PUBLIC PRIVATE PARTNERSHIP

2. MODEL CONCESSION AGREEMENT (MCA)

RAVINDRA NADH CHOWDARY K

1
 MCA - DEFINITION

Model Concession Agreement (MCA)

contract that sets the terms of execution of a project

and is signed between the concessionaire and the
government, in this case the National Highways
Authority of India (NHAI).

MCA for BOT (<100 CRORES PROJECTS)

MCA for BOT (>100 CRORES PROJECTS)

MCA for Hybrid Annuity Model

2
 MCA - DEFINITIONS

Commercial Operations Date (COD)

• Date on which the Independent Engineer has issued the
completion certificate or the provisional certificate upon
completion of the project

Commencement Date
• Date on which physical possession of the project site is
delivered by GOI to the concessionaire, which shall not be
later than 30 days from the date of agreement

3
 MCA - DEFINITIONS

Equity
• Representing the equity share capital of the concessionaire and
shall include the funds advanced by any member of the
consortium or by any of its share holders to the concessionaire
for meeting equity component of the total project cost

• Equity bought in after COD shall not be considered

Financial Close
• Date on which the financing documents providing for funding by
the lenders have become effective and the concessionaire has
immediate access to such funding under the financing
documents
4
 DEFINITIONS cont..

Escrow Account
• Account which the concessionaire shall open and maintain with a
bank in which all inflows and outflows of cash on account of
capital and revenue receipts and expenditure shall be credited
and debited

Independent Consultant
• NHAI shall appoint a consulting engineering firm or body
corporate out of the three names proposed by concessionaire
from the panel of 5 consultants proposed by NHAI

5
 CONCESSION & PROJECT SITE

• Concessionaire to investigate, study, design, engineer,

procure, finance, construct, operate and maintain the
project / project facility including but not limited to the right
of levy, demand, collect and appropriate fee from vehicles
and persons liable for payment

• GOI to handover to the concessionaire physical possession of

Project site free from encumbrance within 30days from the
date of agreement

6
 CONCESSION & PROJECT SITE
Peaceful Possession

• Concessionaire shall have no obligation / liability as to

payment of any compensation (rehabilitation &
resettlement of any person)

• Obstructed by any person claiming any right, title or interest –

concessionaire indemnified against any direct or
consequential loss or damages

Environmental clearance:

• GOI confirms that the project/project site has been granted

clearance.

• Concessionaire however apply for and obtain any other

applicable permits related to environmental matters 7
 PERFORMANCE SECURITY
• 3% of the estimated project cost in the form of BG

• Performance security for operation and maintenance is 1%

of project cost

• In case of encashment of performance security, concessionaire

shall within 30 days furnish fresh performance security
failing which contract will be terminated

8
 FEE

• GOI to publish the fee notification within 180 days from

commencement date

• Concessionaire shall not levy and collect fee until it has

received completion certificate / provisional certificate

• Display the fee at the toll plazas at a distance of 200m ahead

of toll plazas

• In the event of extension in concession period – revise fee @

10% every 2 years

9
 OBLIGATIONS AND UNDERTAKINGS

General
• Investigate, study, design, construct, operate and maintain the
project asset/project facility
• Obtain all applicable permits in conformity with applicable
laws
• Procure and maintain in full force and effect, appropriate
proprietary rights, licenses, agreements and permissions for
materials, methods, processes and systems
• Provide all assistance to IE for performance of duties and
services
• Provide reports to steering committee on regular basis
• Appoint, supervise, monitor and control the activities of
contractors
10
 OBLIGATIONS AND UNDERTAKINGS

• Develop, implement and administer a surveillance and safety

program for project facility, users and contractors personnel

• Precautions for prevention of accidents

• Make its own arrangements for quarrying, if necessary

observe and fulfil the environmental and other requirements

• Responsible for safety, soundness and durability of the project

facility

• Make payment to police department or any government agency

if required for provision of services

11
 OBLIGATIONS AND UNDERTAKINGS

• Operate and maintain at all times during operations period in

conformity with agreement but not limited to specifications &
standards, the maintenance program and good industry
practice

• Remove promptly all surplus construction machinery and

materials, waste materials, rubbish and other debris with the
applicable laws and applicable permits

12
 OBLIGATIONS AND UNDERTAKINGS

Implementation Period

• Submit to IE project completion schedule and scheduled project

completion date

• Have requisite organisation and designate & appoint suitable

officers

• Construct provide and maintain a furnished site office

accommodation for IE

• Adequately equipped field laboratory

• Afford access to the project site, to the steering group,

representatives of GOI,IE, and officer of any govt. agency

13
 OBLIGATIONS AND UNDERTAKINGS

• Concessionaire shall

– Apply for & obtain necessary clearances and/or approvals for

the construction of ROB/RUB from MoR

– Make payments to railways for approvals / shifting of utilities

/ supervision / maintenance

– Agreement with state government / railway zone for

the construction of ROB/RUB as per the requirements of MoR

• Project site to be kept in continuous satisfactory use (by

temporary or permanent diversions)

14
 OBLIGATIONS AND UNDERTAKINGS
GOI

• Handover the physical possession within 30 days

• Procure execution of state support agreement within 30days

• Grant or where appropriate provide assistance to concessionaire

in securing permits

• Not include any additional category of vehicles during

concession period

• Upon written request from concessionaire, assist the

concessionaire in obtaining access to all infrastructure facilities
and utilities, including water, electricity and telecommunication
facilities
15
 OBLIGATIONS AND UNDERTAKINGS
• Procure that no barriers are erected or placed by GOI or any
government agency on the project facility.

