Donald Warnock - rail projects in kuwait construction and operational issues
FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE AND COMMODITIES TRANSPORT TECHNOLOGY Rail Projects in Kuwait Construction and Operational issues Donald Warnock Partner Norton Rose LLP 20 April 2011
Introduction and Background• Partner in construction / engineering group dealing with non-contentious and contentious issues.• Significant experience of all forms of construction contract, including bespoke contracts.• Recently completed a 2 year secondment to Tube Lines (London) as acting General Counsel. Tube Lines are responsible for the upgrade and maintenance of the Jubilee, Northern and Piccadilly lines under the PPP Contract with London Underground Limited.
Kuwait Projects• Kuwait Metro Rail PPP- 2 to 4 lines (US$6 to 12 billion)- lines to be tendered separately- advisory team in place- Build Operate Transfer (BOT) structure• Kuwait Rail Road Systems PPP- heavy rail- will be part of the wider GCC network
Pass Through & Equivalent Project Risk• Pass Through – Principal Risks for SPV – Principal Options for risk transfer• Equivalent Project Relief – What is it and when is it applied – EPR clauses
Risks retained by SPV• Mismatch of liability caps• Insurance• Non-fault risk• Principal contractor interface• Consequential loss• Authority change• Law change• SPV shareholders action/inaction
Risks retained by SPV cont.• Indices differentiation• Law change (O&M phase)• Market testing• Defects Liability• Fare revenue/ridership shortfall
Insurance / risk transfer• Project specific requirements – insurance advisers• Construction all risks / material damage, third party liability, professional indemnity, business interruption cover (to cover loss of revenue for insured events), advance loss of profits insurance / delay in start up insurance• Premium costs and risk sharing
Limitations on liability – scope and nature• Overall liability capped – Building contractor – O&M contractor• Principle behind liability/limitation• Insurance• Effect on contract sum• Examples of exclusions
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FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE AND COMMODITIES TRANSPORT TECHNOLOGY