Risk Management in Transport PPP Projects
In the Islamic Countries
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Contract renegotiation
In Aqaba, each contract specifies the conditions under which a renegotiation of its clauses is
possible.
The national PPP law foresees a more elaborate approach to renegotiation instead. In fact, it
establishes that the government has to be requested for a written approval on any amendment
related to outcomes, price, duration or any waiver of rights that modifies risk distribution. In
addition, in case the amendment was as significant as to increase project costs by more than
20%, the project has to be finalized and re-tendered. Alternatively, additional works may be
offered in tender separately. The Cabinet, anyway, may increase this percentage, based on the
features of the project, to a maximum of 50%. Every other modification can be implemented
only with the prior written approval of the contracting body.
Furthermore, the PPP Regulation provides that the contract must include its own amendment
procedures.
5.5.7. End of contract
Contract return
So far, no transport PPP project has ever reached its final phase in Jordan. However, each PPP
contract includes provisions on the necessary procedures for the transfer of the asset to the
public sector upon expiry of the contract term or early termination as required by PPP
Regulation.
Extension of the concessions are also possible, even though only for a limited number of years.
After that, the transfer of the asset to the public sector and the retendering of the service are the
available alternative options.
According to interviewed stakeholders, the risk of infrastructures being returned in poor
conditions can be successfully addressed by enforcing contract clauses on the schedule and the
type of required maintenance. A further mitigation measure is the appointment of external
advisors before hand-back, in order to confirm that the asset is in compliance with the contract
requirements. Therefore, if these measures are taken, this risk is not expected to evolve into a
major issue at the expiry of transport PPP contracts.
Follow up
As a reference document, the PPP guidelines provide a number of tools (e.g. PPP Suitability
Checklist, template for PPP Project Proposal Memorandum, PPP risk identification matrix, PPP
risk mitigation matrix, PPP risk allocation matrix). If used systematically in the preparation of
individual PPP projects, those documents can potentially form a critical mass of information to
be used to inform the development of future PPP projects.
A database on PPP projects had been set up by the PPP unit in recent years. It collected
information on aspects such as: contracting authority; sector; annual variation order on the