7. Terms and conditions for negotiations of private sector infrastructure projects
Before seeking BCC approval to begin contract negotiations with one or more proponents, the agency together with Treasury, must develop a project-specific 'terms and conditions for negotiations of private sector infrastructure projects' agreement in the PSI-3 format (refer to Appendix Four in the WWG Guidelines).
This will inform the BCC of type of commercial deal the agency wants to pursue with the private sector. The terms and conditions submitted to the BCC must outline the scope of the project and areas for final negotiations, as well as any conditions that must be satisfied for the Government to support the project.
The agency submission should also provide the information needed to estimate any likely contingent liability of the project on the consolidated fund.
Phase | Title | Actions |
1 | PPP project planning | ■ Determine core v non core services and project scope ■ Updated business case (including economic appraisal) ■ Procurement strategy report, including a timetable for procurement showing key milestones ■ Public interest evaluation ■ Risk allocation matrix and management plan ■ Preliminary public sector comparator ■ Project management structure ■ Preliminary statement of fiscal impacts in the format ■ An estimate of contingent liabilities upon the consolidated fund Planning approval preliminary assessment and consultation |
BCC approval to proceed | ||
2 | EOI and short listing | ■ Draft EOI documentation ■ Probity plan prior to issue of the EOI ■ Invite EOI ■ Evaluation plan, evaluation and short listing ■ Update of public interest evaluation ■ Update of risk allocation matrix ■ Environmental assessment |
Possible concept approval under the EP&A Act BCC approval to proceed if required | ||
3 | Detailed proposals and assessment | ■ Draft call for detailed proposals document ■ Draft contracts to issue with the call for proposals ■ Issue call for detailed proposals ■ For Process One project development approval under the EP&A Act and issue to bidders ■ Update PSC prior to receiving proposals ■ Evaluation plan and evaluation ■ Where applicable, proceed to best and final offer (BAFO) ■ Prepare 'terms and conditions for negotiations of private sector infrastructure projects' ■ Update: ■ public interest evaluation; ■ business case (including economic appraisal); ■ risk allocation matrix and management plan; ■ statement of fiscal impacts; ■ assessment of loan council treatment; and ■ assessment of probity, policy and other issues ■ Accounting treatment and taxation opinion |
BCC approval to proceed | ||
4 | Negotiation and contracts | ■ Where appropriate and approved, proceed with pre-selection negotiations ■ Negotiations with preferred proponent ■ Finalise contract ■ Finalise accounting treatment ■ Update: ■ public interest evaluation; ■ business case (including economic appraisal); ■ risk allocation matrix and management plan; ■ statement of fiscal impacts; ■ assessment of loan council treatment; and ■ assessment of probity, policy and other issues ■ Accounting treatment and taxation opinion |
BCC approval to proceed required if significant variations arise in negotiations | ||
Treasurer's approval (PAFA Act) Project or development approval under the EP&A Act | ||
5 | Execution, disclosure and application | ■ Execute contract ■ Environmental assessment ■ Publish project agreement and associated documents (excluding confidential information) ■ Issue contract summary ■ Implement and monitor project ■ Post implementation review |
In addition to the five phases outlined above, an agency will be required to seek BCC approval to continue the project in any of these following situations.
If at any time prior to signing the contract, the conclusions or major assumptions of the business case (including the economic and financial appraisals) significantly change, including:
• forecast construction, operating or maintenance costs, or forecast revenues changing by more than 10 per cent;
• likely development approval conditions;
• proposed or maximum user charges changing by more that five per cent;
• budget funding is required from government or from internally generated funds of the Agency which is additional to that previously approved;
• any previously set BCC conditions of approval are unlikely to be met;
• there is a material change in the risk allocation from that which was last approved by the BCC: and
• procuring the project, as a PPP or not, is no longer in the public interest or would not represent value for money.
An agency must seek the Treasurer's approval under the PAFA Act to enter into joint financing arrangements or PPPs. State-owned corporations may need to obtain the written approval of the shareholding ministers under Section 20X of the State Owned Corporations Act 1989 (SOC Act). This section of the SOC Act deals with the acquisition and disposal of fixed assets and investments. State-owned corporations should check with NSW Treasury to determine if they need this approval for their particular privately financed project.
If the agency wants to renegotiate any significant areas of a PPP contract after it has been approved and signed by government, the agency must obtain BCC approval before starting renegotiations.
A further BCC approval is required before signing a contract if any of the negotiation terms previously approved by the BCC cannot be met.
If the agency wants to renegotiate or amend any element of a previously signed PPP contract without materially changing the workings of the contract, the agency must consult with NSW Treasury before commencing renegotiations. NSW Treasury will determine if it is appropriate to inform the Treasurer or BCC.
Any amendments to previously signed PPP contracts may require the Treasurer's approval under the PAFA Act. Planning and Environmental approvals must also be sought under the EP&A Act (NSW). For more information refer to Section 3.2 in the NSW WWG Guidelines.