Since the Procuring Authority considers the permitting period part of the overall construction period agreed in the PPP contract, the delays in the permits directly affect the construction duration. In the Piracicaba substation project, some governmental permits took longer than anticipated resulting in a 194-day delay to the start of construction. As per the PPP contract, the operations phase duration is automatically shortened by the length of these construction delays in the absence of a corresponding extension of the PPP contract.

The Project Company attempted to keep the original duration of the operations phase despite the construction delays as part of a claim for additional cost and time overruns during construction. The claim submitted by the Project Company was considered by the Procuring Authority.

The dispute resolution process on energy projects in Brazil is as follows:

•  The Procuring Authority has absolute administrative authority in accepting or rejecting a claim;

•  If the Project Company is not satisfied with the Procuring Authority's decision, the dispute is typically escalated straight to the judiciary.

This claim did not go beyond the first stage of the dispute resolution process. The Procuring Authority rejected the Project Company's claim and did not extend the contract duration of the PPP contract. The Project Company decided not to contest the decision, and as of the writing of this case study, this claim is resolved and considered closed.