Legislative or regulatory changes that impact on the concession of the high-speed line may force the state to compensate the concessionaire of the project’s first public-private partnership, according to the specifications to which Lusa had access.
According to the clause in the tender specifications for the first public-private partnership (PPP) for the high-speed line (Porto-Oiã) concerning the restoration of the financial balance in favor of the concessionaire, the state may have to compensate the winning concessionaire if there are “legislative or regulatory changes of a specific nature that have repercussions on the manner and essential conditions of carrying out the activities that constitute the object of the Concession Contract”.
In addition to this criterion, these specific changes must also have “a direct impact on the income or expenses of the Concessionaire”, according to the document to which Lusa had access.
“Legislative or regulatory changes of a specific nature are considered to be those that have an impact, either on the Concession Contract alone or in conjunction with other contracts of the same nature, directly on the manner and essential content of the conditions for carrying out the activities that are the object of the Concession Contract,” the Specifications state.
The State may also have to compensate the concessionaire financially if there is a “unilateral modification, imposed by the Grantor [State], not covered by the risks assumed in the Concession Contract itself, of the essential content of the conditions for carrying out the activities which are the subject of the Concession Contract”.
For this to happen, there must also be, “as a direct result” of this modification, “an increase in expenses or a loss of income” for the concessionaire.
Restoring financial equilibrium should only take place when “there has been a proven increase in the Concessionaire’s expenses and/or a reduction in its income”, and in order to determine the figures, both the state and the concessionaire must agree on “the most appropriate methodology for calculating them”.
These criteria do not apply to “legislative changes of a general nature, including labor, tax, environmental and public procurement laws”, as well as any others “for which the right to financial restitution” of values between the parties is expressly excluded.
In any case, the restoration of the financial balance only takes place if the impact is greater than one million euros, according to the document, and the right to claim it expires within 60 days.
“Restoring the financial balance cannot put either party in a more favorable situation than that resulting from the financial balance initially established, and cannot cover any losses that already resulted from that balance or were inherent to the risk of the contract itself,” the specifications also state.
The criteria by which the financial replacement can be made can be, according to the values of a Base Case or Financing Agreement to be established between the parties, the nominal annual Internal Rate of Return (IRR) for the concessionaire’s shareholders, the minimum value of the Annual Debt Service Coverage Ratio or the minimum value of the Loan Life Coverage Ratio.
Companies or consortia interested in bidding for this PPP must do so by 5 p.m. on June 13, and the procedure is worth 1.66 billion euros, to which 480 million euros of European funds can be added, making a total of 2.14 billion euros.
The evaluation procedure considers price to be a factor with 70% weighting, and quality 30%.
In total, this PPP implies a cost of around 4.3 billion euros until 2055, according to the Council of Ministers’ resolution, with a “sum of 4,269,507,412.38 euros” spread over 31 years, relating to the concession to the winner of the public tender.
