Financing / investing in energy / infrastructure around the world

This tool offers you the chance to see how jurisdictions compare for finance and investment around the world. Please select your country and legal topic area(s) of interest using the drop down menu on the left hand side of the page.

Financing / investing in energy / infrastructure

What is the applicable procurement process?

Angola

According to the law, the approval of concessions as well as their attribution are the responsibility of the President of the Republic. The award of concessions is preceded by a public tender or restricted tender by prior qualification, carried out in accordance with the Public Procurement Law.

In the case of award to a public company or to a company under the effective control of the state, the above tender process is dispensed.

The attribution of licenses is the responsibility of the government, and this responsibility may be delegated to the local administration bodies of the state in its area of jurisdiction, the object of the licenses is concerned with the distribution and sale of electricity under a public service regime.

Australia

In Australia, procurement of infrastructure projects is almost invariably carried out on a contestable tender basis. A contestable tender basis is deemed to be a fair, transparent and competitive way to obtain value for money. Such contestability may be publicly advertised or sought from a formal pre-qualified list of bidders or informally sought from a private list of contractors. Some states do, however, have unsolicited proposal regimes whereby the private sector may directly approach Government with a proposal for infrastructure development and then be awarded the rights on an uncontested basis, but there are strict criteria that apply.

Investing in energy and infrastructure

There is no body of public procurement law. Procurement by the state and federal governments is governed by a mixture of policies such as guidelines and codes of practice, statute, regulations and common law.

While private sector procurers of construction services are generally free to set their own ‘rules’ of procurement, they can still be exposed under statute (for example under the Australian Consumer Law) or at common law. Procurers will find themselves exposed to these laws if they either do not follow the process which has been specified in the tender documentation or if they make inaccurate representations about the way in which the tender process will be managed or contracts awarded. Conversely, bidders may be exposed to common law process contract challenges if they withdraw during evaluation.

In addition to the infrastructure research and advisory bodies established by some states and the federal government, each government agency has at least one designated department or body which develops and implements policy applicable to procurement of infrastructure projects. In some cases specialized policies will apply to particular types of procurement such as defense, health infrastructure and the delivery of Public-Private Partnerships (PPP) and unsolicited proposals. In addition, government agencies which procure a large amount of infrastructure (for example statutory road management agencies) often have their own internal policies and procedures applicable to the procurement of that work.

For projects with a value in excess of AUD10 million, many government agencies have implemented a system of audits, checks and balances to seek to ensure that the tender and procurement processes are competitive, transparent and compliant with the relevant rules and policies. This means that many government agencies are required (or choose) to:

appoint a probity (fairness and honesty) auditor to audit the tender process for the project;
engage a probity advisor to provide ongoing advice to the agency in relation to management of the tender and tender queries; and
participate in periodical reviews (sometimes known as ‘Gateway’ reviews) in order to benchmark, test and check the business case for the project.

Statutory regulation of government tenders

The Australian Consumer Law (and state based Fair Trading legislation) will prohibit certain kinds of behavior and conduct during the course of a procurement, for example, misleading and deceptive conduct. Bid rigging, cover pricing and certain other collusion between tenderers is prohibited under the Competition and Consumer Act 2010 (Cth).

To avoid the possibility of collusion or corruption, tenderers may be asked to provide a statutory declaration that there has been no collusion in the tender process with other tenderers.

To emphasize the transparent nature of government tendering, many government agencies are often now required by statute or policy to publish detailed information:

identifying the successful tenderer;
specifying the tender prices submitted by all tenderers; and
detailing the nature and form of contract executed in respect of the works;

Additionally, government agencies may be required to disclose information under Freedom of Information legislation or through pre-trial discovery processes.

Policies, guidelines and codes of practice

There are numerous policies, guidelines and codes of practice which govern procurement of infrastructure by government agencies at all levels of government. Many government agencies also have specific policies directed at the delivery of projects by different forms of procurement such as a PPP or alliance contracting. In some cases, such as the Commonwealth Procurement Rules issued by the federal government, there are rules dealing specifically with when competition in a tender process may be limited, and additional requirements for procurements at or above a certain threshold.

The core objective of the Commonwealth Procurement Rules is to ensure that value for money is obtained in federal government procurement. The value for money principle requires consideration of all relevant financial and non-financial costs and benefits of each proposal including whole of life costs (such as any maintenance costs or costs in connection with a dispute). The Commonwealth Procurement Rules state that value for money is enhanced in government procurement by:

encouraging competition and being non-discriminatory;
promoting the use of resources;
making decisions in an accountable and transparent manner;
encouraging appropriate engagement with risk; and
ensuring that the procurement process is commensurate with the scale and scope of the procurement.

Financing energy and infrastructure

There are three general ways that can be implemented to allow the private sector to assist deliver infrastructure:

traditional procurement using government financing;
corporate financing using private financing; and
project financing using private financing.

PPPs are often perceived as a way to improve or create public infrastructure without hindering on government funds and budget constraints.

Belgium

Public procurement in Belgium is, for the time being, in most instances governed by the Law, which is based on EU Directives. There are some sector specific regulations such as the Royal Decree of 10 January 1996 on the public procurement of commissions of works, deliveries and services in the sectors of water, energy, transport and postal services.

The key principles are that contracts procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where one of the Belgian governments (whether national or regional), or a branch of them, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities, police and fire authorities, various non governmental bodies and autonomous governmental companies. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met, so a regulated procurement would need to take place.

In most cases, the public sector will need to publish a contract notice in the Official Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy to evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted. This is the most common procedure for relatively small-scale projects.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression-of-interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

An investor may choose, however, to seek to invest in a project (by acquiring an interest in a private sector partner) that has already been procured and is operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the original awarded contract rather than procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement related considerations that need to be borne in mind.

Financing energy and infrastructure

On a publicly procured contract, the public sector may have prescribed requirements on the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, on project finance deals, a refinancing of the senior debt will require the consent of the public sector.

Brazil

The procurement process for Energy and Infrastructure in Brazil is provided by means of concessions and public-private partnerships. Both processes are used by the government to increase private investment in energy and infrastructure assets, as state-owned companies are facing severe financial difficulties for new investments.

Below is a more detailed explanation about the forms of investment and funding in energy and infrastructure assets.

Investing in energy and infrastructure

Infrastructure and energy projects may be implemented under several regimes, depending on their nature and in particular whether they legally qualify as public services, activities within the constitutional attribution of the Union or of the States or regulated private activities. Considering the involvement of public and private sectors, all the projects and activities may be defined as a partnership between the government and private entities, which may be formalized under the following regimes:

Common concessions

The activities designated as public services by the applicable law can only be transferred to private parties through long-term concession agreements or, exceptionally, through permissions (which may be perceived as less stable, but without substantive differences in practice). In both cases, the concession will be a result of a formal public bidding procedure. This procedure is governed by the Federal Law No. 8,987 of 1995.

In common concessions, the private entities are responsible for obtaining the remuneration for the provided services, in a direct relationship with the users of the contracted services.