• Assist the concessionaire in obtaining police assistance against

payment of prescribed costs and charges

16
 INDEPENDENT ENGINEER
• Concessionaire within 30 days submit to GOI a panel consisting
of at least three reputed firms / companies / body
corporates or combination

• GOI within 30 days from the date of receipt of such panel

appoint IE

• The IE shall submit to steering group reports at least once in a

month

• Disputes – dispute resolution procedure

• Termination and appointment if not discharging its duties in a

fair, appropriate and diligent manner

17
 STEERING GROUP
• Comprising of representative each from GOI, STG, and the
concessionaire within 60days of agreement

• Functions
– Hold meeting once in 3 months to review progress during
implementation period and once in 6 months during operations
period

18
 DRAWINGS
• Preparation of drawings by concessionaire
• Review and approval
– Within 15 days of receipt of drawings IE shall review the same

– Failure to review by IE/steering group with in specified period,

concessionaire shall be entitled to proceed with work, GOI
shall not be liable for the adequacy of drawings

– Within 90 days of the COD, concessionaire shall furnish 3 copies of

as built drawings duly vetted by IE

19
 PROJECT IMPLEMENTATION AND
OPERATION
• Concessionaire shall furnish quarterly reports to the steering
group on actual progress

• Carrying out of tests as per time and frequency

• Concessionaire shall expedite progress within 15days of

intimation by IE if rate of progress is not feasible for project
completion

• Suspension of construction works if work is being carried out in

a manner which threatens the safety of the construction works –
costs shall be borne by concessionaire

20
 PROJECT IMPLEMENTATION AND
OPERATION
• Suspending the construction works by steering group other than
default or breach of agreement
– Project completion schedule and scheduled project completion date
gets extended

– IE shall add the preservation costs if any incurred by the

concessionaire to the initial investment in the cash flow projections
the resultant loss due to suspension

• LD for late completion – max 5% of project cost evenly

spread over 180 days

• If COD does not occur with 180 days from scheduled

project completion date – termination

21
 PROJECT IMPLEMENTATION AND
OPERATION
• Tests
– At least 30 days prior to likely completion of project –
concessionaire shall notify IE and steering group, at least 10 days
prior notice of the actual date.

– All tests shall be done in accordance with applicable laws and

permits

– IE will issue provisional completion certificate with punch list points

– Punch list items to be cleared within 120 days from the issue
of PC or GOI will complete those items and take money from
concessionaire

22
 PROJECT IMPLEMENTATION AND
OPERATION
• Operation & Maintenance
– Ensuring smooth and uninterrupted flow of traffic

– Charging, collecting and appropriating fee

– Minimizing disruption to traffic in the event of accident

– Undertaking routine maintenance

– Maintenance work in accordance with maintenance manual and the

maintenance programme

• Maintenance manual shall in consultation with evolve within

120 days before scheduled completion date, 10 copies to
be submitted 2 months before COD

• Maintenance programme – not later than 45 days before

beginning of account year 23
 PROJECT IMPLEMENTATION AND
OPERATION
• Emergency De-Commissioning
– If, in the reasonable opinion of the concessionaire there exists an
Emergency which warrants decommissioning and closure of traffic of
whole or any part of the project facility

– Decommissioning to be notified to PWD engineer promptly

24
 FINANCING ARRANGEMENT

• Concessionaire shall at its cost, expenses and risk make such

financing arrangement

• If concessionaire employing funds borrowed from lenders,

provisions relating to lenders including those related to financial
close and substitution agreement

• Amendment to financing documents shall not be done without

express consent of GOI

25
 SUPERVISION CHARGES

• 1.5% of the estimated project cost, amount to be specified

in the bid document

• Paid in equal annual instalments

• Project monitoring and coordination expenses 0.5% of

estimated project cost per annum

26
 INSURANCES

• Concessionaire shall, at its cost & expense, purchase and

maintain during the implementation period
– Builders all risk insurance

– Comprehensive third party liability (injury / death to personnel of

persons)

– Workmen’s compensation insurance

– Any other insurance that may be necessary to protect the

concessionaire

Insurances during Operations period

• Concessionaire shall takes insurances against

– Lost, damage or destruction of project facility

– Liabilities to third parties 27

 CHANGE OF SCOPE

• Provision of addition / deletion of works provided such changes

expenditure not exceeding 5% of the project cost and do
not adversely effect the scheduled project completion
date.

