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Privately Financed Airport Infrastructure Projects Act 2008

Commencement: 4 August 2008

REPUBLIC OF VANUATU

PRIVATELY FINANCED AIRPORT
INFRASTRUCTURE PROJECTS
ACT NO. 20 OF 2008

Arrangement of Sections

PART 1 PRELIMINARY
1 Interpretation
2 Objects of the Act
3 Application of this Act

PART 2 Pre-selection of bidders and selection of concessionaire
4 Rules governing selection proceedings
5 Purpose and procedure of pre-selection
6 Invitations and pre-selection documents
7 Pre-selection criteria
8 Participation of consortiums
9 Decision on pre-selection

PART 3 PROCEDURES FOR REQUESTING PROPOSALS
10 Single-stage and two-stage procedures for requesting proposals
11 Content of the request for proposals
12 Bid securities
13 Clarifications and modifications
14 Evaluation criteria
15 Comparison and evaluation of proposals
16 Further demonstration of fulfilment of qualification criteria
17 Final negotiations

PART 4 NEGOTIATION OF CONCESSION CONTRACTS WITHOUT COMPETITIVE PROCEDURES
18 Circumstances authorizing award without competitive procedures
19 Procedures for negotiation of a concession contract

PART 5 UNSOLICITED PROPOSALS
20 Admissibility of unsolicited proposals
21 Procedures for determining the admissibility of unsolicited proposals
22 Unsolicited proposals that do not involve intellectual property, trade
secrets or other exclusive rights
23 Unsolicited proposals involving intellectual property, trade secrets or other exclusive rights

PART 6 GENERAL PROVISIONS IN RELATION TO PROCEDURES FOR CONSESSION CONTRACTS
24 Confidentiality
25 Notice of contract award
26 Record of selection and award proceedings
27 Review procedures

PART 7 CONTENTS AND IMPLEMENTATION OF THE CONCESSION CONTRACT
28 Contents and implementation of the concession contract
29 Governing law
30 Organization of the concessionaire
31 Ownership of assets
32 Acquisition of rights related to the project site
33 Easements
34 Financial arrangements
35 Security interests
36 Assignment of the concession contract
37 Transfer of controlling interest in the concessionaire
38 Operation of infrastructure
39 Compensation for specific changes in legislation
40 Revision of the concession contract
41 Takeover of an infrastructure project by the contracting authority
42 Substitution of the concessionaire

PART 8 DURATION, EXTENSION AND TERMINATION OF THE CONCESSION CONTRACT
43 Duration and extension of the concession contract
44 Termination of the concession contract by the contracting authority
45 Termination of the concession contract by the concessionaire
46 Termination of the concession contract by either party
47 Compensation upon termination of the concession contract
48 Wind-up and transfer measures

PART 9 SETTLEMENT OF DISPUTES
49 Disputes between the contracting authority and the concessionaire
50 Disputes involving customers or users of the infrastructure facility
51 Other disputes

PART 10 MISCELLANEOUS
52 Delegation
53 Regulations
54 Commencement

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REPUBLIC OF VANUATU

Assent: 12/06/2008
Commencement: 04/08/2008

PRIVATELY FINANCED AIRPORT
INFRASTRUCTURE PROJECTS
ACT NO. 20 OF 2008

An Act to promote and facilitate the implementation of privately financed airport infrastructure projects, and for related purposes.

Be it enacted by the President and Parliament as follows:

PART 1 PRELIMINARY

1 Interpretat ion

In this Act, unless the contrary intention appears:

application for pre-selection means an application referred to in paragraph 6(1)(d);

bidder means a person that participates in selection proceedings concerning an infrastructure project;

contracting authority means an office, entity or instrument of the Government and includes a ministry and the Minister;

concessionaire means a person that carries out an infrastructure project under a concession contract entered into with a contracting authority;

concession contract means a mutually binding agreement or agreements between a contracting authority and a concessionaire that sets out the terms and conditions for the implementation of an infrastructure project;

evaluation criteria means the evaluation criteria referred to in section 14;

infrastructure facility means physical facilities and systems relating to airports that directly or indirectly provide services to the general public;

infrastructure project means the design, construction, development and operation of new infrastructure facilities in relation to airports or the rehabilitation, modernization, expansion or operation of existing infrastructure facilities in relation to airports;

Minister means the Minister responsible for infrastructure;

prescribed means prescribed by the regulations;

pre-selected bidder means a bidder invited under section 9 to submit a proposal under Part 3;

pre-selection criteria means the criteria referred to in section 7;

pre-selection documents means the documents referred to in subsection 6(2);

proponent, in relation to an unsolicited proposal, means the person who makes the unsolicited proposal;

regulatory agency means a public authority that is entrusted with the power to issue and enforce rules and regulations governing an infrastructure facility or the provision of the relevant services;

request for proposals means a request for proposals referred to in section 11;

unsolicited proposal means any proposal relating to the implementation of an infrastructure project that is not submitted in response to a request or solicitation issued by a contracting authority within the context of a selection procedure.

