Public Private Partnership (PPP)
Although Public Private Partnership, or PPPs, have only been on the New Zealand scene for a relatively short time, they have been widely used throughout Europe for decades as an important procurement tool across all sectors.
In the UK PPPs are used across a wide range of sectors, including health, education, transport, defence, leisure, waste, culture and housing sectors. Generally, PPP contracts are a form of ‘off balance sheet’ funding and are a variation of the capital lease structure that is used widely by oil and gas companies in the private sector.
They are often entered into with special purpose project companies (Special Purpose Vehicles or SPVs) that then subcontract most or all of the significant performance obligations to subcontractors. Standard international practice is for the subcontractor’s rights of recovery against the project company to be limited to sums or remedies that the project company can recover from or enforce against the public sector partner through equivalent project relief provisions.
SREIL has considerable experience working with both the private sector and regulatory authorities in regard to PPP projects in transport, power and housing. We are able to develop, critique and integrate our clients’ financial models into the applicable legal framework to deliver bankable and operationally workable projects.
Southampton City Council: Combined Heat and Power project
As a senior associate in the Energy and Infrastructure team of London law firm, Nabarros, SREIL’s Sean Rush was engaged by the Southampton City Council to develop a PPP contract whereby the investor would install a gas fired power station and use the excess heat for residential heating of a nearby council estate. The investor would receive a monthly firm ‘take or pay’ fee for having heat available, guaranteed by the Council over the term of the contract.
As a senior associate in the Energy and Infrastructure team of London law firm, Nabarros, SREIL’s Sean Rush was engaged to advise the Go Ahead Group in respect to their bids to secure the Chiltern Railways franchise and Great Western railway franchises from the Strategic Rail Authority. Go Ahead committed to a multi-billion dollar investment in new infrastructure associated with the route over the term of the franchise and committed to minimum service levels associated with passenger numbers and punctuality. In return, and subject to the minimum service levels being met, Go Ahead received a minimum monthly revenue stream from fares that would be topped up by the Government should fares be in.
Oil and Gas Production Sharing Contracts
Although not commonly recognised as ‘PPP’s’ production sharing contracts issued by Governments to oil and gas companies (known as ‘the Contractor’) follow the same commercial framework as PPPs prevalent in more conventional sectors. The Government moves the financing and development of its natural resources to the private sector in return for agreed capital investment and minimum production levels and local content. Sean Rush has had wide experience of PSCs in Indonesia, Yemen, Algeria, Kurdistan and Iran.