Procedure of change of scope

• GOI issue concessionaire a notice of change of scope

• Concessionaire within 15 days, provide to the IE such

information with preliminary documentation
– The impact which the change of scope is likely to have on
project completion schedule

– Cost to the concessionaire of complying with such change of scope

notice on account of increase in BOQ at the rate mentioned.28
 CHANGE OF SCOPE

– IE shall review and communicate its recommendation to steering

committee within 15 days from receipt of information from the
concessionaire

• GOI shall issue change of scope order with 15 days from the
date of recommendation

29
 CAPACITY AUGMENTATION AND
ADDITIONAL FACILITY
• After COD, government may decide to augment/increase the
capacity of the project
• GOI invite proposals from eligible persons, while Concessionaire
shall have the option to submit its proposal
• Bid document for capacity augmentation shall specify a termination
payment to be made to concessionaire
• If fails to give the lowest offer, concessionaire shall be given the
first right of refusal to match the preferred offer
• If concessionaire matches the preferred offer, the parties shall
enter into suitable agreement
• In such case concessionaire shall pay lowest bidder 0.1% of
estimated cost subject to max. of Rs. 10 lakhs towards
bidding cost of such bidder 30
 CAPACITY AUGMENTATION AND
ADDITIONAL FACILITY
• If the concessionaire chooses not to submit offer /
declines to match the preferred offer, GOI shall be entitled
to terminate the agreement and pay to concessionaire of the
termination payment

Additional Facility

• GOI shall not construct and operate either itself or have the
same, built & operated on BOT basis

• GOI may build and operate such facility subject to the fee
charged for vehicles using such facility being at any not less
than 133% of fee for the time being charged for the
vehicles using the project facility
31
 FORCE MAJEURE
• Non Political event (Acts of god, radioactive contamination,
strikes or boycotts, any judgment or order of any court of
competent jurisdiction etc), Indirect political event (act of
war, industry wide strikes, public agitation), Political event
(change of law, expropriation etc)
• Effect of force majeure event
– No termination
– If occurs before COD, project completion date and concession
period extended by the period
– If occurs after COD, concessionaire make reasonable efforts to
operate the project, if unable to do, concession period shall be
extended as determined by steering committee for which toll
collection fee remains affected
32
 FORCE MAJEURE
• Allocation of costs
– Non political events parties shall bear the costs

– Indirect political event – borne by concessionaire to the extent of

insurance, if exceeds insurance cover, one half shall be reimbursed
by GOI within 90days

– Political event – reimbursed by government within 90days from

the date of receipt of claim

– GOI may at its option reimburse the force majeure costs either
by cash / increasing the concession period

• Termination
– If extends for more than 120 days

33
 FORCE MAJEURE
• Termination Payment
– Non political events – 90% of the debt due less pending
insurance claims, if insurance not admitted and paid, 90% of claims
shall be paid

– Indirect political event – total debt due less pending insurance

claims , , if insurance not admitted and paid, 80% of claims shall be
paid

– 110% of the equity subscribed in cash and actually spent on the

project if termination occurs during 3 yrs commencing from
commencement date and after successive year, amount shall be
adjusted as per WPI during such yr and the adjusted amount shall
be reduced every yr by 7.5%
34
 FORCE MAJEURE
– Political Event – total debt dues plus

– 150% of the equity subscribed in cash and actually spent on the

project

• Should repot within 7 days by the affected party

• Report should contain

– Nature and extent of each force majeure event

– Estimated duration and the effect or probable effect

– Measures which the affected is taking

35
EVENTS OF DEFAULT AND TERMINATION

• Concessionaire Event of Default

– Fails to commence construction within 30 days from the
commencement date

– Fails to achieve COD within 180 days from scheduled project

completion date

– Representation made or warranties given by the concessionaire is

found to be false

– Creates any encumbrance on the project site / project facility

– Suspends or abandons the operations of the project without the

prior consent of GOI

36
EVENTS OF DEFAULT AND TERMINATION

• GOI Event of Default

– Breach of this agreement and failed to cure such breach within 60
days from the date of receipt from concessionaire

– Breach of any of its obligations and has not been cured within
30days from the date of written notice

– Delayed payment of any amount that has fallen due beyond 90 days

37
EVENTS OF DEFAULT AND TERMINATION

• Termination for Concessionaire default

– Incase breach/default not cured within 60 days from the date of
preliminary notice

– If default not cured within 30 days from preliminary notice, GOI

shall be entitled to encash the performance security

– If not cured within 30days of encashment notice and fresh

performance security is not submitted, - termination notice

– Termination amount 90% of dues less pending insurance claims /

80% of amount if claims not admitted

38
EVENTS OF DEFAULT AND TERMINATION

• Termination for GOI default

– Total debt plus

– 150% of equity subscribed in cash and actually spent on the project

if such termination occurs any time during 3 years commencing
from the commencement date and each successive year thereafter
such amount shall be adjusted every year to fully reflect the
changes in WPI during such year and adjusted amount so arrived at
shall be reduced by 7.5%