2 Objects of the Act

The objects of the Act are:

(a) to promote and facilitate the implementation of privately financed airport infrastructure projects by enhancing transparency, fairness and long term sustainability; and

(b) to remove undesirable restrictions on private sector participation in airport infrastructure development and operation; and

(c) to develop the general principles of transparency, economy and fairness in the award of contracts in relation to airports by public authorities through the establishment of specific procedures for the award of infrastructure projects.

3 Application of this Act

(1) This Act applies only to privately financed infrastructure projects in the civil aviation sector.

(2) The provisions of the Government Contracts and Tenders Act [CAP 245] do not apply to privately financed infrastructure projects under this Act.

PART 2 PRE-SELECTION OF BIDDERS AND SELECTION OF CONCESSIONAIRE

4 Rules governing selection proceedings

Subject to this Act, the selection of a concessionaire is to be conducted in accordance with sections 6 to 27.

5 Purpose and procedure of pre-selection

(1) A contracting authority may engage in pre-selection proceedings to identify bidders who are suitably qualified to implement a proposed infrastructure project.

(2) If a contracting authority decides to engage in pre-selection proceedings, the contracting authority must publish an invitation to participate in the pre-selection proceedings in one or more of the following:

(a) a newspaper that is available throughout Vanuatu;

(b) the Government of Vanuatu’s website;

of Vanuatu as the contracting authority determines.

6 Invitation and pre-selection documents

(1) An invitation in relation to an infrastructure project must include the following:

(a) a description of the infrastructure facility;

(b) an indication of other essential elements of the infrastructure project, such as the services to be delivered by the concessionaire and the financial arrangements envisaged by the contracting authority (for example, whether the project will be entirely financed by user fees or tariffs or whether public funds such as direct payments, loans or guarantees may be provided to the concessionaire);

(d) the manner and place for the submission of applications for pre-selection and the deadline for making a submission, expressed as a specific date and time, so as to allow bidders a sufficient time to prepare and submit an application;

(e) the manner and place for solicitation of the pre-selection documents and the prescribed fee to be paid to obtain those documents.

(2) The pre-selection documents in relation to an infrastructure project must include at least the following information:

(a) the pre-selection criteria in accordance with section 7;

(b) whether the contracting authority intends to waive the limitations on the participation of consortiums set out in subsection 8(3);

(c) whether the contracting authority intends to request only a limited number of pre-selected bidders to submit proposals upon completion of the pre-selection proceedings in accordance with subsection 9(4) and, if applicable, the manner in which this selection will be carried out;

(d) whether the contracting authority intends to require the successful bidder to establish an independent legal entity established and incorporated under the laws of Vanuatu in accordance with section 30.

7 Pre-selection criteria

The pre-selection criteria in relation to an infrastructure project must include at least the following:

(a) adequate professional and technical qualifications, human resources, equipment and other physical facilities as are necessary to carry out all the phases of the infrastructure project, including design, construction, operation and maintenance;

(b) sufficient ability to manage the financial aspects of the infrastructure project and capability to sustain its financing requirements;

(c) appropriate managerial and organizational capability, reliability and experience, including previous experience in operating similar infrastructure facilities.

8 Participation of consortiums

(1) One or more bidders may form a consortium for the purposes of preparing and submitting an application for pre-selection in relation to an infrastructure project.

(2) If a consortium is formed, the contracting authority must assess each member of the consortium and the consortium as a whole against the pre-selection criteria for the infrastructure project.

(3) Each member of a consortium in relation to a particular infrastructure project may participate, either directly or indirectly, in only one application for pre-selection for that infrastructure project, unless the pre-selection documents provide otherwise.

(4) The contracting authority may disqualify each member of a consortium and the consortium as a whole from the pre-selection process if any member of the consortium contravenes subsection (3).

(5) If a member of a consortium is disqualified under subsection (4), the contracting authority must give written notice of the disqualification to the member.

9 Decision on pre-selection

(1) A contracting authority must assess each application for pre-selection in relation to an infrastructure project against the pre-selection criteria for that project.

(2) Subject to subsection (4), the contracting authority must invite in writing any bidder whose application meets the pre-selection criteria to submit a proposal in accordance with sections 10 to 17 upon the completion of the pre-selection proceedings.

(3) The contracting authority must notify in writing any bidder whose application does not meet the pre-selection criteria.

(4) The contracting authority may:

(a) rate the bidders that meet the pre-selection criteria on the basis

of the criteria applied to assess their qualifications; and

(b) draw up the list of bidders that will be invited to submit proposals

upon completion of the pre-selection proceedings,

if the pre-selection documents so provide for this to be done.

