is eligible, including that it complies with the PPP contract, any direct agreement, the applicable laws, regulations and standards; and that it has the requisite track record and reputation, technical expertise and financial resources. For example, the relevant procurement regulations that covered the procurement process prior to financial close may become relevant again, including being subject to retendering requirements.
A range of contingent liabilities will also typically exist for the Procuring Authority depending on what support and guarantee mechanisms are in place, such as any government guarantees of payment obligations and the agreed risk allocation. These contingent liabilities must be considered, as they may be affected by the structure of the new Project Company (including the new Project Company's debt financing arrangements).
The Procuring Authority may also need to negotiate the duration of any services suspension while a transfer is taking place, the extent of a 'temporary amnesty' or 'wipe clean' mechanism related to any existing payment deductions to be given to the substitute Project Company, criteria for the replacement of any contractors, and a detailed remedial plan for resolving the overall issues.