Public-private partnership

The public-private partnership is governed by the Federal Law No. 11,079 of 2004 and consists of an agreement entered into by and among the government and a private entity for works or services in an amount higher than R$20 million and for a period of more than five years and less than 35 years.

Public-private partnerships are different from the common concessions because of the way the private entities are remunerated. In public-private partnerships, the remuneration of the private entities is usually paid by the public entity which hired the private entity.

There are activities in the infrastructure sector not designated as public services and usually not involving scarce resources or natural monopolies, which may be carried out by private agents with more flexibility. Such activities may be conducted by private entities without the need for a concession or a public private partnership, being subject only to sector-specific regulation and a non-discretionary authorization, on the top of environmental and other legal requirements applicable to business activities in general.

Financing energy and infrastructure

The Brazilian Development Bank (BNDES) plays a dominant role in financing energy and infrastructure assets. Caixa Econômica Federal and Banco do Brasil, the other two large state-owned banks, increased their market share. However, the finance provided by these entities is not sufficient for the investment in infrastructure planned by the government for the coming years, and the investment provided by private companies has become necessary for the execution of the infrastructure projects.

Canada

Investing in infrastructure

While there is no legislative regime specifically covering the public procurement of infrastructure assets, a body of law has developed relating to the procurement of such projects by public sector organizations. The principles that underpin this jurisprudence are primarily directed at fairness and transparency on the part of the public authority in relation to bidding entities. The development of a two-stage request for qualifications/request for proposals process has emerged as a very common means of conducting such procurement. Following initial qualification, usually based on experience of similar or related projects, the public authority selects a relatively small number of bidders to proceed to the request for proposals stage. Under the relevant Canadian jurisprudence, the documentation setting out the rules of engagement for the procurement establish an offer, which is accepted and converted into a contract (Contract A) when a proponent submits a compliant bid. This is distinguished from the contract for the development of the facility or asset (Contract B), which is ultimately entered into between the authority and the proponent when it is selected as the winning bidder.

Investing in energy

The construction of new oil and gas infrastructure, such as pipelines and distribution systems, being privately owned, is not subject to public tendering or procurement processes.

There is an element of public procurement to the awarding of leases for oil and gas exploration. Most oil- and gas-producing lands in Canada are owned by the provinces, which conduct periodic sales of the right to explore for and produce petroleum from those lands. The sales are generally conducted via an open, public auction. A party wishing to purchase lands for oil and gas exploration may either participate in one of these auctions (which are generally for the sale of unexplored and unproven lands) or may purchase existing, proven oil and gas leases from existing producers.

The methods by which new electricity infrastructure is procured vary from province to province and also evolve with time.

Many transmission projects are undertaken by the incumbent utilities without a public procurement process. For example, the reinforcement of the Bruce-to-Milton line in Ontario was undertaken by Hydro One has part of its system planning. While an aboriginal group received an equity stake in the project, the opportunity was not generally open to outside equity investors. Some large transmission projects are initiated through a public procurement process open to all prospective developers, ‎not just the regional incumbent. For example, the Alberta Electricity System Operator ran a competitive develop-design-build-finance-own-operate-maintain process for the construction of a 500km, 500kV line serving Fort McMurray.

Distribution projects tend to be undertaken by existing distribution utilities. While procurement process may be run to obtain design, construction and other services, the projects as a whole are usually managed by the utilities.

Generation projects may be, but are not universally, publicly procured. Alberta has historically taken a ‘hands off’ approach to generation, allowing private sector developers to undertake new projects in response to wholesale pricing and other negotiated offtake agreements. However, it has recently prioritized the development of renewables ‎- as described above, the Alberta government has provided price supports for the generation of renewable electricity ‎from projects selected in a competitive bidding process conducted over several rounds in 2017-2019‎. Ontario’s approach continues to evolve. The Feed-in Tariff (FIT) program introduced in 2009 offered 20-year power purchase agreements at guaranteed rates to developers of wind, solar, hydro and biomass/gas projects. Development of grid-connected projects boomed, but that boom is now over as the Independent Electricity System Operator (at the behest of the Province of Ontario) cancelled the FIT program, terminated hundreds of FIT version 5 contracts that were pre-construction, announced a zero-tolerance policy for delays projects that are under construction, and commenced a review of the contracts of existing projects to identify cost savings opportunities. The IESO has recently shifted to a transitional capacity auction market to procure generation, but the IESO’s long-term strategy for generation procurement continues to evolve.

Financing infrastructure and energy

Financing for infrastructure and energy projects is not generally the subject of a separate public procurement process. The manner in which a particular project has been procured will, however, have a significant impact on financing terms.

Chile

Regarding public concessions, the bidding process is an administrative procedure constituted by a set of formal acts by the authority and investors, legally regulated according to the applicable regulation and expressed through this predetermined proceeding, through which the State selects the bidding that offers the most advantageous conditions for the public interest, ensuring in every case the respect to the fundamental principles such the biddings publicity, the secrecy of each offer, equality among proponents and strict subjection to the bidding conditions.

Investing in energy and infrastructure

As a result of the privatization processes, Chile now presents an efficient, transparent and sophisticated electricity market with a regulatory framework based on a highly efficient model of free-market principles.

Generation

Generation is organized according to a competitive market model with several generating companies competing in the contract market and interacting amongst each other through the spot market, based on short term margin costs of the electric system.

Transmission

As an isolated segment, this is an activity that presents large scale economies regarding its particular cost structure which is why the procedures to establish payments for the use of transmission facilities is regulated in the energy regulation, according to a procedure that seeks to cover capital and operational costs.

Distribution

Due to its monopolist nature and to the existence of economies of scale, this activity is organized around concessionary companies, with the obligation to provide services in their specific concession area and subject to the fixing of their tariffs by authorities, prices which are obtained from the analysis of capital costs and efficient model company operations.

Financing energy and infrastructure

Even though the energy market in Chile is highly complex and regulated, there are no specific rules in financing companies related to this industry.

However, the states provides several benefits, for example, in order to promote certain energy sectors, incorporating guaranteed minimum returns.

Colombia

Public Procurement in Colombia is governed by the General Statue for Public Procurement, composed by Law 80 of 1993, Law 1150 of 2007 and Decree 1082 of 2015. The following are the sector-specific regulations that are excluded from the application of the general regime:

Residential Public Utility Services are governed by Law 142 of 1994 and subject to private law regime.
Electric energy activities are governed by Law 143 of 1994 and subject to private law regime.
Telecommunications are governed by Law 1341 of 2009; (iv) Ports are governed by Law 01 of 1991.