(5) In drawing up the list, the contracting authority is to apply the manner of rating that is set out in the pre-selection documents.

(6) The contracting authority must notify in writing any bidder whose application meets the pre-selection criteria, but who was not included in the list.

PART 3 PROCEDURES FOR REQUESTING PROPOSALS

10 Single-stage and two-stage procedures for requesting proposals

(1) A contracting authority is to provide a set of the request for proposals and related documents in relation to an infrastructure project issued in accordance with section 11 to any pre-selected bidder upon payment of the prescribed fee.

(2) Despite subsection (1), the contracting authority may use a two-stage procedure to request proposals from pre-selected bidders if the contracting authority decides that it is not feasible to describe the characteristics of the infrastructure project in the request for proposals in a manner sufficiently detailed and precise to permit final proposals to be formulated, including characteristics such as the following:

(a) project specifications;

(b) performance indicators;

(d) contractual terms.

(3) Subsections (4) to (8) apply if the contracting authority decides to use a two-stage procedure.

(4) The initial request for proposals must call upon the pre-selected bidders to submit, in the first stage of the procedure, initial proposals relating to all of the following:

(a) project specifications;

(b) performance indicators;

(d) contractual terms (if any) proposed by the contracting authority;

(e) such other characteristics of the project as the contracting authority determines.

(5) The contracting authority may convene meetings and hold discussions with any of the bidders to clarify:

(a) any questions concerning the initial request for proposals; or

(b) the initial proposals and any accompanying documents submitted

by the pre-selected bidders.

(6) The contracting authority must prepare minutes of any such meeting or discussion containing the questions raised and the clarifications provided by the contracting authority.

(7) The contracting authority may, upon examination of the proposals received, review and, as appropriate, revise the initial request for proposals by deleting or modifying:

(a) any aspect of the initial project specifications, performance indicators, financing requirements or other characteristics of the project, including the main contractual terms; or

(b) any criteria for evaluating and comparing proposals and for ascertaining the successful bidder, as provided in the initial request for proposals, as well as by adding characteristics or criteria to it.

(8) The contracting authority must indicate the justification for any revision to the request for proposals in the record of the selection proceedings to be kept pursuant to section 26.

(9) In the second stage of the proceedings, the contracting authority must invite the pre-selected bidders to submit final proposals in accordance with sections 11 to 17.

(10) An invitation to submit final proposals must include any deletion, modification or addition made under subsection (7).

11 Content of the request for proposals

The request for proposals in relation to an infrastructure project must include at least the following information:

(a) the manner and place for the submission of proposals and the deadline for making a submission, expressed as a specific date and time, so as to allow pre-selected bidders sufficient time to prepare and submit a proposal;

(b) the infrastructure project specifications and performance indicators, as appropriate, including the contracting authority’s requirements regarding safety and security standards and environmental protection;

(c) the contractual terms proposed by the contracting authority, including an indication of which terms are non-negotiable;

(d) the criteria for evaluating proposals (see section 14) and the thresholds, if any, set by the contracting authority for identifying non-responsive proposals;

(e) the relative weight to be accorded to each evaluation criteria;

(f) the manner in which the criteria and thresholds are to be applied in the evaluation and rejection of proposals.

12 Bid securities

(1) The request for proposals in relation to an infrastructure project must set out the following requirements with respect to the bid security:

(a) the issuer;

(b) the nature, form and amount;

(2) A bidder is not to forfeit any bid security that the bidder is required to provide, unless:

(a) the bidder withdraws or modifies a proposal after the deadline for submission of proposals and, if so stipulated in the request for proposals, before that deadline; or

(b) the bidder fails to enter into final negotiations with the contracting authority pursuant to subsection 17(1); or

(c) the bidder fails to submit its best and final offer within the time limit determined by the contracting authority pursuant to subsection 17(3); or

(d) the bidder fails to sign the concession contract, if required by the contracting authority to do so, after the proposal has been accepted; or

(e) the bidder fails to provide the required security for the fulfillment of the concession contract after the proposal has been accepted, or to comply with any other condition prior to signing the concession contract specified in the request for proposals.

13 Clarifications and modifications

(1) A contracting authority may, whether on its own initiative or as a result of a request for clarification by a bidder, review and, as appropriate, revise any element of the request for proposals as set out in section 11.

(2) The contracting authority must indicate the justification for any revision to the request for proposals in the record of the selection proceedings to be kept pursuant to section 26.

(3) Any such deletion, modification or addition is to be communicated to the bidders in the same manner as the request for proposals at a reasonable time prior to the deadline for submission of proposals.

14 Evaluation criteria

(1) The criteria for the evaluation and comparison of the technical proposals in relation to an infrastructure project must include at least the following:

(a) technical soundness;

(b) compliance with environmental standards;

(d) quality of services and measures to ensure their continuity.