39
 EVENTS OF DEFAULT AND TERMINATION

• Rights of GOI on termination

– Take possession and control of project assets

– Prohibit the concessionaire and any person claiming through or

under the concessionaire from entering upon the project assets /
dealing with or any part thereof

Termination payments
• Within 30 days from the day of demand

• If fails to pay within 60days the interest rate at SBI PLR plus two
percent

Mode of Payment
• Credit directly to bank

40
 CHANGE IN LAW
• If there is increase in costs / reduction in net after tax return or
other financial burden, the aggregate financial effect of which
exceeds 2-3 million in any accounting year, the concessionaire
may notify the same to GOI/steering committee

• Extension to the concession period so as to put the

concessionaire in the same financial position

• GOI, shall within 30 days of receipt of such recommendation,

extend the concession period

41
 HANDOVER AND DEFECT LIABILITY
PERIOD
• At the end of concession period, hand over vacant and peaceful
possession of project assets at no cost to GOI

• Handing over process shall be initiated at least 12 months

(project specific) before the actual date of expiry of concession
period by a joint inspection by PWD engineer & concessionaire

• Within 15 days of such inspection prepare and furnish list of

works/jobs/additions to be carried out / if not carried out GOI
shall be at liberty to carry out by any other person

42
 DISPUTE RESOLUTION
• Should attempt to amicable settlement within 15 days
• Not settled by amicably will be referred to arbitration as per
arbitration and conciliation act 1996
• Place of arbitration New Delhi
• Language – English
• Decision or award resulting from arbitration shall be final and
binding
• Fees and expenses
– Initially born and paid by respective parties
– Arbitrators may provide in the arbitral award for the reimbursement
to the prevailing part of its costs and expenses in bringing or
defending the claim
43
 REPRESENTATIONS AND WARRANTIES,
DISCLAIMER
• The aggregate equity share holding of the members of
consortium / sponsors in the issued and paid up equity share
capital shall not be less than
– 51% until expiry of 3 years following COD

– 26% during remaining operations period

44
 MISCELLANEOUS

• Concessionaire shall indemnify GOI against all claims arising out

of breach by concessionaire obligations and vice verse

• Concessionaire shall not undertake or permit any form of

commercial advertising

45
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT

Concession 15 years
Period
Bid Security 50 million

Rs. 100 million within 120 days* of the date

of this agreement
* Till such time bid security shall remain in
full force & effect.
Release of performance security:
Equity by the share holders to extent of 100%
/ Concessionaire having expended on the
project 20% of project cost.
Performance 3% of the estimated project cost In case of concessionaire default
Security and 1% for O & M NHAI shall encash performance security,
within 15 days fresh performance security
shall be provided, failing which leads to
termination
After fresh performance security,
concessionaire shall be granted 60days as
cure period

46
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
Shall not collect any fees from local personal
traffic and local commercial traffic in excess of
following discounted rates
Increase in fee biannually at
Fee 10% of prevailing rate for each •Local personal Traffic : 25% of applicable
2 yr. period fees
•Local Commercial Traffic : 50% of
applicable fees
Fee shall be deposited in ESCROW account

Should not be opened to traffic before 8 yrs of

expiry.
If additional toll is commissioned after 8 years,
Additional toll way concession period shall be increased by half
the number of years
Per KM fare to be levied at no time less than
133%

Governing
Steering Group NHAI
Authority
Within 15 days of receipt of Within 30 days of receipt of drawings
drawings For revised drawings within 15 days of receipt
For revised drawings also 15 of such drawings
Review of Drawings
days NHAI is not liable for failure to provide
comments / observations
47
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT

Submission of As-
Within 90days of COD Within 90days of COD
built drawings

Within 150 days from the date of agreement

Failure to provide access , NHAI to pay
concessionaire damages at rate of Rs. 1000
With 30 days from the date of per month per 1000 sqm.
Access to site
agreement
Damages shall be raised to Rs.2000 per
month after COD if essential for smooth and
efficient operation of the project highway

5% of project cost spread over 0.01% of total project cost per week
180 days delay

Milestone Delay: fails to achieve project

Liquidated
milestone within 90days, 1 million per day
Damages until such milestone is achieved
Concessionaire shall make payment
within 7 days of demand by NHAI, failing
with interest rate @ SBI PLR + 2%

Project Completion Depending on project 30 months from the appointed date

Termination due to If COD not achieved within 180

If COD not achieved within 12 months 48
COD days
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
To be completed within 120 days
Punch list points To be completed within 120 days Delay in completing punch list points : 2 lakhs
per week to a further period of 180 days

Change of scope Limit up to 5% of project cost Limit up to 5% of project cost

Maintenance
Within 120 days Within 180days
Manual
Within 120 days from the date of agreement
Within 60 (30 + 30) days from
Independent Initially for a term of 3 years
the date of agreement
Consultant / One half of remuneration shall be paid by
remuneration shall be included in
Engineer concessionaire
Bid price

