Risk Management in Transport PPP Projects
In the Islamic Countries
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Contract renegotiation
Amendments or changes to the contract terms are allowed by legislation that need to take
the form of contractual amendments. Changes in the ownership/contract assignment are also
possible specified that the replacing entity has also to explicitly assume contractual obligations
in front of the procuring authority. The state may also exercise its pre-emptive right on the
transfer of equity shares. Amendments may be done by the line Ministry without an external
control of the National Regulatory Authority for Public Procurement if changes do not affect the
denomination of the contracting parties, the technical and financial guarantees and the
contractual period, and when its amount or cumulated amounts of the different amendments is
below 10% of the initial amount of the contract. Under different circumstances external control
from the authority is required. The National Regulatory Authority for Public Procurement also
exercises control on the amendments foreseeing an increase higher than 15% of the original
contract value for services and studies and 20% for the procurement of public works.
Amendments to the economic terms of the contract are indeed possible as long as they are not
related to causes attributable to any of the involved parties. Similarly modifications to the
original contract are also possible to restore the financial sustainability of contracts if the causes
of the imbalances are not attributable to the SPV. Risk allocation cannot be modified as part
of contractual amendments procedures (WB, 2018).
Dispute resolution mechanisms are also foreseen by public procurement law which
includes amicable resolution in first instance. Mediation and arbitration measures include
international arbitration as well as investor-state arbitration as Algeria adopted the 1958 New
York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which
entered into force in the country on 9 September 1998. Algeria is also member of the
International Centre for Settlement of Investment Disputes (ICSID Convention). The National
Regulatory Authority for Public Procurement is also endowed with a national mechanism of
conflict resolution for the solution of disputes between the parties involved in public
procurement processes (WB, 2018).
Concerning force majeure, public contracts shall specify all the cases of force majeure. Force
majeure events determine the suspension of the project implementation time-schedule.
Accordingly delays attributable to force majeure events will not result in the application of
penalties (WB, 2018).
5.4.7. End of contract
Contract return
According to the public procurement code at the stage of contract resolution the
infrastructure shall be returned by the parties in optimal conditions. If this may not be
possible, compensation measures may be adopted (WB, 2018). In absence of a dedicated PPP
regulatory framework, the public procurement law is not specific in terms of duration of the PPP
contracts. The three PPP contracts relating to the development and management of port