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COVID 19: Force Majeure provisions in PPP Concessions - Non-political and Indirect Political Events
Force Majeure Events
The Concession agreement would provide for, some or all of, the following force major events:
- Non-Political event – such as act of God, epidemic, extremely adverse weather conditions.
- Indirect Political event – such as acts of war, embargo, blockade, terrorist action.
- Political event – such as expropriation of assets of the project in national interest, unlawful/unauthorized revocation of or refusal to grant/renew clearances required by the concessionaire to complete the project not caused by a breach of the conditions of such clearances by the concessionaire or its contractors.
- If the Force Majeure Event occurs before the timeline prescribed for fulfilment of the conditions precedent, the timeline for such fulfilment should be extended by a period equal to the duration of the Force Majeure Event;
- If the Force Majeure Event occurs after the fulfilment of the conditions precedent but before the commencement of commercial operations of the project, the period of the concession agreement and the timeline for completion of the project should be extended by a period equal to the duration of the Force Majeure Event;
- If the Force Majeure Event occurs after the commencement of the commercial operations, the concession period should be extended.
- for a Non-Political event – the parties will bear their respective costs;
- for an Indirect Political event – if the costs exceed the insurance cover for such event, the concessionaire will bear the costs up to half of the excess, and the other half of the excess would be reimbursed by the authority; and
- for a Political event – all costs attributable to Political events would be reimbursed by the authority.
- The effect of the lockdowns imposed due to COVID 19 on the performance of the obligations under the contract.
- Strict compliance with the provisions of the force majeure clauses.
- Analysis of provisions of subsisting insurance policies to ascertain claims that can be made (if any) under such policies.