Donald Warnock - rail projects in kuwait construction and operational issues

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Donald Warnock - rail projects in kuwait construction and operational issues

  1. 1. 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
  2. 2. 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.
  3. 3. 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
  4. 4. Typical PPP/PFI Project Structure Authority Lender: Independent [Y] Bank Certifier/Technical Project Adviser: Agreement [C] Limited Loan Agreement Joint Appointment of IC/TA SPV: Shareholder [A] [80]% Shareholder [B] [20]% O&M Contract Building Interface Contract Agreement Building O&M: Contractor: [E] plc [D] plc Subcontractors Consultants: Architect [P] M&E Engineer [Q] Structural Engineer [R] etc
  5. 5. Kuwait PPP novel structure Selected Kuwait IPO Investors Developer Government 40% 10% 50% SPV
  6. 6. 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
  7. 7. 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
  8. 8. Risks retained by SPV cont.• Indices differentiation• Law change (O&M phase)• Market testing• Defects Liability• Fare revenue/ridership shortfall
  9. 9. 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
  10. 10. 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
  11. 11. Our international practice
  12. 12. Presentation2 No individual who is a member, partner, shareholder, employee or consultant of, in or to any constituent part of Norton Rose Group (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation.3 Any reference to a partner means a member of Norton Rose LLP or Norton Rose Australia or a consultant or employee of Norton Rose LLP or one of its respective affiliates with equivalent standing and qualifications.4 This presentation contains information confidential to Norton Rose Group. Copyright in the materials is owned by Norton Rose Group and the materials should not be copied or disclosed to any other person without the express authorisation of Norton Rose Group5 This presentation is not intended to give legal advice and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. Readers must take specific legal advice on any particular matter which concerns them. If you require any advice or information, please speak to your usual contact at Norton Rose Group.
  13. 13. FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE AND COMMODITIES TRANSPORT TECHNOLOGY

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