Partnership contract consists of a set of contracts, undertakings, guarantees, appendices and any related agreements that govern the contractual relationship between the Federal Entity, the project company and any other concerned party such as the emirates' local governments, guarantors, funding banks, international organizations, the state concerned authorities and institutions, public institutions or the private partner awarded the joint project.
There is a set of things shall be identified in the PPP contract, and thus, the federal government may develop standard contracting provisions, which shall be general provisions taking into consideration the internationally acceptable general matters and provisions. These standard provisions aim at developing a clear perception of the method to be followed by the Technical Bureau and the Federal Entity in dealing with the PPP contracts, especially in relation to the type of risks involved in these contracts and how to transfer them, reducing the negotiation period and consequently reducing the cost incurred by the parties involved in the project. It shall be noted that those standard provisions shall not constitute ready-to-sign contract forms, but other things specific to each sector or project shall be taken into consideration, including, but not limited to, the private partner dues structure and the their payment mechanism.
The structure of dues to be paid to by the Federal Entity to the project company varies depending on project. These dues may be in exchange for providing services, may be based on availability charge, or may be a structure combining both forms. On the other hand, fees may be imposed on users for benefiting from services in some joint projects, while the service may be free of charge in other projects. This matter depends on the joint projects nature.
If the services are provided to users in exchange for fees, these fees shall be approved by the Concerned Authority in the federal government "Cabinet".
Therefore, the relationship between the project company and Federal Entity is a direct relationship. The project company provides the public service without collecting its dues from the beneficiaries to its own account, and the Federal Entity collects fees through its employees or systems. However, the project company may be authorized to collect the fees of the joint project on behalf of the Federal Entity. Thus, the money collected by the project company shall not subject to retention, deduction or set off because it is a public property.
The PPP contract draft constitutes an integral part of the bidding requirements document. However, drafting the PPP contract does not mean that it may subject to significant amendments because the draft outlines have been agreed upon with the qualified participants during the dialogue period, taking into consideration the international best practices. Accordingly, the bidders' notes shall be limited to revising some matters in the draft. Discussing the PPP contract wording with the qualified partners significantly contribute in accelerating the contract signing after awarding the project to the winning partner.
Hereunder some of the standard articles that may be included in the PPP contract:
1. Works that each party shall do or refrain from doing it, and rights and obligations of each party .
2. The project technical, environmental, financial and economic requirements and the associated obligations of each party.
3. Contract term, provided that this term shall not exceed (suggested 30 or 35 years)
4. Financing basics and mechanisms
5. Details of all dues that will be paid to the private partner in exchange for performing the works agreed upon in the contract, the mechanisms of calculation and payment, mechanisms of price review, the service price and change in service requirements.
6. Security and safety requirements and the basics of their supervision, inspection and assessment.
7. Measurement and Assessment indicators of Private partner performance (KPI)
8. Reports to be prepared by the private partner and their submission dates.
9. Risks distribution among parties, as well as the measures and procedures to be followed to reduce those risks.
10. The mechanisms and procedures of addressing the impacts resulted from the technical and technological developments/ upgrades and their effect on the project implementation, the service price, investor rights, etc.
11. Rights of government intervention and the cases leading to that intervention, and the government right to request changing the management.
12. Procedures of complaint and grievance and their consideration mechanisms, arbitration and contract termination
13. The controls obliging the investor/ partner to use the governmental entity employees, as well as identifying the emiratization ratio therein (to be identified depending on the nature of each project)
14. Explanation of the obligations relating to the intellectual property rights of each party and ensuring that the private partner shall transfer knowledge and experience to the government authority, including providing an integrated and organized program for training and qualifying the Federal Entity employees, focusing on UAE nationals in order to be able to manage and operate the project after the expiration of the contract with the private partner.
15. Guarantees and securities provided by each party.
16. Moneys, properties and assets owned by the government, which will be at the disposal of the private partner throughout the project period to be able to perform its obligations, in addition to the rights and obligations of the private partner in respect of those assets and moneys.
17. Mechanism and time of transferring the joint project to the government or its representative.
18. Penalties, fines and actions that may be imposed on the private partner in the event of violating its obligations under the contract.
19. Procedures of securing the continuity of the project and works contained in PPP contract works upon its expiration or termination or if the private partner violates its obligations under the contract.
20. The rules applied in the state for dispute resolution, including mediation and arbitration.