Infrastructure Projects

• 3. Participation in projects.- Any person may participate in financing, construction,
  maintenance and operation of projects. 4. Concession agreement

• (a) A person may enter into a concession agreement of the nature specified in Schedule II with the State Government, a Government agency or a specified Government agency.
  (b) The scheme for a concession agreement shall be such as may be prescribed
• Where the Board having regard to the nature of a project is satisfied that, it is necessary so to do, it may permit combination of two or more agreements of the nature specified in Schedule II into one agreement.
• No concession agreement shall provide for transfer of a project by a developer to the State Government, a Government agency or a specified Government agency later than thirty five years from the date of agreement.
• (a) The State Government may, by notification in the Official Gazette, add to Schedule II any other nature of agreement and thereupon the nature of agreement so added shall be deemed to be a nature of agreement specified in schedule II for the purpose of this Act.
  (b) Every notifications issued under clause (a) shall be laid before the State Legislature as soon as may be, after they are issued.
• Recommendation by Board.-
  (1) A proposal prepared by the State Government, a Government agency or a specified Government agency for participation by a person other than the State Government, a Government agency or a specified Government agency in financing, construction, maintenance and operation of the project, the cost of which exceeds such amount as may be prescribed, shall be submitted to the Board along with proposed concession agreement relating thereto and different amount of cost may be prescribed for different nature of project.
  
  (2) The Board shall consider the proposal and the proposed concession agreement submitted to it under sub-section (1) or sub-section (1) of section 10 and may either recommend with or without modifications or not recommend, or return the proposal and concession agreement for reconsideration of the State Government, the Government agency or, as the case may be, the specified Government agency.
•  Assistance by State Government, Government agency or specified Government agency.-The State Government, a Government agency or a specified Government agency may provide to a person assistance in the following manner, namely:-
  participation in the equity of the project not exceeding forty-nine per cent of the total equity.
  Subsidy not exceeding fifteen per cent of the cost of the project. Senior or subordinate loans,
  Guarantee by the State Government, a Government agency or a specified Government agency in respect of liability of a Government agency arising out of a concession agreement.
  Opening of operation of escrow account
  Conferment of development rights in respect of any land. Incentives by the State Government in the form of exemption from the payment of, or deferred payment of, any tax or fees levied by the State Government under any law, or
  In such other manner.

• Procedure for concession agreement. No concession agreement for undertaking a project shall be entered into with any person unless the procedure specified in section 8 and 9 or, as the case may be, section 10 has been followed.
• Selection of a person (1) A concession agreement for undertaking a project may be entered into with a person who is selected through a competitive public bidding as provided in section 9 or by direct negotiation as provided in section 10.
  (2) The matters relating to competitive public bidding and direct negotiation shall be such as may be prescribed.
• Selection of a person by competitive public bidding
  (1) On the acceptance of the recommendation of the Board made under sub-section (2) of section 5, the State Government, the Government agency or, as the case may be, the specified Government agency shall select a developer for the project through the competitive public bidding in the manner provided hereunder- (a) public notice inviting the persons to participate in competitive public bidding for undertaking the project.
            (i) shall be published once in a week for two consecutive weeks in at least three newspapers, two in general circulation and one in circulation in the area in which the project is to be undertaken, and
            (ii) may be published by any means of mass communication. (b)
            (I) Any person who intends to participate in the competitive public bidding to undertake the project in pursuance of clause (a) shall provide information with regard to his legal, technical, managerial and financial capacity to undertake the said project in such form alongwith such particulars as may be specified by the State Government, the Government agency or, as the case may be, the specified Government agency.
            (ii) The State Government, the Government agency or, as the case may be, the specified Government agency shall examine the information and other particulars submitted the person under sub-clause (I) and decide as to whether such person fulfils the criteria for pre-qualification as laid down by the State Government, the Government agency or, as the case may be, the specified Government agency.
             (iii) A person who fulfils the criteria under sub-clause (ii) shall be the pre-qualified person
             (c) Where after a person is consortium is pre-qualified under clause (b) but before such person entered into a concession agreement with the State Government, the Government agency or, as the case may be, the specified Government agency, any constituent of the consortium disassociates from such consortium, then the State Government, the Government agency or, as the case may be, the specified Government agency shall call upon the consortium to include, within thirty days, such constituent in the consortium so that in the opinion of the State Government, the Government agency or, as the case may be, the specified Government agency, the consortium fulfils the criteria specified in sub-clause (ii) of clause (b) (ii) Where the consortium fails to comply with the requirement specified in sub-clause (I), the consortium shall cease to be pre-qualified person.
             (d) All pre-qualified persons shall be permitted to submit their proposals to undertake the project in such form (containing technical and financial aspects) as may be specified by the State Government, the Government agency or, as the case may be, the specified Government agency. (2)  On receipt of the proposals from the pre-qualified persons, the State Government, the Government agency or, as the case may be, the specified Government agency shall reevaluate the proposals from technical aspect (3)  If the proposals are in order from the technical aspect, the State Government, the Government agency or, as the case may be, the specified Government agency shall evaluate the proposals from the financial aspect, having regard to different factors specified below in respect of different nature of the agreements specified in Schedule II- (a)  In relation to the build own operate and transfer agreement and the build operate and transfer agreement, any of the following factors shall be taken into consideration for the purpose of evaluation of the proposal, namely.-