Contracts procured by the public sector must be awarded following the principles of objective selection, transparency, economic efficiency, planning, publicity and responsibility. All public contracts must be awarded through a public tender unless the regime establishes specifically that a given contract must be awarded following one of the exceptive procedures. However, in all cases the public entity will need to publish the procedure’s terms of reference and contractual documents in the electronic system SECOP. The following are the five selection procedures for awarding public contracts:

Public tender – This selection process is used by state agencies to select contractors through a public invitation that is extended to all people interested in entering into a contract with such entity so that they, on equal conditions and following an established objective criterion, submit their proposals, from which the most favorable will be selected.
Abbreviated selection – This procedure is used in cases in which the characteristics of the object to be contracted, the circumstances of contracting, or the value or destination of the goods or services may be contracted by an expedited public tender. It is allowed in the following instances:
- when the good to be acquired has uniform technical characteristics and are of everyday use by state entities;
- for minor amount contracts, determined based on the annual budget of the contracting entity;
- for celebrating contracts for the provision of health services;
- in the cases when a public tender process has been declared deserted (without suitable bidders);
- for the alienation of public assets;
- for acquiring goods produced or intended for agricultural purposes that are offered on legally constituted product exchanges;
- for celebrating contracts that have as an object the commercial and industrial activities inherent to industrial and commercial state entities;
- the contracts of entities dedicated to the execution of programs regarding protection to individuals in risk, demobilization and reinsertion to civil life of people belonging to armed groups, displaced population, human rights protection, and population in high risk of vulnerability; and
- for acquiring goods and services required for national defense and security.
Merits-based contest – This selection process must be used only to select contractors for consultancy projects in which the work is mostly intellectual and so the public entity must consider the bidder’s professional qualities or technical expertise instead of the price of the services.
Direct contracting – This is an exceptional selection mechanism since its application is restricted to the following events only:
- when the public entity has declared that the contract must be celebrated to ensure the continuity of the service (‘urgencia manifiesta’);
- for contracting loans;
- for celebrating inter-administrative contracts;
- for the confidential contracts celebrated to acquire goods and services required for national defense and security that must be kept under reserve;
- contracts for the development of scientific and technological activities;
- escrow agreements celebrated by regional entities;
- when there are no other suppliers in the market for the provision of the good or service; and
- for the provision of professional services and administrative support, or for the execution of artistic works that can be only entrusted to specific individuals.

Investing in energy and infrastructure

The selection mechanisms and rules for the celebration and execution of public-private partnership (PPP) contracts are also ruled by the General Statue for Public Procurement. However, the selection mechanism that applies depends on the project’s initiative (public or private) and if it requires public funds, according to what is prescribed in Decree 1467 of 2012.

Public initiative PPP

The selection mechanism that must be selected by the public entity is the public tender. However, the entity can choose to open a prequalification round where the investor’s financial and experience capacities will be evaluated when the project’s estimated value exceeds US$17 million.

Unsolicited proposal PPP

Funded 100% by a private investor

Once the state entity approves the project presented by the originator in its feasibility phase, it must publish a public call for third parties to manifest if they are interested in the project structured by its originator. If no other companies show their interest, the state agency can award the contract directly to the project’s originator. If other companies manifest an interest in the project, the state entity must open an abbreviated selection process to award the contract. During the public process, the originator has the right to present a second offer improving the value of the offer that was qualified in the first place. If, even by exercising its right, the originator doesn’t obtain the first place, the company has the right to be compensated by the winning offeror for the costs incurred when structuring the project.

Funded by a private investor with 20% public funds

The investor has to be selected through a public tender process. The project’s originator will have a 3% to 10% bonification in its final qualification during the tender process as a reward for its previous efforts in structuring the project.

An investor may choose, however, to seek to invest in a project that has already been procured and is operational. A special purpose vehicle (SPV) project company’s shareholder may assign its contractual position to the shareholder, in which case such investments are controlled by the state entity who awarded the contract as procurement regulations establish that the assignment must be previously approved by the awarding entity. Moreover, an investor can also invest in an ongoing project by acquiring an interest in an SPV project company, where typically such investments are controlled by contractual mechanisms within the original contracts celebrated between the SPV’s shareholders.

Financing energy and infrastructure

Publicly procured contracts include a disposition that states that the SPV must register the lenders before the public entity and any change on the funding arranged, requires consent from the public sector. In addition, contracts provide that if the SPV incurs in a breach of any of the financial documents or contracts entered with the lenders, these have a step-in right to control the project.

Czech Republic

Public procurement in the Czech Republic is regulated by Act No. 134/2016 Coll., on Public Procurement, as amended (Zákon o zadávání veřejných zakázek). This Act has implemented:

Directive 2014/24/EU on public procurement (and repeals Directive 2004/18/EC); and
Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors (repealing Directive 2004/17/EC).
The following contracts are regulated under Czech law:
below-the-threshold public contracts/concessions;
small-scale public contracts/concessions;
public contracts in the water, energy, transport and postal services sectors; and
public service concessions.

Procurement processes

The various types of procurement processes regulated by the Czech Act on Public Procurement are as follows.

Simplified below-threshold procedure

A contracting authority announces to an unlimited number of suppliers its intention to award a public contract. Call for tenders can be sent directly to a tenderer, in which case the call has to be sent to at least five tenderers. There are shorter periods for application for and execution of the contract in this procedure.

Open procedure

A contracting authority announces to an unlimited number of suppliers its intention to award a public contract. The open procedure is a call for tenders and proof of qualification.

Restricted procedure

The contracting authority announces to an unlimited number of suppliers its intention to award a public contract in the tender procedure. It then invites the suppliers to submit a request to participate in the restricted procedure and to send a proof of qualification. The call for tenders is sent directly to the suppliers selected by the contracting authority.

Negotiated procedure with prior publication

The contracting authority announces its intention to award a public contract. The announcement is an invitation to apply for participation in the negotiated procedure with publication and to demonstrate its skills. Invited bidders submit a tender.

Negotiated procedure without prior publication

The contracting authority announces to candidates or a limited number of applicants its intention to award a public contract by tender. After concluding the contract, the contracting authority is obliged to issue the contract award notice.

Competitive dialogue

The contracting authority announces to an unlimited number of suppliers its intention to award a public contract. The authority invites suitable suppliers to dialogue with the authority to develop the most suitable solution in respect of the public contract in question and all conditions needed to find the best way to perform the contract.

Innovation partnership

In cases where there are no technologies or methods readily available in the market, the contracting authority announces to an unlimited number of suppliers its intention to award a public contract involving an innovation partnership. The authority then discusses the most suitable process with all suitable suppliers.

Concession procedure

The contracting authority announces to an unlimited number of suppliers its intention to award a public contract. This procedure is used in cases when the authority wishes to award a special concession from the authority to the supplier, typically construction work.

Procedure to award a public contract in the simplified regime

The contracting authority announces to an unlimited number of suppliers its intention to award a public contract in simplified regime for special services such as social services or low cost services. The authority determines the procedure it wishes to use and can determine special tender criteria according to the nature of the service needed.

The key principles are that contracts procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality (especially within the EU) and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where the Czech government, or a branch of it, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

The relevant procurement legislation applies to certain public bodies including central government departments, local and municipal authorities, public-benefit corporations, Czech National Bank, various non-governmental public interest-purposed bodies or any entity, which is controlled by those previously mentioned bodies. A regulated procurement is required where certain financial thresholds are met. In the case of most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

Financing energy and infrastructure

Finland

Finnish public procurement is subject to national procurement legislation (Act on Public Contracts and Concessions). In addition, there are sector-specific regulations, such as the act regarding public contracts and concessions on certain special fields (ie water and energy maintenance, traffic and postal services) and the Act on Defense and Security Public Contracts. These implement the EU directives on public procurement.