Within 180 days from the date of agreement

Finance the project and meet
Financial Close
obligations in timely manner
If not achieved, another 90 days extension by
paying penalty of 1 lakh per week for a period
of 180 days
Else termination

Upon Termination Bid security / performance guarantee

Not less than 12 months inspect Not less than 30 months nor more than 36
Defect Liability the project facility months conduct a join inspect inspection
Inspection report within 15 days Inspection report with in 90 days
49
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
2nd inspection not less than 9 months and not
more than 12 months
Within 30 days inspection report

From the date of 2 years prior to the expiry of

the concession period a sum equal to the fees
realisable during the last 2 years of the
concession period for a traffic flow calculated
at 10000 PCUs per day per year for renewal
works
Retained in the escrow account
If no renewal works are required then within
14 days 50% will be released
Within 14 days after issue of vesting
certificate sums retained will be released

For a period of 180 days with a continuous

Force Majeure Termination after 120 days period of 365 days, termination by giving 30
days notice

Termination due to
Total debt due* + 110 % of Total debt due + out standing subordinated
Indirect Political
equity debt + 110% of equity*
Event
Total debt due* + 150 % of Total debt due + 120% of subordinated debt +
Termination due to
equity 150% of equity*
Political event 50
 MCA FOR BOT PROJECTS
Clause < 100cr BOT > 100 cr BOT
10 million
Parties shall meet within 30 days of
notification by concessionaire
If no agreement then within 90 days
Change in Law Max up to 2-3 million concessionaire will give written notice
NHAI shall do payment within 15 days of
notice or with interest @ SBI PLR if payment
delayed beyond 15 days
Same is applicable for reduction in price

Provide a video recording of construction

Video recording completed in that quarter compiled to 3 hrs
cassette to NHAI within 15 days

51
 CONCESSION AGREEMENT

Damages for Delay by Authority

• 0.1% of the performance security for each day’s delay until

fulfillment of such conditions, subject to max. of 20% of
performance security

52
HYBRID ANUITY MODEL

REQUEST FOR PROPOSAL (RFP)

53
 REQUEST FOR PROPOSAL

RFP comprises of

•Invitation for Bids

–Introduction

–Instructions to Bidders

–Evaluation of Bids

–Fraud and Corrupt Practices

–Pre-Bid Conference

–Miscellaneous

54
 REQUEST FOR PROPOSAL

Type of Bidding: ICB through single stage bidding

Mode of submission: e-tendering

• Bid security, proof of online payment of cost of bidding

document, Power of attorney and joint bidding agreement shall
be submitted physically

Scope of Work

• Design, engineering, financing, procurement, construction,

operation and maintenance of the project

• Rehabilitation, upgradation and widening of existing carriageway

to four-lane with construction of new pavement, major and
minor bridges, culverts etc, operation and maintenance
55
 BIDDING PROCESS

Single Stage Two Envelope

• Invited in two envelopes (Technical Bid & Financial Bid)

• Prior to along the bid, bidder has to pay Rs. 50,000 as cost of
RFP process (10,000 for every 100 cr project)

• Technical Bid – Eligibility and qualification

• Financial Bid – opened only for those bidders whose technical

bids are responsive

• Bid validity – 120 days

• Bid security – 1% of the estimated project cost (may be upto

2% in some cases, for project > 2000 cr, may be reduced but
not less than 0.5%)
56
 BIDDING PROCESS

• Bid security in the form of DD / BG, validity period of 120 days

and claim period of 60days

Evaluation of Bids – on the basis of lowest assessed bid price

• Bid price shall be the summation of

– Net Present Value (NPV) of bid project cost during concession period

– NPV of O&M Cost

• Discount rate for the calculation of NPV shall be Bank rate +

3%, bank rate shall be applicable bank rate on the date of
submission of bid

57
 BIDDING PROCESS

• If bid project cost of the lowest bidder is lower by more than

10% wrt estimated project cost, the concessionaire has to
submit Additional Performance Security @ 10% of the
difference in estimated project cost.

58
 INSTRUCTIONS TO BIDDERS (ITB)

• Feasibility report / Detailed project report is preliminary

reference document, bidders are expected to carry out their
own surveys, investigations and other detailed
examination before submission of bids

• Bidder shall be single entity, shall be required to form SPV,

under Indian Companies Act 2013. In case the bidder is a
consortium, following requirements shall be met
– No. of members shall not exceed 6

– Members of consortium shall nominate one member as Lead

Member, equity share holding of at least 26%

– Brief description of roles and responsibilities of each member

– Consortium shall be liable jointly and severally

59
 INSTRUCTIONS TO BIDDERS (ITB)

Eligibility and Qualification Requirements

• The bidder may be single entity or group of entities

(consortium)

• Bidder shall not have a conflict of interest that affects the

bidding process, in case of conflict of interest, bidder shall be
disqualified and 5% of the bid security shall be forfeited

