Decree 15/2015 on private public partnership (PPP) investment was issued in February 2015 and will take effect from April 2015. Decree 15/2015 will replace the current regulations on, among other things, BOT and BT investment (Decree 108/2009) and the ad-hoc regulations on PPP investment (Decision 71/2010). The following are salient points of Decree 15/2015:
- Decree 15/2015 has a comprehensive transition clause in order to address the concerns of many investors in on-going BOT projects (mostly coal-fired power plants). In particular, Decree 15/2015 allows BOT projects which have been granted an Investment Certificate (IC) or whose project contracts have been duly executed to continue to operate according to the granted IC or the executed project contracts. A project whose project contracts have been initialed is not subject to re-negotiation. However, this exception may not work if the initialed project contracts do not comply with Decree 15/2015 and need further amendments for compliance with Decree 15/2015. A project where the investor has been selected via a decision does not need to re-select the investor. It is not clear if this exception applies to investors whose are selected via an official correspondence instead of a decision. Feasibility studies approved before Decree 15/2015 are not subject to review and re-approval.
- The definition of a Build-Transfer (BT) project now expressly provides that after the BT project is completed, the BT investor will receive land use right to develop a second project. Under current BT regulations, it is not clear that the BT investor will receive land use right to develop the second project.
- Decree 15/2015 introduces three additional forms of PPP investment including Build-Transfer-Lease, Build-Lease-Transfer and Operation and Management Contract.
- Decree 15/2015 now requires an “Investment Agreement” to be signed between the project sponsors and the Authorised State Body after negotiation of the project contract is completed and before applying for the IC of the project.
- Decree 15/2015 now expressly lenders of a PPP project to designate a third party to exercise the step-in right of the lenders. Decree 15/2015 also expressly allows the lenders of a PPP project to take mortgage over the concession rights under the project contracts in addition to other assets of the project.
- Decree 15/2015 now guarantees that there will be no change to the land use purpose of the land used to develop a PPP project during the project term even in case of enforcement of step-in right by the lenders.
- A PPP project including a BOT project is now not entitled to land rental exemption as currently provided to BOT projects under Decree 108/2009. Instead, a PPP project is only entitled to land rental exemption if it satisfies the conditions for land rental exemption under the land regulations.
- Decree 15/2015 now expressly recognises that a dispute arising from a project contract or a contract related to a PPP project is a commercial dispute that can be settled by commercial arbitration. In addition, Decree 15/2015 is clearer about the possibility to refer a dispute with the Authorised State Body arising from a project contract to foreign arbitration if the project contract has a party being a foreign investor or enjoys a Government guarantee.