Under these regulations, public sector procurement must follow transparent open procedures ensuring fair and non-discriminatory conditions of competition for suppliers.

Investing in energy and infrastructure

Public procurement is relevant where a public unit is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal, which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities etc.

A regulated procurement is required where certain financial thresholds are met. On most major infrastructure projects, it is likely that those thresholds will be met so a regulated procurement would need to be run.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures (please note that in the procurements subject to the act regarding public contracts on certain special fields, ie water and energy maintenance traffic and postal services, the procedure is more flexible than described below in accordance with the Act on Public Contracts):

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than limited clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

The Competition and Consumer Authority supervises the compliance of the procurement regulations and it may issue reminders to procurement units if it observes unlawful conduct, and, in the case of illegal direct procurement, it may prohibit the implementation of a procurement decision. The authority may also propose that the Market Court impose sanctions. The Market Court is the court which hears public procurement cases (appeals) in the first instance.

France

Generally

The key principles of the public procurement are that:

contracts procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality; and
all potential bidders are treated equally.

Different forms of public procurement exist, depending on:

the type of administrative contract (marché public or délégation de service public ou concession);
the nature of the project (eg PPP or renewable energy project); and
the procurement threshold.

Legal framework of the public procurement in France

Public procurement for PPP in France is mostly based on the following European directives:

Directive n°2014/23/UE regarding concession agreements (implemented in France by ordinance n°2016-65 and decree n°2016-86); and
Directive n°2014/24/UE regarding Public Procurement contracts (implemented in France by ordinance n°2015-899 and decrees n°2016-360 and n°2016-361).

Public procurement for renewable energy in France is mostly based on the following texts:

Directive n°2009/28; and
Law n°2015-992 and its implementing decrees issued or to be issued.

Publicity of the public procurement

This legislation is complex and depends on:

whether it is a public procurement contract or a concession; and
some thresholds applicable to this type of procurement and contract.

Form of public procurement

For greenfield projects (ie when the asset has not been commissioned yet), the public procurement is complex.

For public procurement contracts:

below a certain threshold there is an adapted bidding process (marché à procédure adaptée) in which the public entity determines freely the modalities of the procedure; or
above a certain threshold there is formalised procedure (procédure formalisée) in which the public entity shall run one of the following procedures:
- tender process (appel d'offres), which may be opened (ie any bidder may apply) or restricted (ie a few bidders may apply);
- competitive procedure with negotiation (procédure concurrentielle avec négociation) in which the public entity may negotiate the conditions of the public procurement contracts with one or several bidders, after receipt of the initial offer;
- negotiated procedure with prior call of competition (procédure négociée avec mise en concurrence préalable) in which the public entity may negotiate the conditions of the public procurement contracts with one or several bidders, before receipt of the initial offer; or
- competitive dialogue (dialogue compétitif) in which the public entity cannot set out the technical, financial or legal means for the project.

For concession agreements:

the public entity freely organizes the procurement procedure;
the minimal procedural guarantees (garanties procedurales minimales) shall be complied with by the public entity for any concession agreements; and
in addition to the common rules set out for the concession agreements, sectoral rules (for example in relation to hydroelectric, highway or ski lift concession) and specific rules depending on the amount of the concession agreement or its purposes shall apply.

For renewable energy (for example), in the offshore wind, onshore wind and photovoltaic sectors, a tender process shall be complied with for projects exceeding a certain threshold.

For a brownfield investment (ie when the asset has already been commissioned), contractual mechanisms inserted in the public contract (or in the relevant finance documents) control the shareholding structure of the special purpose vehicle (SPV).

Financing in the context of a public procurement

On a publicly procured contract, the public sector may have prescribed requirements on the funding arrangements. In any case, size and costs of the debt financing play an important role in the decision of the awarding public entity.

Germany

Public procurement in Germany is governed by a variety of federal acts based on a triad of EU Directives which were modernized in 2014. On 18 April 2016, the modernized European procurement law was enacted into German law and has, in some respects, brought material changes. In relation to energy and infrastructure, the Regulation on the Award of Public Contracts (Vergabeverordnung – VgV) and the Regulation on the Award of Contracts in the field of Sectors (Sektorenverordnung – SektVO) apply. Whereas the VgV is more general in nature and therefore contains provisions for procurements not being addressed by the SektVO, the SektVO provides specific regulations for contracts in the water, electricity, energy and transportation sectors. Furthermore, there are special statutes on procurement of concessions, construction services and defense and security-related contracts.

The key principles of German procurement law are that all contracts procured by the public sector or other so-called contracting authorities are awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where a German contracting authority, such as the government or a sector entity, is seeking to outsource the delivery of a new project. For infrastructure projects, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal, which could include: design; building; operation; maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies not only to certain public bodies including central government departments and local authorities but also to various non-governmental bodies, such as private entities in the various sectors. A regulated procurement is required where certain financial thresholds are met and in most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met and therefore a regulated procurement would be necessary.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects. Tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage. Tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Negotiated procedure with prior call for competition – In negotiated procedures with prior call for competition, any economic operator may submit a request to participate in response to a call for competition. Only those economic operators invited by the contracting entity following its assessment of the information provided may participate in the negotiations. This is a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation are not allowed following final tender.
Competitive dialogue – The competitive dialogue involves a shortlisting of at least three bidders who are invited to enter into dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.

An investor may choose, however, to seek to invest in a project (by acquiring an interest in a private sector partner) that has already been procured and is operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the originally awarded contract rather than procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest in or variation to the existing project may have procurement-related considerations that need to be borne in mind since they might cause a new procurement procedure.

Financing energy and infrastructure

On a publicly procured contract, the public sector may have prescribed requirements on the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, in project finance deals, a refinancing of the senior debt will require the consent of the public sector.

Ghana

Procurement of works and services with public funds must be in accordance with the Public Procurement Act, 2003 (Act 663) as amended which sets various thresholds, procurement procedures and approvals required to embark on such projects. Procurement entities are required to have tender committees to which they must submit not later than one month prior to the end of each financial year, their procurement plan for the following year.

There are procedures prescribed under the Act for the procurement of goods, services, and works and the engagement of consultants. Generally, competitive selection procedures are preferred, with single source procurement as a possible exception.

Hungary

Public procurement in Hungary is, in most instances governed by Act CXLIII of 2015 on Public Procurement which is based on EU Directives. There are some sector-specific regulations such as Act XXX of 2016 the Defense and Security Public Procurements, but these are also based on EU Directives.

Investing in energy and infrastructure

Public procurement is relevant where the Hungarian government, or any branch of it as a state-owned company, is seeking to outsource the delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. Design, Build, Finance and Operate public-private partnership (DBFO PPP) schemes were popular in Hungary in road, prison, education and sports projects before 2010. Currently, no new DBFO PPP projects are launched and existing DBFO PPP projects are being actively terminated by the state. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities, police and fire authorities and various non-governmental bodies. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures.

Open procedure

This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.

Restricted procedure

There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.

Competitive dialogue

This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to discuss with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.