(2) The criteria for the evaluation and comparison of the financial and commercial proposals in relation to an infrastructure project may include all or any of the following:

(a) the present value of the proposed tolls, unit prices and other charges over the concession period;

(b) the present value of the proposed direct payments by the contracting authority, if any;

(c) the costs for design and construction activities, annual operation and maintenance costs, present value of capital costs and operating and maintenance costs;

(d) the extent of financial support, if any, expected from the Government;

(e) the soundness of the proposed financial arrangements;

(f) the extent of acceptance of the negotiable contractual terms proposed by the contracting authority in the request for proposals;

(g) the social and economic development potential offered by the proposals.

15 Comparison and evaluation of proposals

(1) A contracting authority is to compare and evaluate each proposal in relation to an infrastructure project in accordance with:

(a) the evaluation criteria; and

(b) the relative weight accorded to each such criteria; and

(2) For the purposes of subsection (1), the contracting authority may establish thresholds with respect to quality, technical, financial or commercial aspects.

(3) If the contracting authority decides that a proposal fails to achieve any of the thresholds referred to in subsection (2), the contracting authority is to regard the proposal as non-responsive and reject it from the selection procedure.

(4) The contracting authority must notify in writing any bidder whose proposal has been rejected from the selection procedure.

16 Further demonstration of fulfilment of qualification criteria

(1) A contracting authority may require any pre-selected bidder to demonstrate again its qualifications in accordance with the pre-selection criteria.

(2) The contracting authority is to disqualify any pre-selected bidder that fails to demonstrate again its qualifications.

(3) If any pre-selected bidder is disqualified under subsection (2), the contracting authority must give written notice of the disqualification to the bidder.

17 Final negotiations

(1) A contracting authority must:

(a) rank all responsive proposals on the basis of the evaluation criteria; and

(b) invite the bidder that has attained the best rating for final negotiation of a concession contract.

(2) A final negotiation of a concession contract must not concern the contractual terms, if any, that have been stated as non-negotiable in the request for proposals.

(3) If it becomes apparent to the contracting authority that the negotiations with the bidder so invited will not result in a concession contract, the contracting authority must:

(a) inform the bidder of its intention to terminate the negotiations; and

(b) give the bidder a reasonable time in which to formulate its best and final offer.

(4) If the contracting authority does not find the final offer acceptable, it must, by notice in writing to the bidder concerned, terminate the negotiations with that bidder.

(5) Upon terminating the negotiations, the contracting authority may invite other bidders in the order of their ranking for negotiations until the contracting authority enters into a concession contract or rejects all remaining proposals.

(6) The contracting authority must not resume negotiations with a bidder with which negotiations have been terminated under this section.

PART 4 NEGOTIATION OF CONCESSION CONTRACTS WITHOUT COMPETITIVE PROCEDURES

18 Circumstances authorizing award without competitive procedures

Subject to the prior approval of the Council of Ministers, a contracting authority may negotiate a concession contract in relation to an infrastructure project without using the procedures set out in sections 6 to 17 if:

(a) there is an urgent need for ensuring continuity in the provision of a required service and engaging in the procedures set out in sections 6 to 17 would be impractical, and the circumstances giving rise to the urgency were not foreseeable by the contracting authority or the result of dilatory conduct on its part; or

(b) it is an unsolicited proposal made in accordance with section 23; or

(d) there is only one source capable of providing the required service, such as when the provision of the service requires the use of intellectual property, trade secrets or other exclusive rights owned or possessed by a

(i) an invitation to the pre-selection proceedings or a request for proposals has been issued, but no applications or proposals were submitted or all proposals failed to meet the evaluation criteria set out in the request for proposals; and

(ii) in the judgement of the contracting authority, issuing a new invitation to the pre-selection proceedings and a new request for proposals would be unlikely to result in a project award within a reasonable time frame.

19 Procedures for negotiation of a concession contract

(1) If a concession contract in relation to an infrastructure project is to be negotiated without using the procedures set out in sections 6 to 17, a contracting authority must:

(a) except for concession contracts negotiated pursuant to paragraph 18(c), cause a notice of its intention to commence negotiations in respect of a concession contract to be published in one or more of the following:

(i) a newspaper that is available throughout Vanuatu;

(ii) the Government of Vanuatu’s website;

(iii) a newspaper or such other publications published outside of Vanuatu as the contracting authority determines; and

(b) engage in negotiations with as many persons as the contracting authority considers capable of carrying out the infrastructure project; and

(2) The contracting authority must keep a record of the selection proceedings pursuant to section 26.

(3) Except for concession contracts negotiated pursuant to paragraph 18(c), the contracting authority must give written notice of the concession award to the concessionaire, and publish the concession award in a newspaper available throughout Vanuatu setting out the specific circumstances and reasons for the award of the concession without competitive procedures.