60
 INSTRUCTIONS TO BIDDERS (ITB)

Technical Capacity: bidder shall, over the past 5 financial years

preceding the bid due date, have
• Paid for, or received payments for, construction of eligible
projects, and / or
• Paid for development of eligible projects in category 1 and/or
category 2
• Collected and appropriated revenues from eligible projects in
category 1 and/or category 2, such that the sum total of the
above is more than Threshold Technical Capability
• Provided that at least one fourth of the Threshold Technical
Capability shall be from eligible projects in category 1 and / or
category 3
61
 INSTRUCTIONS TO BIDDERS (ITB)

Eligible Projects under category 1 & 2

• Should have been undertaken as a PPP project on BOT, BOLT,

BOO, BOOT or other similar projects for providing its output to a
public sector entity

• Minimum 26% equity in eligible project during the entire year

for which eligible experience is claimed

• Capital cost of the project should be more than 10% of

estimated project cost

Category 1 Highway sector projects

Category 2 Core sector (highways, airports, ports, railway

infrastructure)
62
 INSTRUCTIONS TO BIDDERS (ITB)

Eligible Projects under category 3 & 4

• Applicant shall have paid for execution of its construction works

or received payments from its clients for construction works
executed during the 5 financial years immediately preceding bid
due date shall qualify for computing the experience score

• Payments / receipts of less than 10% of the estimated cost of

the project shall not be reckoned for eligible projects

Category 3 Highway sector projects

Category 4 Core sector (highways, airports, ports, railway

infrastructure)
63
 INSTRUCTIONS TO BIDDERS (ITB)

Financial Capacity – bidder shall have a minimum net worth of

25% of the estimated cost of project

In case of consortium

• Combined technical capability and net worth of those members,

who have and shall continue to have an equity share of 26%
each in the SPV

• Each member shall, for a period of 2 years from the date of

commercial operation of the project, hold equity share capital
not less than
– 26% of the subscribed and paid up equity of the SPV

– 5% of the total project cost specified in Concession Agreement

64
 INSTRUCTIONS TO BIDDERS (ITB)

Cost of Bidding

• Cost associated with preparation of their bids and their

participation in the bidding process to be borne by bidder

Site Visit and Verification of Information

• Ascertain themselves the site conditions, location, surroundings,

climate, availability of power, water, & other utilities for
construction, access to site, handling and storage of materials,
weather data, applicable laws and regulations.

65
 INSTRUCTIONS TO BIDDERS (ITB)

It is deemed that by submitting the bid, the bidder has

• Accepted the risk of inadequacy, error or mistake in the

information provided in the bidding documents

• Satisfied about all matters related to site visit

• Provisions for inclusion of costs related to maintenance during

development period

66
 INSTRUCTIONS TO BIDDERS (ITB)

Technical Bid

• Appendix 1A to V ( letter comprising technical, financial bid, BG

for bid security, power of attorney for signing of bid, lead
member, joint bidding agreement, integrity pact) and supporting
certificates / documents

• Copy of proof of payment for bid documents

Financial Bid

• Letter comprising of financial bid

67
 EVALUATION OF BIDS

• Tests of responsiveness
– As per format

– Documents listed

– Power of attorney

– Integrity pact

– Bid security

• Bidders competence and capability is proposed to be

established by
– Technical Capacity

– Financial Capacity

68
 EVALUATION OF BIDS

• Bidders experience shall be measured in terms of Experience

Score

• Experience score = {(eligible payments / receipts )/ (1 crore

)}*applicable factor as mentioned below

• If bidder has experience in different

FACTOR
category, the score for each category is
Category 1 1.45
calculated and aggregated.
Category 2 1.0
• If eligible project situated in developed
Category 3 1.0
country which is a member of OECD shall be
Category 4 0.7
further multiplied by 0.5
OECD –Organization for Economic Co-operation and Development
69
 EVALUATION OF BIDS

• Experience score of the bidder shall be computed as a weighted

average of a Experience score and its proposed equity stake in
consortium

• Similarly financial score shall also be calculated

Selection of Bidder

• Bidder whose bid is responsive and who’s assessed price is the

lowest shall be declared as the selected bidder

70
 MCA FOR BOT PROJECTS
Article Clause Hybrid Annuity Model

2 Scope of Project Construction, O & M, performance & fulfilment of obligations

Construction Period – 550th day from the appointed date

3 Concession Period
Operation Period – 15 years

Obtaining permits, proprietary rights, licenses, agreements

and permissions for materials, obligations under financing
Obligations of arrangements,
5
Concessionaire Upon written request by authority, make reasonable efforts to
facilitate the acquisition of land, environmental & forest
clearances,

Upon written request from concessionaire, make reasonable

6 Obligations of Authority efforts to facilitate the acquisition of land, environmental &
forest clearances, infrastructure facilities

5% of the bid project cost

Within 30 days from the date of this agreement, until such
9 Performance Security time bid security shall remain in effect
If not provided within 30days, authority will encash bid
security

In case of concessionaire default, encashment of performance

Appropriation of security,
Performance Security within 15 days fresh performance security,
additional cure period of 120 days
71
 MCA FOR BOT PROJECTS
Article Clause Hybrid Annuity Model
Release of Performance One year from the appointed date / expending 30% of the
Security project cost