Competitive procedure with negotiation

This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

Ireland

Public procurement in Ireland is based on the EU regime, which has as its objective the free movement of goods, services and works within the EU. There are some sector-specific regulations as set out below.

The legislation around public procurement is applicable where any public sector bodies outsource the delivery of these goods and services, this includes all government departments/offices, local and regional authorities, health authorities, commercial and non-commercial state bodies. If the relevant procurement is in relation to a major infrastructure project or the contract exceeds EU thresholds, the procurement is regulated.

Contracts below the EU thresholds which are funded or part-funded from public funds or awarded by private sector entities, should, as far as possible, be awarded in accordance with the national guidelines.

The basic principle of public procurement is that there should be a competitive process, affording an equal opportunity for all suppliers to compete. The type of process will depend on the value and nature of the requirement. There is a legal obligation to engage in a competitive process for contracts above EU thresholds and award them in accordance with procedures set out in EU public procurement directives.

In most cases, the public sector body will need to publish a contract notice in the Office Journal of the EU (OJEU) and typically run one of the following procedures:

Open Procedure - The open procedure is the most commonly used procedure in Ireland for public sector bodies. It allows an unlimited amount of offers and, therefore, unlimited competition.
Restricted Procedure - The restricted procedure is a two-stage procedure that takes longer to run than the Open Procedure and is more complicated to run. It is used where there is a need to pre-qualify suppliers or where there is evidence that the number of potential suppliers is very large or possibly where a contracting authority wants to limit the number of people who will have access to confidential and/or sensitive information.
Competitive Dialogue Procedure - This procedure provides for some clarification and optimization after the final call for tenders making it better for highly complex outcome-based procurement. It is a more structured procedure than the Competitive Procedure with Negotiation and could be said to offer more safeguards for contracting authorities.
Competitive Procedure with Negotiation - This is a two-stage procedure that generally starts with a call for competition. The contract notice must make it clear that this procedure is being used. There is an obligation on the contracting authority to provide a description of its needs, to specify the award criteria and to define the minimum requirements that must be met by all tenderers.

When fixing the deadline for receipt of tenders or requests to participate, contracting authorities must take account of the complexity of the contract and allow sufficient time for submitting the necessary information and preparing tenders.

An investor may also choose to invest in a project (for example, by way of acquiring equity in a private sector partner) that has already been procured and is operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the original awarded contract rather than the procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement related considerations that need to be borne in mind.

Other Applicable Law

The Freedom of Information Act 2014 (the FOI Act) applies to public bodies. Any person may request “records”, including records relating to tendering procedures. There are exemptions under the FOI Act regime which apply where records are confidential or commercially sensitive. Tender-related records are not exempt as a class. Tenderers are normally requested to indicate in their tenders, with supporting reasons, any information which should be regarded as confidential.

Code of Practice on the Governance of State Bodies

Commercial and non-commercial state bodies in Ireland are subject to the Code of Practice on the Governance of State Bodies (2016) (Code). The Code provides that it is the responsibility of the relevant body to satisfy itself that the requirements for public procurement are adhered to. Transparency is a key theme of the Code and competitive tendering is advocated as the standard procedure in the procurement process of state bodies.

Financing energy and infrastructure

Italy

Energy

The procurement process for the achievement of the energy efficiency targets requires, as a prerequisite, collaboration and coordinated action between the State and local governments. This has resulted distribution of the 2020 targets on renewable energy and energy efficiency (known as 'Burden Sharing') which assigns to the State and each local government a corresponding objective in terms of sharing energy consumption through renewable sources. Each region can, based on the characteristics of its territory and the general nature of its consumption, operate at the most appropriate levels of renewable energy consumption. Potential savings are very broad but will require the careful action of local government, for example in the fields of local transport and mobility, public lighting, buildings and district heating. The role of regional and local authorities is also crucial for the effective simplification and harmonization of the authorization procedures.

Infrastructure

In general, the Code of Public Contracts provides for different public procurement procedures (eg the open procedure, the restricted procedure, the negotiated procedure and the competitive dialogue).

It must be highlighted that the open procedure consists in the following steps:

publication of a call for tender;
submission of offers by the bidders;
evaluation of the offers by the Awarding Entity;
awarding of the tender; and
submission of the contract.

Each individual step is structured as follows.

Publication of the call for tender

The publication of the call for tender aims to select the subjects who meet the necessary requirements in order to enter into the agreement with the awarding entity.

The submission of the offers

Pursuant to the Code of Public Contracts, in order to take part to the public tender procedure, the bidder has to meet the requirements stated by the call for bids.

If the bidder does not meet these requirements, it will be excluded from the tender.

As a general rule, two requirements must be met:

The general requirements – These requirements are aimed at assuring that the administration will enter into the agreement with a trustworthy and reliable subject. Such requirements are defined by Article 80 of the Code of Public Contracts, which provides a list of mandatory requirements to be met by all entities taking part in a public procedure. In particular, Article 80 provides, inter alia, that the awarding entity cannot award the procedure to companies that have incurred breaches concerning tax payment obligations. This violation represents a cause of exclusion from the tender when the breach is considered serious (ie if it exceeds an amount of €10,000). Moreover, there is also the requirement that the bidder and the subcontractor should not have committed any serious professional crime.
The special requirements – Such requirements relate to the experience and technical and financial capability of the bidders. Such requirements are provided by the awarding entity in the tender documentation, on the basis of the value and the nature of works, services or supplies which are subject to tender.

Moreover, in order to take part in the procedure, the bidder shall submit an offer including all the required documents by the deadline indicated in the call for tender. In order to fulfil the above-mentioned requirements, the bidder must declare, through a self-declaration (the so called DGUE), that the business operator and its management meet all the general requirements. Any sub-contractor will also have to declare through the DGUE. If the business operator or its subcontractor do not fulfil the above-mentioned requirements they will be excluded from the tender.

In case of false self-declaration, penal and civil consequences shall be applied (eg exclusion from the tender; enforcement of the bid bond; warning to the Anticorruption Authority (ANAC); prosecution for the offence of false declaration of a public deed). If the ANAC believes that such declarations have been given fraudulently or with sufficiently serious negligence (considering the facts of the false declaration or false documentation), it may exclude the bidder from public tenders for a maximum of two years.

Evaluation of the offers by the awarding entity

After the expiry of the deadline for the submission of the offers, the awarding entity shall proceed with the examination and evaluation of the offers received. This activity is carried out in several private sessions and it depends on the awarding criteria.

The awarding entity will be required to independently make such verifications, in relation to the accessible data, through the consultation of several databases. However, they may ask bidders to provide appropriate evidence or to carry out verifications on a sample basis.

The awarding entity may also require, inter alia, the criminal records and a court certificate concerning pending trials (a Certificato del Casellario giudiziale and Certificato dei carichi pendenti) and a tax certificate released by the 'Agenzia delle Entrate'.

The awarding entity will also consult the Digital Registry held by the ANAC. This will reveal if the bidder has been excluded from public tenders (within the previous two years, starting from the registration of the fact in the Registry) as a result of false declarations, as mentioned above.