• lowest bid in terms of the present value of user fees, where period of concession is fixed;
• the highest revenue share to the State Government, the Government agency or the specified Government agency.
• a bid in terms of the shortest concession period, where the user fees is fixed.
• the lowest present value of the subsidy, where the period of concession is fixed.
• In relation to the build and transfer agreement or the build lease and transfer agreement, the lowest net present value of the amortization payment from the State Government, the Government agency or the specified Government agency shall be taken into consideration.
  (b) In relation to the lease management agreement, highest present value of the lease payment to the State Government, the Government agency or the specified Government agency shall be taken into consideration. (c)  In relation to the management and service agreement, the lowest present value of the management fees to be paid by the State Government, the Government agency or the specified Government agency shall be taken into consideration. (d)  In relation to any other nature of agreement, the State Government, the Government agency or the specified Government agency may consider such factors as may be recommended by the Board.
  (4)  Where -

• the proposals are evaluated under sub section (3) from the financial aspect having regard to a relevant factor specified in that sub section and refereed to in the proposal, and
• Once the proposal so evaluated satisfies the financial aspect having regard to the relevant factor,
• The State Government, the Government agency or, as the case may be, the specified Government agency, may enter into a concession agreement with the person who has submitted the proposal referred to in clause (d) of sub-section (1)
  (5)  Where no proposal stands the scrutiny from the technical or financial aspect, the competitive bidding shall stand cancelled.
  (6)  Nothing in sub-section (5) shall prohibit the State Government, the Government agency or, as the case may be, the specified Government agency from inviting persons to participate in competitive public bidding in respect of the proposal cancelled under that sub-section after, if necessary, revising the same.

• Selection by direct negotiation (1) Where-
  (i) a proposal for participation by a person for undertaking a project and a proposed concession agreement have not been prepared by the State Government, a Government agency or the specified Government agency for being submitted to the Board under sub-section (1) of section 5, and
  (ii) a proposal for undertaking a project and a proposed concession agreement prepared by a person are submitted to the State Government, the Government agency or the specified Government agency.The State Government, the Government agency or, as the case may be the specified Government agency may-

• consider the proposal and the proposed concession agreement from all aspects (including technical and financial) and if necessary modify the same in consultation with the person who has submitted the proposal and the proposed concession agreement, and
• submit the proposal and the proposed concession agreement to the Board if-
  
  (i)  the cost of the project exceeds the limit prescribed under sub-section (1) of section 5 and
  (ii) the undertaking of the project does not require financial assistance in the form of subsidy from the State Government, the Government agency or the specified Government Agency.
  