(4) For the purposes of paragraph (1)(b), the regulations may prescribe qualification criteria that persons must meet in order for the contracting authority to engage in negotiations.

PART 5 UNSOLICITED PROPOSALS

20 Admissibility of unsolicited proposals

Despite the procedures set out in sections 6 to 17, a contracting authority may consider unsolicited proposals pursuant to the procedures set out in sections 21 to 23 if such proposals do not relate to an infrastructure project for which selection procedures have been initiated or announced.

21 Procedures for determining the admissibility of unsolicited proposals

(1) As soon as reasonably practicable after receiving an unsolicited proposal in relation to an infrastructure project, a contracting authority must conduct a preliminary examination of it and inform the proponent of the unsolicited proposal in writing, whether or not the contracting authority considers that the infrastructure project is potentially in the public interest.

(2) If the infrastructure project is considered to be potentially in the public interest, the contracting authority must:

(a) invite the proponent to submit as much information on the infrastructure project as is feasible at this stage to allow the contracting authority to make a proper evaluation of the proponent’s qualifications and the technical and economic feasibility of the project; and

(b) decide whether the infrastructure project is likely to be successfully implemented in the manner proposed in terms acceptable to the contracting authority.

(3) For the purpose of subsection (2), the proponent is to submit:

(a) a technical and economic feasibility study; and

(b) an environmental impact study; and

(4) The contracting authority may request additional information about any matter mentioned in subsection (3).

(5) The contracting authority must notify the proponent in writing of its decision under paragraph (2)(b).

(6) In considering an unsolicited proposal, the contracting authority must comply with the intellectual property, trade secrets or other exclusive rights contained in, arising from or referred to in the proposal.

(7) The contracting authority must not make use of information provided by or on behalf of the proponent in connection with its unsolicited proposal other than for the evaluation of that proposal, without the written consent of the proponent.

(8) Except as otherwise agreed by the parties, the contracting authority must return to the proponent the original and any copies of documents that the proponent has submitted and prepared throughout the procedure if the contracting authority decides under paragraph (2)(b) that the infrastructure project is not likely to be successfully implemented.

(9) For the purposes of subsection (1), the regulations may prescribe the criteria to be used by the contracting authority to assess whether or not an unsolicited proposal is potentially in the public interest.

22 Unsolicited proposals that do not involve intellectual property, trade
secrets or other exclusive rights

(1) Except for the circumstances set out in section 18, a contracting authority must initiate a selection procedure in accordance with sections 6 to 17 in relation to an infrastructure project set out in an unsolicited proposal if:

(a) the contracting authority decides to implement the infrastructure

project; and

(b) the envisaged output of the infrastructure project can be achieved without the use of intellectual property, trade secrets or other exclusive rights owned or possessed by the proponent of the unsolicited proposal; and

(2) The contracting authority must invite the proponent to participate in the selection proceedings.

(3) The contracting authority may give the proponent an incentive or a similar benefit in a manner determined by the contracting authority in the request for proposals in consideration of the proponent having developed and submitted the proposal.

23 Unsolicited proposals involving intellectual property, trade secrets or other exclusive rights

(1) If a contracting authority determines that paragraphs 22(1)(b) and (c) have not been met, the contracting authority is not required to carry out a selection procedure pursuant to sections 6 to 17.

(2) Despite subsection (1), the contracting authority may seek to obtain elements of comparison for the unsolicited proposal in accordance with subsections (3) to (5).

(3) If the contracting authority intends to obtain elements of comparison for the unsolicited proposal, the contracting authority must publish in a newspaper available throughout Vanuatu:

(a) a description of the essential output elements of the proposal; and

(b) an invitation for other interested parties to submit proposals within 60 days after the invitation was published.

(4) If no proposals in response to an invitation issued pursuant to paragraph (3) (b) are received within the 60 days, the contracting authority may engage in negotiations with the proponent of the unsolicited proposal.

(5) Subject to subsection (6), if the contracting authority receives proposals in response to an invitation issued pursuant to paragraph (3)(b), the contracting authority must invite the proponent of the unsolicited proposal and any person who has made a proposal in response to the invitation to negotiations in accordance with the provisions set out in section 19.

(6) If the contracting authority receives a sufficiently large number of proposals and the proposals appear to meet generally its infrastructure needs, the contracting authority must request the submission of proposals pursuant to sections 10 to 17.

(7) Any request under subsection (6) must be made subject to any incentive or other benefit that the contracting authority gives to the proponent of the unsolicited proposal in accordance with subsection 22(3).

PART 6 GENERAL PROVISIONS IN RELATION TO PROCEDURES FOR CONCESSION CONTRACTS

24 Confidentiality

(1) A contracting authority must treat proposals in relation to an infrastructure project in such a manner as to avoid the disclosure of their content to competing bidders.