Awarding of the tender and submission of the contract

If the evaluation of the requirements has a positive outcome, the awarding entity will enter into the agreement with the awardee and ask for the issuance of the performance bond.

Please note that any bidder must satisfy each general and special requirement for the entire duration of the tender procedure. Please also consider that the awarding entity should periodically verify the fulfilment of each requirement and if during the execution of the contract any such requirement is not fulfilled, the awarding entity is entitled to terminate the contract.

Ivory Coast

In Ivory Coast, the key principle is that any contract procured by the public sector is awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

In general, in the energy and infrastructure areas, public procurement is relevant where the Ivorian government, or a public entity, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

The relevant procurement legislation applies to certain public bodies, including central government departments, local authorities, police and fire authorities, various non-governmental bodies such as the Competition and Markets Authority. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

Investing in energy and infrastructure

In most cases, the public sector will need to publish a contract notice in the gazette and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the National Authority for the Regulation of Public Procurement (ANRMP) notice. Change and negotiations to the tender are not permitted.

Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.

Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.

Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Financing energy and infrastructure

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Japan

The Public Accounting Act and the Local Autonomy Act set out the procedure for public procurement in Japan.

Investing in energy and infrastructure

There are three types of procurement process:

an open bid where all contractors may bid;
a selective bid where contractors designated by the central government or local public authorities may bid; and
a single tender where a specific contractor may secure the public contract under special circumstances, such as urgent circumstances or where the relevant service or product considered can only be provided by a single supplier.

Where the government tenders a design and construction contract for a public project to private companies, a construction company may sometimes participate in the bid as a part of a consortium. A common form of a consortium involves a construction company as bidder, who subcontracts the building design or other consultation work to a construction consultant. As part of the bidding process, it is necessary for bidders who form a consortium to submit relevant information about subcontractors (such as past records of such subcontractor and a quotations) to the government in the course of the bidding process.

The general procedure for an open bid consists of the following:

notification of tender opportunities;
pre-bid meeting;
commence bidding; and
determine winning bid.

The general procedure for a selective bid consists of the following:

qualification examination for the selective bid;
notice of designation;
commence bidding;
determine winning bid; and
conclusion of a contract.

The general procedure for a single tender consists of the following:

selection of a counterparty; and
conclusion of a contract.

Financing energy and infrastructure

When inviting bidders, public organizations may require the bidders to describe their funding arrangement or financial plan for the tendered public project. Specifically, bidders are required to provided information, such as their expected composition ratio of equity and debt and a redemption schedule of for such debt and equity.

Public organizations occasionally obtain funds directly from financial institutions by a procurement process.

Luxembourg

Contracts with public entities are subject to public bid restrictions imposed by EU law and national laws. These rules impose a public tender process, governed by the public procurement rules implemented by the Luxembourg law dated 8 April 2018 on public procurement, as amended from time to time.

The procurement process is as follows:

Prerequisite

The submission criteria are detailed in the tender documents accompanying the public contract notice or are sent directly to the business (procedure without publication). The following information is provided:

award criteria, the weighting given to each criterion and the rating system;
the minimum criteria for participation in case of a public tender;
deadlines;
penalties for delays;
possible bonus for termination of works before the deadline;
technical description of variants; and
insurance policies to take out.

Preliminary steps

When the business has identified a potentially interesting public procurement notice or if it has been invited by a contracting authority to tender a bid, it must verify that:

the means (human, technical, financial etc) at its disposal meet the contract requirements; and
it can meet the deadlines.

Types of procedures

There are several types of public procurement procedures, amongst others:

open procedures, which require the procurement contracts to be publicly advertised;
restricted procedure may be used in the cases mentioned in article 66 of the Luxembourg law dated 8 April 2018 on public procurement;
exceptional procedures, which depend on the scope of the procurement contract (regarding procurement contract below or above certain thresholds);
negotiated procedure or restricted procedure without publication;
negotiated procedure (regarding, inter alia, rescue services, police, customs);
negotiated procedure with or without prior publication (in instances mentioned in article 19 and 20 of the Luxembourg law dated 8 April 2018 on public procurement, as amended from time to time); and
competitive dialogue (in instances mentioned in article 68 of the Luxembourg law dated 8 April 2018 on public procurement, as amended from time to time).

Preparing the tender

A business must meet all requirements detailed in the tender documents. This document defines the works or services to be carried out, the tendering conditions and the documents requested by the contracting authority.

Bid documents which do not meet the conditions laid down in the tender documents are rejected.

However, since the reason for a rejection will be provided, any business that believes it has been treated unfairly may lodge an appeal. The bid document allows the business to:

present itself or the members of the group of businesses;
highlight its experience;
put forward its financial means and guarantees;
put forward the advantages it has over the competition; and
define its project.

The business may, within a reasonable time limit, request clarifications concerning the contract from the contracting authority. Answers are sent to all the participants.

Tendering the bid

To be eligible, a company must meet the deadlines for submission of the application/tender. The tender may be submitted personally in exchange for a receipt or sent by mail with acknowledgement of receipt.

Administrative certificates

Depending on the procedure, the business must also prove that it has fulfilled its professional obligations by attaching the following documents to its tender:

a non-liability certificate from the Joint Social Security Centre (Centre Commun de la Sécurité Sociale);
a certificate of compliance with respect to value added tax obligations and liability from the Land Registration and Estates Department (Administration de l'Enregistrement des Domaines et de la TVA);
a non-liability certificate from the Luxembourg Inland Revenue (Administration des Contributions Directes – (ACD)), delivered on simple request at the competent tax office of the ACD; and
an extract from the criminal records.

Where applicable, national and foreign subcontractors must also provide these certificates.

Mauritius

The choice of procurement methods available to a public body is set out below.

Procurement of goods, other services and works

open advertised bidding;
restricted bidding;
request for sealed quotations;
direct procurement;
community or end-user participation; or
departmental execution.

Procurement of consultancy services

request for proposals on the basis of:
- quality and cost;
- quality alone;
- quality and fixed budget; or
- least cost and acceptable quality;
direct procurement; or
open advertised bidding.

Mexico

Public procurement in Mexico is governed at a federal level by the Federal Law for Acquisitions, Leasing and Services for the Public Sector (Ley de Adquisiciones, Arrendamientos y Servicios del Sector Público) and their corresponding laws in the different states and municipalities.

As part of the Energy Reform, CFE and Pemex have their own procurement regulations and the general law mentioned above does not apply to such governmental entities. The Ley de Petroleos Mexicanos and the corresponding procurement regulations issued by its Board of Directors are applicable to Pemex, and the Ley de la Comisión Federal de Electricidad and the corresponding procurement regulations issued by its Board of Directors are applicable to CFE.

Investing in energy and infrastructure

Public procurement is relevant where the Mexican government, or a branch of it, seeks to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation (as indicated above) applies to certain public bodies, such as federal government departments, and state and municipal authorities.

Public contracting may be carried out by any of the following:

open bidding procedure (Licitación Pública);
invitation to at least three participants; and
direct adjudication.

