This presentation talks about some of the contract clauses of concessionaire document of Hyderabad Metro. The clauses discussed are : Performance Security Right of Way Change of Scope Financial Close Dispute Resolution

1. Contract Clauses –
Hyderabad Metro
Presented By,
Rajkumar Kansagra FP17005
P. Madhusudhan FP17009

2. The Largest Ever Fund Tie-
up in an Indian PPP Project
PPP- DBFOT (Design Build Finance Operate
Transfer)

3. ₹.12,132,00,00,000
Estimated Cost
71.16 kms
Length of Metro
₹. 4,853,00,00,000
Viability Gap Funding Offered

4. “Article 09:
Performance Security

5. 9.1 Performance Security
▷ Bank Guarantee of Rs. 360 Crore with the form in
Schedule F within 180 days from the date of agreement.
▷ If not provided within 180 days the government has a right
to encash the Bid Security and can use it for the delay
damages.

6. 9.2 Appropriation of Performance Security
▷ In occurrence of Concessionaire default or failure the
government has the right to encash the performance
guarantee and appropriate the relevant amounts for damages.
▷ In the next 30 days after the use of performance guarantee
the concessionaire must replenish the bank guarantee if
partially used or give a fresh performance guarantee.
▷ If the concessionaire fail to provide above things, the
agreement shall be terminated by the government.

7. 9.3 Release of Performance Security
▷ Performance Security remains in force and effect for a
period of one year from the appointment date.
▷ Shall be released upon the concessionaire expending an
aggregate amount more than 20% of the total project cost.
▷ Should not be released if there is a breach of contract.

8. “Article 10:
Right of Way

9. 10.1 The Site
▷ The site of Rail System shall comprise of the real estate
described in Schedule A.
▷ Right of way shall be provided by the government to the
concessionaire as a licensee under and accordance with this
agreement.
▷ Site = Real Estate

10. 10.2 Licence, Access and Right of Way
▷ Government grants concessionaire access to the site.
▷ Leave and Licence Rights for all the land.
▷ Concessionaire shall perform its obligation on two existing lanes
without disturbing the traffic.
▷Licence shall terminate automatically on breach of contract.
▷The concessionaire shall appoint Government as Nominee.
▷ Everything other than trees on site are Concessionaires
Property

11. 10.3 Procurement of the Site
▷ Memorandum containing an inventory of the site is prepared
by mutual agreement.
▷ The Government shall have a vacant access and right of
way at any point of time which shall not include more than
10% of the total site area.
▷ Concessionaire shall provide round-the-clock vigil until
Transfer Date.
▷ Government shall provide the Site, Access and Right of Way
within 90 days from the Date of Agreement.

12. 10.3 Procurement of the Site (Cont.)
▷ Delay in informing this event will attract a concessionaire
compensation for delay of Rs. 1000 per day per 500 Sq. Mtr.
Area from the 91st day from the Appointment Date.
▷ If any additional land is required for any ancillary structures
the government shall initiate a change in scope order and
complete the procedure of acquiring the land within 60 days
and will form the part of the Site.

13. 10.4 Site to be free from Encumbrances
▷ The Site should be made available by the government to the
concessionaire which is free from all encumbrances.
▷ Concessionaire shall not be liable to incur any cost for
removal of any encumbrances from the Site.

14. 10.5 Protection of Site from Encroachments
▷ The Concessionaire shall protect the site from any
encroachment.
▷ Shall not allow anyone else to use the Site for their benefits
and also shall not claim to create any security interest over
the Site.

15. 10.6 Special/Temporary Right of Way
▷ The Concessionaire shall bear all the costs for special or
temporary right of way.
▷ The costs for facilities on the site need to be procured by the
cost of Concessionaire.

16. “Article 16:
Change of Scope

17. 16.1 Change of Scope
▷ Government has the authority to make changes.
▷ Concessionaire can also propose to make changes with a
written notice

18. 16.2 Procedure for Change of Scope
▷ Government issues Change of Scope Notice
▷ Concessionaire in such cases shall notice the government
on the change in the schedule of project.
▷ Also the increase in the costs with a detailed breakup of the
cost to be incurred.
▷ Mutual Agreement between both parties for cost and time.

19. 16.3 Payment for Change of Scope
▷ Within 7 days of issue of Change of Scope Order, amount of
20% of the total cost of change of scope must be released as
advance payment.
▷ Any cost of change of scope amounting to less than or equal
to 0.25% of the total contract value the cost is borne by the
concessionaire.

20. 16.4 Restriction on Certain Works
▷ Concessionaire should not undertake any works or services
which leads to delay in the project unless the Governments
consent.
▷ Concessionaire shall be entitled to nullify any change of
scope order if it causes the cumulative cost to increase by
more than 5% of the total project cost in any consecutive 3
years from the date of Change of Scope Order or cumulative
cost exceed 20% of the total project cost at anytime during the
project.

21. 16.5 Power of Government to Undertake Works
▷ Government can undertake any works and can award it on
the basis of open competitive bidding bust must give the first
right of refusal to the concessionaire of the project to match
the first ranked bid.
▷ The works to be done shall conform to Specifications and
Standards.

22. 16.6 Reduction in the Scope of the Project
▷ In case of failure of completing any construction work due to
force majeure or reasons obligated to the government, the
concessionaire shall pay 80% of the total sum saved from the
operation of the project to the government in return of
completion of the works obligations.
▷ For determining the obligations of the concessionaire in
such conditions Clauses16.1, 16.2 and 16.4 shall apply.

23. “Article 24:
Financial Close

24. 24.1 Financial Close
▷ Financial Closure to be achieved within 180 days of
agreement.
▷ In case of failure a further extension of 120 days and a delay
damage of 0.1% of the performance guarantee per day is to
be fined, for which a period of 80 days are given.
▷ 2 Days prior to the Financial Close the Concessionaire shall
provide 3 true copies of Financial Package and the Financial
Model duly attested and acceptable to the Senior Leaders.

25. 24.2 Termination due to Failure of Financial Close
▷ Contract shall be terminated by mutual agreement.
▷ If the Concessionaire is fault the bid security is encashed as
the proceeds for damage.
▷ If the government is at fault the bid security is returned to
the government.

26. “Article 44:
Dispute Resolution

27. 44.1 Dispute Resolution
▷ Dispute, Difference or Controversy of whatever nature must
be first tried to resolve amicably.
▷ The parties must give their best efforts for resolving the
dispute equitably and in good faith.

28. 44.2 Conciliation
▷ Independent Engineer for Mediation.
▷The dispute to be referred to the Principal Secretary to
Government, MA&UD Department and the Chairman of the
Board of Directors of the Concessionaire for amicable
settlement.
▷ The meeting shall be done within 7 days, if not then 15 days
if not then 30 days.

29. 44.3 Arbitration
▷ Rules of Arbitration of the International Centre for Alternative
Dispute Resolution, New Delhi are applied.
▷ Venue of Arbitration would be Hyderabad and Language
would be English.
▷ 3 Arbitrators must be appointed.
▷ Reasoned Award.
▷ Enforced on both the Government and Concessionaire.

30. 44.4 Adjudication by Regulatory Authority or Commission
▷ After no result from Arbitration the dispute is taken to an
appointed Regulatory Authority with powers to adjudicate.
▷ If any party want to appeal against such adjudication, it
should be done through an appellate tribunal or High Court as
per applicable Law.

31. Thanks!
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