(2) A discussion, communication or negotiation held between the contracting authority and a bidder pursuant to subsections 10(4) to (8), sections 17, 18 or 19, or subsection 23(4) or (5) are to be treated as confidential.

(3) Unless required by law or by a court order, or permitted by the request for proposals, a party to a negotiation must not disclose to any other person any technical, price or other information in relation to discussions, communications and negotiations without the consent of the other party.

(4) The regulations may prescribe special procedures relating to the handling of unsolicited proposals.

(5) If a person contravenes subsection (1), (2) or (3), the person is guilty of an offence punishable on conviction by a fine not exceeding VT 5,000,000.

25 Notice of contract award

(1) Except for concession contracts awarded pursuant to paragraph 18(c), a contracting authority must publish a notice of the contract award in a newspaper that is available throughout Vanuatu.

(2) The notice must identify the concessionaire and include a summary of the essential terms of the concession contract and such other details as are prescribed by the regulations.

26 Record of selection and award proceedings

(1) A contracting authority must keep an appropriate record of information pertaining to the selection and award proceedings for an infrastructure project.

(2) The regulations may prescribe the information or kind of information that is required to be kept by the contracting authority for the purposes of this section.

27 Review procedures

A person that is aggrieved by any act or omission, or decision, taken or made by a contracting authority under this Act may, in addition to any other rights, apply to the Supreme Court for judicial review of the act, omission or decision.

PART 7 CONTENTS AND IMPLEMENTATION OF THE CONCESSION CONTRACT

28 Contents and implementation of the concession contract

A concession contract is to provide for such matters as the parties agree and may include all or any of the following:

(a) the nature and scope of works to be performed and services to be provided by the concessionaire;

(b) the conditions for provision of those services and the extent of exclusivity, if any, of the concessionaire’s rights under the concession contract;

(c) the assistance that the contracting authority may provide to the concessionaire in obtaining licences, permits and permissions to the extent necessary for the implementation of the infrastructure project;

(d) any requirements relating to the establishment and minimum capital of a legal entity incorporated in accordance with section 30;

(e) the ownership of assets related to the project and the obligations of the parties, as appropriate, concerning the acquisition of the project site and any necessary easements, in accordance with sections 31 to 33;

(f) the remuneration of the concessionaire, whether consisting of tariffs or fees for the use of the infrastructure facility or the provision of services, the methods and formulas for the establishment or adjustment of any such tariffs or fees, and payments, if any, that may be made by the contracting authority or other person;

(g) procedures for the review and approval of engineering designs, construction plans and specifications by the contracting authority, and the procedures for testing and final inspection, approval and acceptance of the infrastructure facility;

(h) the extent of the concessionaire’s obligations to ensure, as appropriate, the modification of the service so as to meet the actual demand for the service, its continuity and its provision under essentially the same conditions for all users;

(i) the contracting authority’s right to monitor the works to be performed and services to be provided by the concessionaire and the conditions and extent to which the contracting authority or a regulatory agency may order variations in respect of the works and conditions of service or take such other reasonable actions as the contracting authority finds appropriate to ensure that the infrastructure facility is properly operated and the services are provided in accordance with the applicable legal and contractual requirements;

(j) the extent of the concessionaire’s obligation to provide the contracting authority or regulatory agency with reports and other information on its operations;

(k) mechanisms to deal with additional costs and other consequences that might result from any order issued by the contracting authority or any other person in connection with subparagraph (h) or (i), including any compensation to which the concessionaire might be entitled;

(l) any rights of the contracting authority to review and approve major contracts to be entered into by the concessionaire, in particular with the concessionaire’s own shareholders or other affiliated persons;

(m) guarantees of performance to be provided and insurance policies to be maintained by the concessionaire in connection with the implementation of the infrastructure project;

(n) remedies available in the event of default of either party;

(o) the extent to which either party may be exempt from liability for failure or delay in complying with any obligation under the concession contract owing to circumstances beyond its reasonable control;

(p) the duration of the concession contract and the rights and obligations of the parties upon its expiry or termination;

(q) the manner for calculating compensation pursuant to section 47;

(r) the governing law and the mechanisms for the settlement of disputes that may arise between the contracting authority and the concessionaire;

(s) the rights and obligations of the parties with respect to confidential information.

29 Governing law

A concession contract is to be governed by the laws of Vanuatu unless otherwise provided in the concession contract.

30 Organization of the concessionaire

(1) A contracting authority may require that the successful bidder establish a legal entity incorporated under the laws of Vanuatu if a statement to that effect was made in the pre-selection documents or in the request for proposals.

(2) Any requirement relating to the minimum capital of such a legal entity and the procedures for obtaining the approval of the contracting authority to its internal rules and any significant changes to those rules are to be set out in the concession contract consistent with the terms of the request for proposals.