The general rule for public contracting is to perform an open bidding procedure; however, applicable regulations expressly provide for exceptional cases under which the corresponding government bodies may observe a different procedure. There are three types of tender processes under federal regulations:

National (reserved for Mexicans and Mexican products that contain at least 50% of its parts made in Mexico);
International under international treaties (reserved for Mexicans and foreigners that are nationals from a country with which Mexico has a Free Trade Agreement and contains provisions for public procurement); and
Open Internationally (open to Mexicans and foreigners irrespective of the origin of goods).

An investor may choose to seek to invest in a project (by acquiring an interest in a private sector partner) that has already been procured and is operational. However, such investments are controlled by contractual mechanisms within the original awarded contract rather than procurement regulations themselves and the parties are required to confirm whether legal thresholds under the Mexican Antitrust Law (Ley Federal de Competencia Económica) are exceeded, in which case the transaction would have to be notified to the Mexican Antitrust Commission (Comisión Federal de Competencia Económica) and obtain clearance before closing.

Financing energy and infrastructure

In the case of public contracts financed from externally sourced credit granted to the federal government or guaranteed by regional or multilateral financial organizations, the procedures, requirements and other provisions for their contracting are established by the Ministry of the Civil Service (Secretaría de la Función Pública), with the opinion of the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público).

Morocco

The public procurement is based on constitutional principles:

Freedom of access to public procurement;
Competitive bidding of candidates;
Guarantee of competitors' rights;
Equal treatment of competitors;
Transparency in the choice of the project owner.

These principles imply the respect of some basic rules:

Preliminary definition of needs;
Compliance with disclosure obligations;
Call for competition;
Choice of the most advantageous offer.

Public procurement must:

Obey principles and rules laid down by the regulations in force;
Be carried out in accordance with the conditions and forms.

Under Moroccan law, three procedures limit competition:

Restricted tender process;
Negotiated contracts;
Services on purchase orders.

This decree also allows public purchasers to use certain procedures known as exceptional procedures under the competition rule in very specific cases under the regulations in force, and this:

to deal with certain cases of force majeure;
to take into account the specificities of certain departments, but also of certain services;
as a facility for management services.

Netherlands

Public procurement in the Netherlands is governed by the Dutch Procurement Act 2012 which contains a national implementation of the three EU Directives on concessions, government sectors and the special sectors as well as a (limited) national framework.

The key principles are that contracts procured by the public sector must be awarded transparently, based on objective and proportionate requirements and criteria and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where the Dutch government, or a branch of it, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would be financing a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to the State, a province, a municipality, the Water Boards and bodies governed by public law.

In most cases, the public sector will need to publish a contract notice in the Official Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects where a dialogue with tenderers is necessary in order to find solutions that fulfil the contracting authority’s needs and requirements. It involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification is allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This procedure can be used under the same circumstances as the competitive dialogue and is suitable for complex infrastructure projects. Main difference with the competitive dialogue is that the negotiations in a competitive procedure with negotiation are not aimed at finding a solution, but at improving the received bids (price and/or quality aspects). The minimum requirements and award criteria cannot be negotiated.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

New Zealand

Private sector procurement is governed by the ordinary laws of New Zealand. As noted above, foreign investors may need to obtain consent from the Overseas Investment Office before entering into certain transactions. Foreign investment is otherwise generally not subject to any further restrictions.

Public sector entities must comply with good public sector procurement practices when contracting with private sector suppliers. The Government Rules of Sourcing (GRS), issued by the Ministry of Business Innovation and Employment, provide a broad framework of rules and best practice guidelines for government procurement. The GRS apply on a mandatory basis to almost all executive government organizations and a number of Crown entities. Other non-core public sector and local government organizations may also be obliged to take the GRS into account as guidance for good practice. In addition to the GRS, each public sector entity has its own procurement policy.

The GRS apply to government contracts when the maximum total estimated value meets or exceeds:

in relation to contracts for goods and services, NZD100,000 or more; or
in relation to contracts for construction works, NZD9 million or more.

The broad objective of the GRS is to ensure that procurement decisions are fair, transparent, lawful and provide value for tax payer money. A decision not to award a contract to tenderer cannot be made on the basis that they are a foreign-owned or controlled entity.

Government procurement opportunities are advertised on a web-based service called Government Electronic Tender Service (GETS). GETS is accessible to all interested suppliers, both domestic and international. It meets New Zealand's commitments under free trade agreements. Government agencies are also permitted to consider unsolicited proposals from the private sector, subject to certain restrictions.

Construction procurement guidelines have recently been developed which set out the standards of good practice for government agencies to apply to their construction projects.

Norway

Generally

Public procurement in Norway is governed by a set of rules that are meant to ensure fair competition, integrity and predictability in the procurement process, and the equal treatment of providers.

Norwegian legislation distinguishes between tender invitations for contracts above and below the European Economic Area (EEA) Public Procurement Thresholds. Above the EEA thresholds, Norway is obliged to follow the relevant EU regulations through the Agreement on the European Economic Area. Tender invitations for contracts above these thresholds are advertised in the English language in the EU official journal and the TED database.

Below the EEA thresholds, national rules govern the procurement process. These are in general simplified versions of the implemented EU regulations. In Norway there is also a national threshold of NOK 1.1 million. Invitations to tender for contracts above the national threshold must be made public in the Norwegian official database, Doffin. Under the national threshold, the employer is allowed to choose a procedure which ensures a minimum level of competition.

Peru

Public procurement in Peru is, for the time being, in most instances governed by the Law for Public Procurement and State Contracting. There are some sector-specific regulations such as Legislative Decree 1224 Public-private partnerships Law (Decreto Legislativo N° 1224 Ley Marco de Promoción de la Inversión Privada mediante Asociaciones Público Privadas y Proyectos en Activos), applicable to any sector and the Law of Electric Concessions (Decreto Ley 25844 Ley de Concesiones Eléctricas), among others.

Investing in energy and infrastructure

Public procurement is relevant where the Peruvian government, or a branch of it, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities, police and fire authorities, among others. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

The general rule is that the public sector needs to follow a public tender. However, it could happen that some projects are generated under unsolicited proposals, which means that a private sector company may propose the development of a project to a public entity. Regarding public tenders, there are different regulations that may be applicable depending on the sector, for example the regulation applicable to electric projects are regulated by different rules to those regulating transportation infrastructure projects.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

On a publicly procured contract, the public sector may have prescribed requirements regarding the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, on project finance deals, a refinancing of the senior debt will require the consent of the public sector.

Poland

Public procurement in Poland is, for the time being, in most instances governed by the Public Procurement Law Act, which is based on EU Directives.

The key principles are that contracts procured by the public sector must be awarded fairly, transparently and without discrimination on the grounds of nationality, and that all potential bidders must be treated equally.