  (2) On acceptance of the recommendation of the Board made under sub-section (2) of
  section 5, the State Government, the Government agency or, as the case may be, the specified Government agency shall adopt the proposal as the basis for selecting a person with whom concession agreement for undertaking the project may be entered into, and for selecting such person, the State Government, the Government agency or, as the case may be, the specified Government agency shall follow the procedure of competitive public bidding specified in section 9
  
  (3) Where a person is selected by following the procedure of the competitive public bidding (hereinafter referred to as "the selected person") the proposal of the selected person shall be compared with the proposal which is earlier submitted by a person to the State Government, the Government agency or, as the case may be, the specified Government agency under sub-section (1) (hereinafter referred to as "the earlier proposer")
  
  (4) Where the proposal of the earlier proposer is not preferable to the proposal of the selected person, the earlier proposer shall be given an opportunity to make his proposal competitive with that of the selected person within a period of thirty days from the date on which he has been given an opportunity and where the earlier proposer fails to do so within the said period, the State Government, the Government agency or, as the case may be, the specified Government agency may enter into a contract with the selected person.
  
  (5)(a) Where a concession agreement has not been entered into with the earlier proposer, the cost of preparation of the proposal and the concession agreement incurred by him shall be reimbursed by the State Government, the Government agency or, as the case may be, the specified Government agency and on such reimbursement, the proposal and the concession agreement relating to it shall be the property of the State Government, the Government agency or, as the case may be, the specified Government agency.
  (b) the cost of preparation of the proposal and the concession agreement shall
  be determined in such manner as may be prescribed.

• Amount to be charged for goods and services.- (1) Where, in pursuance of a concession agreement with the State Government, the Government agency or the specified Government agency.
  
  (a) (I)the developer has constructed a project for providing goods or services, and
  (b) (II)the project vests in the developer for a period specified in the agreement and
      (iii)on expiry of such period , the project is to vest in the State Government, the Government agency or, as the case may be, the specified Government agency.the developer may charge such amount as specified in the agreement, for providing goods or services by the project so long as the project continues to vest in him.
  (2) A concession agreement may provide that a developer may revise the fees referred to in sub-section (1) in such manner and having regard to the rate of inflation, variation in the rate of foreign exchange and such other factors, as may be prescribed.
• Financial security for maintenance of project.- Where a provision is made in a concession agreement requiring the developer to maintain the project constructed by him for a period specified in such agreement,-
  (a) there shall be opened an escrow account by the developer, the moneys out of which shall be expended for the maintenance of the project in accordance with the provision made in the concession agreement or in any other agreement with the State Government, the Government agency or, as the case may be, the specified Government agency, or
  (b) the developer shall execute a bond in the favour of the State Government, the Government agency or, as the case may be, the specified Government agency binding himself to make payment of such amount of money as specified in the bond to the State Government, the Government agency or, as the case may be, the specified provisions made in the concession agreement or any other agreement with the State Government, the Government agency or, as the case may be, the specified Government agency.
• Training to employees.-(1) A developer shall provide at his expense, training to the employees of the State Government, the Government agency or, as the case may be, the specified Government agency in respect of maintenance or operation of the project in accordance with the provisions made in the concession agreement or in any other agreement with the State Government, the Government agency or, as the case may be, the specified Government agency.
• Transfer of certain rights :-Where the project is transferred to the State Government, the Government or the specific Government agenc y according to the provisions of the concession agreement, all the rights of the developer in respect of the project shall stand transferred to the State Government, the Government agency or, as the case may be, the specified Government agency.
• Termination of concession agreement- (1) Where a concession agreement is terminated by the State Government, the Government agency or, as the case may be, the specified Government agency with the consent of the developer or in absence of any default of the developer, the developer shall be entitled to such amount of compensation for such termination as specified in the concession agreement.(2) A concession agreement may provide that if a default specified therein is committed by the developer, the State Government, the Government agency or, as the case may be, the specified Government agency shall, after giving to the developer an opportunity of being heard in such manner as may be prescribed, be entitled to terminate the concession agreement and-
  
  (a) take over the project without repaying the amount invested by the developer in the equity and shall assume the liability of the developer towards loans taken by him in respect of the project, or
  (b) enter into a concession agreement with another person whose name is recommended by the tenders and approved by the State Government, the Government agency or, as the case may be, the specified Government agency, on the same terms and conditions as are specified in the concession agreement so terminated.
• Power to add to Schedule 1 (1) The State Government may, by notification in the Official Gazette, add to Schedule 1 any other project which falls within the executive power of the State and thereupon the project so added shall be deemed to be a project specified in schedule I for the purpose of this Act. (2) Every notifications issued under sub-section (1) shall be laid before the State Legislature as soon as may be after they are issued.