31 Ownership of assets

(1) A concession contract must specify which assets are, or are to become, public property, and which assets are, or are to become, the private property of a concessionaire.

(2) The concession contract must identify which assets belong to the following categories:

(a) assets, if any, that the concessionaire is required to return or transfer to the contracting authority or to another entity indicated by the contracting authority in accordance with the terms of the concession contract;

(b) assets, if any, that the contracting authority, at its option, may purchase from the concessionaire;

(c) assets, if any, that the concessionaire may retain or dispose of upon expiry or termination of the concession contract.

32 Acquisition of rights related to the project site

(1) A contracting authority and all relevant Ministries must assist a concessionaire in obtaining such rights related to the site of the infrastructure project, including title to it, as may be necessary for the implementation of the project.

(2) Any compulsory acquisition of land that may be required for the implementation of the infrastructure project is to be carried out in accordance with the Land Acquisition Act [CAP 215].

33 Easements

A contracting authority and all relevant Ministries must assist a concessionaire to enjoy the right to enter upon, transit through or do work or fix installations upon property of third parties as required for the implementation of the infrastructure project.

34 Financial arrangements

(1) Subject to any other Act or law, a concessionaire has the right to charge, receive or collect tariffs or fees for the use of an infrastructure facility or its services in accordance with a concession contract.

(2) The contracting authority may make direct payments to the concessionaire as a substitute for, or in addition to, tariffs or fees for the use of the infrastructure facility or its services.

35 Security interests

(1) Subject to any restriction that may be contained in a concession contract, a concessionaire has the right to create security interests over any of its assets, rights or interests, including those relating to the infrastructure project, to secure any financing needed for the infrastructure project.

(2) Without limiting subsection (1), security interests include:

(a) security over movable or immovable property owned by the concessionaire or its interests in project assets; and

(b) a pledge of the proceeds of, and receivables owed to the concessionaire for, the use of the facility or the services it provides.

(3) A security can not be created over public property, or other property, assets or rights needed for the provision of a public service, if the creation of such security is prohibited by the laws of Vanuatu.

36 Assignment of the concession contract

(1) Except as otherwise provided in section 35, the rights and obligations of a concessionaire under a concession contract may not be assigned to a third party, without the consent of the contracting authority.

(2) The concession contract is to set out the conditions under which the contracting authority may give its consent to an assignment of the rights and obligations of the concessionaire under the concession contract, including:

(a) the acceptance by the new concessionaire of all obligations under the concession contract; and

(b) evidence of the new concessionaire’s technical and financial capability as necessary for providing the service.

37 Transfer of controlling interest in the concessionaire

(1) Except as otherwise provided in a concession contract, a controlling interest in a concessionaire may not be transferred to a third party without the consent of the contracting authority.

(2) A concession contract is to set out the conditions under which the consent of the contracting authority may be given.

38 Operation of infrastructure

(1) A concession contract is to set out the extent of a concessionaire’s obligations to ensure each of the following:

(a) the modification of the service so as to meet the demand for the service;

(b) the continuity of the service;

(d) the non-discriminatory access of other service providers to any public infrastructure network operated by the concessionaire.

(2) The concessionaire has the right to issue and enforce rules governing the use of the facility, subject to the approval of the contracting authority.

39 Compensation for specific changes in legislation

A concession contract is to set out the extent to which a concessionaire is entitled to compensation in the event that:

(a) the cost of the concessionaire’s performance of the concession contract has substantially increased; or

(b) the value that the concessionaire receives for such performance has substantially diminished, as compared with the costs and the value of performance originally foreseen;

as a result of changes in legislation or regulations specifically applicable to the infrastructure facility or the services the concessionaire provides.

40 Revision of the concession contract

(1) Subject to subsection(2) and without prejudice to section 39, a concession contract is also to set out the extent to which a concessionaire is entitled to a revision of the concession contract with a view to providing compensation in the event that:

(a) the cost of the concessionaire’s performance of the concession contract has substantially increased; or

(b) the value that the concessionaire receives for such performance has substantially diminished, as compared with the costs and the value of performance originally foreseen;
as a result of changes in economic or financial conditions, or changes in legislation or regulations not specifically applicable to the infrastructure facility or the services it provides.

(2) Subsection (1) applies only if the economic, financial, legislative or regulatory changes:

(a) occur after the conclusion of the contract; and

(b) are beyond the control of the concessionaire; and

(c) are of such a nature that the concessionaire could not reasonably be expected to have taken them into account at the time the concession contract was negotiated, or to have avoided or overcome their consequences.

(3) The concession contract must establish procedures for revising the terms of the concession contract following the occurrence of any such changes.