Performance security in respect of remaining concession

Deemed Performance period
Security Withdrawal from escrow account / making a deduction from
accounts due and payable by authority

Additional Performance 10% of the difference between estimated project cost and bid
Security project cost

Appropriation & release In case of concessionaire default up to third project milestone

of additional Released within 30 days from the certification of third project
Performance Security milestone

Authority representative and concessionaire shall, on

mutually agreed date and time inspect the site and
prepare a memorandum containing an inventory of the
site including the vacant & unencumbered land,
buildings, structures etc.
10 Right of way Prior to the appointed date, the authority shall take
possession of at least 80% of the length
After signing the memorandum and until transfer date,
concessionaire shall maintain round-the-clock vigil over
the site & inform authority in case of any encroachment
and undertake its removal at its own cost
72
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Authority shall provide right of way within 90days from
the appointed date, in the event of delay it shall pay re 1
per 10 sqm per day from 91st day to appointed date / 180
days whichever is earlier

If not provided within 180 days, remaining site of the

project highway is removed from scope of work under
the provision of change of scope

Project should be completed within scheduled completion date

for land provided with 180 days (20% of construction period)

Protection of site from

Responsibility of concessionaire
encumbrances
Special / temporary right
Concessionaire shall bear all the costs and charges
of way
Existing utilities and roads: if necessary by providing
suitable temporary or permanent diversions at
concessionaire’s cost

Utilities, associated roads

11 Shifting of Obstructing utilities: by concessionaire at the
and trees cost of authority owning them

Felling of trees: cost and expenses in respect of felling

73 of
trees shall be borne by concessionaire
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
To be prepared by concessionaire
IE shall review within 15 days
Concessionaire shall continue work after 15 days if no
comments from IE
12 Drawings Resubmitted drawings shall be reviewed within 7 days

For general arrangement drawings, within 30 days of receipt

of drawings
Within 90 days of COD, as built drawings shall be furnished

If fails with a period of 90 days, 0.1% of performance

security for each day delay until such milestone is
achieved

Project Milestone
If COD is achieved as per date then penalty shall be
refunded without interest
If project is not completed & COD not achieved within 270
days then project will be terminated

Maintenance during In the event of default by concessionaire 0.2% of

construction period performance security

Monitoring of Monthly progress report within 7 days of each month

13
construction IE shall inspect once in a month

Delays during Within 15 days of such notice, concessionaire shall take

74
construction reasonable steps to expedite the progress
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Within 30 days prior to likely completion, notify IE
14 Completion Certificate
Concessionaire shall fix the dates in not less than 10 days

To be completed with 90 days

Completion of punch list If delay damages per day shall be 0.1% of performance
items security or 0.2% of cost of completing such items, which
ever is lower to a max of 120 days

On the day of which completion / provisional certificate is

issued
If COD doesn’t occur on prior to 91st day after scheduled
Entry into Commercial completion date, 0.2% of performance security per day of
15
Service delay until COD is achieved

On non payment, shall be deducted from 1st annuity payment

along with interest of bank rate + 3%

Concessionaire shall raise change of scope request if

necessary & authority shall within 15 days should intimate its
decision
Authority can issue change of scope to concessionaire, in
16 Change of Scope return concessionaire should give the impact of such change
in terms of cost & time
Within 7 days of issuing change order, authority shall make
advance payment 0f 20% of cost assessed
Payment for work shall be within 30 days of submission of bills
75
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Bid project cost shall be reduced by 115% (estimated project
Reduction in scope of cost / civil construction cost estimated )*100 of the civil cost
work of reduced scope of work, due to authority default /force
majeure

In proportion to increase / decrease in the length of project

Effect of change in O&M
highway

Maintenance manual shall be submitted 90 days prior to

17 O&M
scheduled completion date

Damages for breach of Higher of 0.2% of performance security / 0.1% of cost of such
maintenance obligations repair for each day of delay

No later than 7 days after the close of each month of detail of

19 Monitoring of O&M condition of project
Regulation and
20 Traffic regulation and management shall be by concessionaire
Management
Within 60days from the date of appointment
21 Independent Engineer Half of remuneration to be paid by concessionaire
Term shall be construction period + 1 yr
Within 150 days from date of agreement
Extended further by 120 days subject to payment of 0.05% of
22 Financial Close performance security for each day of delay
Further 95 days subject to payment of 0.1% of performance
security per day of delay
Payment of Bid Project Bid project shall be revised time to time to reflect the variation
23 76
Cost in price index
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Variation in price index as a multiple of variation in price index
Price Index Multiple
between bid date and invoice date

40% of the bid cost adjusted for price multiple index, shall be
in 5 equal instalments of 8% each during the construction
Payment of Bid project period
cost Remaining bid project cost, shall be adjusted for price multiple
index, payable in 30 instalments commencing from 180th day
of COD

Within 15days of the receipt of report

1st – 20% physical progress
Payment during 2nd – 40% physical progress
construction period 3rd – 60% physical progress
4th – 75% physical progress
5th – 90% physical progress