41 Takeover of an infrastructure project by the contracting authority

Under the circumstances set out in a concession contract, a contracting authority has the right to:

(a) temporarily take over the operation of the infrastructure facility for the purpose of ensuring the effective and uninterrupted delivery of the service in the event of a serious failure by the concessionaire to perform its obligations; and

(b) rectify the breach of the concessionaire within a reasonable period of time.

42 Substitution of the concessionaire

A contracting authority may agree with the entities extending financing for an infrastructure project and a concessionaire to provide for the substitution of the concessionaire by a new entity or person upon serious breach by the concessionaire or other events that could otherwise justify the termination of the concession contract.

PART 8 DURATION, EXTENSION AND TERMINATION OF THE CONCESSION CONTRACT

43 Duration and extension of the concession contract

(1) The duration of a concession is to be set out in the concession contract.

(2) The contracting authority may agree to extend the duration of the concession contract.

(3) In deciding whether to agree to an extension, the contracting authority is to have regard to the following circumstances:

(a) whether any delay in completion or interruption of operations is due to circumstances beyond the reasonable control of either party;

(b) whether a suspension of the project has been brought about by acts of the contracting authority or other public authorities;

(c) whether any increase in costs arose from requirements of the contracting authority not originally foreseen in the concession contract and whether the concessionaire would not be able to recover such costs without such extension.

44 Termination of the concession contract by the contracting authority

A contracting authority may terminate a concession contract:

(a) in the event that it can no longer be reasonably expected that the concessionaire will be able or willing to perform its obligations owing to insolvency or serious breach of the concession contract; or

(b) for compelling reasons of public interest, subject to payment of compensation to the concessionaire, the terms of the compensation to be as agreed in the concession contract.

45 Termination of the concession contract by the concessionaire

A concessionaire may not terminate a concession contract except under one or more of the following circumstances:

(a) in the event of serious breach by the contracting authority or other public authority of its obligations in connection with the concession contract;

(b) if the conditions for a revision of the concession contract under section 40 are met, but the parties have failed to agree on a revision of the concession contract;

(c) if the cost of the concessionaire’s performance of the concession contract has substantially increased or the value that the concessionaire receives for such performance has substantially diminished as a result of acts or omissions of the contracting authority or other public authorities, for instance, pursuant to paragraphs 28 (h) or (i), and the parties have failed to agree on a revision of the concession contract.

46 Termination of the concession contract by either party

(1) Either party has the right to terminate a concession contract in the event that the performance of its obligations is rendered impossible by circumstances beyond either party’s reasonable control.

(2) The parties also have the right to terminate a concession contract by mutual consent.

47 Compensation upon termination of the concession contract

A concession contract is to stipulate how compensation due to either party is calculated in the event of termination of the concession contract, providing, where appropriate, for compensation for the fair value of works performed under the concession contract, costs incurred or losses sustained by either party, including, as appropriate, lost profits.

48 Wind-up and transfer measures

A concession contract may provide for all or any of the following at the end of the concession period:

(a) the mechanisms and procedures for the transfer of assets to the contracting authority;

(b) the compensation to which the concessionaire may be entitled in respect of assets transferred to the contracting authority or to a new concessionaire or purchased by the contracting authority;

(d) the training of the contracting authority’s personnel or of a successor concessionaire in the operation and maintenance of the infrastructure facility;

(e) the provision, by the concessionaire, of continuing support services and resources, including the supply of spare parts, if required, for a reasonable period after the transfer of the infrastructure facility to the contracting authority or to a successor concessionaire.

PART 9 SETTLEMENT OF DISPUTES

49 Disputes between the contracting authority and the concessionaire

Any disputes between a contracting authority and a concessionaire are to be settled through the dispute settlement mechanisms agreed by the parties in the concession contract.

50 Disputes involving customers or users of the infrastructure facility

If a concessionaire provides services to the public or operates infrastructure facilities accessible to the public, a contracting authority may require the concessionaire to establish simplified and efficient mechanisms for handling disputes or claims submitted by its customers or users of the infrastructure facility.

51 Other disputes

(1) A concessionaire and its shareholders may choose the appropriate mechanisms for settling disputes among themselves.

(2) A concessionaire may agree on the appropriate mechanisms for settling disputes between itself and its lenders, contractors, suppliers and other business partners.

PART 10 MISCELLANEOUS

52 Delegation

(1) A contracting authority may delegate to any person all or any of its functions or powers under this Act, other than this power of delegation.

(2) A delegation:

(a) must be made in writing; and

(b) may be made either generally or subject to express limitations or conditions; and

(3) A contracting authority remains responsible for actions taken under a delegation.

(4) A contracting authority may continue to perform a function or exercise a power that has been delegated.

53 Regulations

The Minister may make regulations prescribing matters:

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.

54 Commencement

This Act commences on the date on which it is published in the Gazette.

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