COD on or more than 30 days prior – 0.5% of 60% of the bid

Bonus on early project cost for first 30 days, there after pro rata basis for
completion each day .
Bonus shall be payable along with first annuity
Completion shall be summarized as 20% bid project cost
adjusted to 20% physical progress and so on..
Balance 10% preceding to COD
Annuity payments during
operation period 1st Annuity payment within 15 days of 180th day of COD &
remaining payable with 15 days of completion of successive
77
six months
MCA FOR BOT PROJECTS

78
 MCA FOR BOT PROJECTS

Interest shall be payable on the reducing balance of completion cost at an

interest rate equal to the applicable bank rate plus 3%

79
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Biannual payments
O&M expenses shall be borne by concessionaire
O & M payments
Each instalment shall be product of amount quoted * price
index multiple

After 60 days from the appointed date, within 30days of

receipt of request
Chargeable interest rate equal to bank rate compounded
Mobilization advance annually
Recovered in 4 instalments from each payment made by
authority and interest on 5th instalment upon expiry of 120
days commencing from date of recovery of 4th

Shall be taken by concessionaire within 45 days of start of

construction period or operation period shall furnish to
26 Insurance cover authority
With 30 days authority may ask the concessionaire to take
any other insurances

Before COD: construction period and dates set forth shall be

Force Majeure & extended by a period equal to length of force majeure
28
Termination After COD: concessionaire shall be entitled to receive annual
payments plus interest due payable

Termination notice for If force majeure event subsists for a period of 180 days or
Force Majeure more within a continuous period of 365 days

80
 EVALUATION OF BIDS

• Termination on account of Non Political Event

In case termination occurs on or after COD:

• 75% of annuity payments remaining unpaid for and in respect of

the remaining concession period, including interest

• Above payment shall be reduced by insurance cover

81
 EVALUATION OF BIDS

• Termination on account of Indirect Political Event

• Prior to COD

110% of adjusted equity

In case termination occurs on or after COD:
• 90% of annuity payments remaining unpaid for and in respect of
the remaining concession period, including interest
• Above payment shall be reduced by insurance cover
82
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Each party within 30 days of demand of receipt supported by
Compensation for Breach
29 necessary particulars shall pay to other for the breach or
of agreement default

In case of any default of concessionaire, suspend all rights of

concessionaire and authority to act on behalf of concessionaire
Can be extended by a period of 180 days, further extended by
Suspension of
30 90 days
concessionaire’s rights Revocation of suspension – with a period of 90 days from the
date of suspension.
Substitution of concessionaire or issuing termination notice

Concessionaire Default
Cure period of 60 days
Performance security shall be encashed, fresh performance
security within 15 days
Cure period 120 days
Not achieving milestone in 120 days
31 Termination
COD not occurring as per defined date
Punch list items not cleared
Financial default
Change in ownership
Concessionaire adjudged bankrupt
Failed to fulfil obligation

83
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
Authority Default
cure period 90 days
Failed to make any payment
Right of way & other clearances within 180 days

Concessionaire Default
After COD:
65% of all sum of annuity payments including interest
Before COD:
Refer table
Authority Default
Prior to COD: 80% of such un paid claims
Termination Payment
150% of adjusted equity
After COD:
Sum of annuity payments remaining with interest

Shall be paid within 15 days

In the event of delay, interest rate of 3% above the bank rate,
provided delay not exceeding 90 days

120 days after termination

Defects Liability After If any shall be rectified within 15 days
33
Termination 15% of annuity payments due and payable immediately shall
be retained in escrow account

1 cr for every 500 cr or 2% of the total annuity payments

35 Change in Law 84
After notice parties shall meet within 30 days
MCA FOR BOT PROJECTS

85
 MCA FOR BOT PROJECTS
Article Clause > 100 cr BOT
If no agreement is reached in 90 days, within 15 days either
party shall settle the claim

Should keep a complaint register open to public access

Redressal of public
40 Shall inspect register daily and take prompt and reasonable
grievances action

86
 PROJECT FACILITIES

• Toll plazas

• Roadside Furniture

• Pedestrian facilities

• Tree Plantation

• Major bridges

• Minor bridges

• Truck lay-bys

• Bus-bays and bus shelters

• Traffic aid posts

• Medical aid posts

87
 APPLICABLE PERMITS

• Permission of state government for extraction of boulders from

quarries at least 20% of total length of road

• Permission of village panchayat & pollution control board for

installation of crusher

• License for use of explosives

• Permission of state government for drawing of water from

river/reservoir

• Any other permits or clearances under applicable laws

88
 PROJECT COMPLETION SCHEDULE

• Milestone 1 – 120th day from the appointed date, should not

spend less than 20% of the total capital cost

• Milestone 2 – 270th day from the appointed date, not less than
35% of the capital cost

• Mile Stone 3 – 365th day from the appointed date, not less than
75% of the capital cost

• Scheduled completion 550th day from appointed date

89