Investing in energy and infrastructure

Public procurement is relevant where the Polish government, or a branch thereof, is seeking to outsource the delivery of a new project. On an infrastructure project, a potential investor would have to bid on its own or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance, and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies, including central government departments, local authorities, the police and fire authorities, and the National Health Fund. A regulated procurement is required where certain financial thresholds are met. On most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met, therefore a regulated procurement would be necessary.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and bidders simply submit an offer in response to the OJEU notice. Changes to the tender and negotiations are not permitted.
Restricted procedure – There is a shortlisting of at least five bidders following an expression of interest stage and then the bidders submit their offers. Again, no negotiation is permitted (other than to clarify and finalize the contract terms).
Competitive dialogue – This is the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to enter dialogue with the public sector contracting party to develop detailed solutions which are acceptable for the public sector. Clarifications and further negotiations are allowed following the final tender, but only to confirm the financial and other commitments in a bidder's offer.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure because it allows dialogue with bidders but also allows the public sector contracting party to award a contract on the basis of an initial tender (or further stages), but clarifications and negotiations are not allowed after the final tender.

However, an investor may choose to seek to invest in a project (by acquiring an interest in a private sector partner) that has already been procured and is already operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the original awarded contract rather than by procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

On a publicly procured contract, the public sector contracting party may have prescribed requirements concerning the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, on project finance deals, a refinancing of the senior debt will require the consent of the public sector contracting party.

Portugal

In Portugal, public procurement is governed by the Portuguese Public Contracts Code which transposes EU directives into Portuguese law. The award of contracts by public entities must comply with the principles of the Treaty on the Functioning of the EU and in particular the free movement of goods, freedom of establishment and the freedom to provide services, as well as principles deriving therefrom, such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency. In particular, for public contracts above a certain value, regulated procurement procedures with an element of competition are mandatory to ensure that those principles are given practical effect.

Investing in energy and infrastructure

Public procurement is relevant where the Portuguese government or a public body is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

A regulated procurement procedure is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run. In most cases, the awarding entity will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Public Tender (Concurso Público) – a procurement procedure open to any bidders; or
Restricted Tender by Prequalification (Concurso Limitado por Qualificação Prévia) – a procurement procedure open to all bidders that meet requirements of technical capacity and/or financial capacity defined in the tender documents.

An investor may choose, however, to seek to invest in a project (by acquiring an interest in a private-sector partner) that has already been procured and is operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the original awarded contract rather than procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

On a publicly procured contract, the awarding entity may have prescribed requirements on the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, on project-finance deals, a refinancing of the senior debt will require the consent of the public sector.

Puerto Rico

Once the Puerto Rico Public-Private Partnership Authority (Authority) has determined that the project meets the public policy requirements of the P3 Act and it is advisable to pursue the establishment of a public-private partnership (P3), then the P3 Act provides for two kinds of procurement procedures:

competitive negotiated procurement; and
negotiations without a request for proposal.

The P3 Act also provides for unsolicited proposals. The first procurement procedure involves request for qualifications (RFQ) issued by the Authority to identify the persons that satisfy the minimum standards to enter into a P3 contract. The P3 Act describes the qualifications to be a proponent. Among these qualifications, a proponent must:

be authorized to do business in the Commonwealth of Puerto Rico;
have available corporate or equity capital or securities or other financial resources that are necessary for the construction and proper operation, as applicable, of the P3;
have a good reputation;
have technical capacity and experience; and
certify that neither it nor any of its directors or officers have formally been convicted for acts of corruption in Puerto Rico, the US or any foreign country.

Proponents may present proposals jointly under consortia. After the RFQ process, requests for proposals (RFPs) will be issued. Proponents who submit proposals for P3 contracts shall assume the risk of paying for all expenses related to the RFQ and RFP processes.

The second procedure is initiated by the Authority and allows the negotiation of a partnership contract without abiding by the RFQ and RFP procedure only when:

there is only one source capable of providing the service required; and
an RFP was issued and received no responses or the proposals submitted failed to meet the indicated requirements, and, in the Authority’s opinion, issuing a new RFQ and RFP would cause such delay that a partnership contract may not be executed in the time required.

Prior to executing a contract with proponents chosen pursuant to this second procurement alternative, the Authority must notify the legislature Public-Private Partnership Joint Commission. Unsolicited proposals are also provided for under the P3 Act.

Unsolicited proposals may be received by the Authority provided they include, at a minimum:

a summary of the proposed project;
a description of how the proposed project satisfies a government need;
how the proposal differs from other traditional or proposed approaches to develop the project;
the amount of public resources needed to complete the project and indirect and direct costs involved, including capital costs;
financial viability and financing mechanisms available;
commercial aspects of the project;
possible public benefit;
proposed method of execution; and
unique intellectual property involved, if any.

If the Authority considers the unsolicited proposal to be favorable to the public interest, it may either enter into talks directly with the unsolicited proponent or commence a process of open RFP, depending on various conditions indicated in the P3 Act.

Romania

Public procurement in Romania is, for the time being, regulated by several laws enacted in 2016 aimed to transpose into Romanian legislation the EU public procurement reform, as follows:

Law on Public Procurement transposing Directive 2014/24/EU on public procurement;
Law on Sectorial Acquisitions, transposing Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors;
Law on Concessions of Works and Concessions of Services, transposing Directive 2014/23/EU on the award of concession contracts; and
Law on Remedies and Appeals Related to Awarding of Public Procurement Contracts, Sectorial Contracts and Works Concession Contracts and Services Concession Contracts, as well as regarding the organization and functioning of the National Council for Solving Complaints, transposing Directive 89/665/EEC on application of review procedures to the award of public supply and public works contracts and Directive 92/13/EEC on application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors.

The award of the contract is determined on a more complex basis, with the sole awarding criterion being the ‘most economically advantageous tender’, which is determined by reference to price or cost, price-quality and/or cost-quality ratio.

Public procurement is relevant where the central authorities, public institutions, local public authorities, local public institutions or State-owned companies, are seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

The thresholds triggering application of public procurement rules are as follows:

RON 23,227,215 (approximately €5.186 million) for public works contracts;
RON 600,129 (approximately €134,000) for public service contracts; and
RON 3,334,050 (approximately €750,000) for public service contracts for social and other specific services.

A contracting authority is entitled to purchase directly products or services with an estimated value (excluding VAT) of RON 132,519 (approximately €33,129), or works with an estimated value (excluding VAT) of RON 441,730 (approximately €110,432).

The existing procurement methods are: open tender procedure, restricted tender procedure, competitive dialogue, negotiated procedure without prior publication, design contest, simplified procedure, competitive procedure with negotiation, innovation partnership, awarding procedure for social services and other specific services.

Prior to launching a procurement procedure, contracting authorities may conduct market consultations for preparing the procurement and in this context they may involve independent experts, public authorities or commercial entities, including representative organizations thereof. The advice received may be used in the planning and conduct of the procurement procedure, provided that it does not distort competition and/or results in violation of the principles of non-discrimination and transparency.

To simplify the procedure, the contracting authorities shall accept the European Single Procurement Document (ESPD), consisting of an updated sworn statement of the tenderer/candidate, as preliminary evidence in replacement of certificates issued by public authorities or third parties confirming that the relevant economic operator fulfills the qualification conditions such as not being in the exclusion situations provided by law, meeting the capacity criteria and, as the case may be, meeting the selection criteria. Nevertheless, the contracting authority may ask tenderers/candidates at any moment during the procedure to submit all or part of the supporting documents where this is necessary to ensure the proper conduct of the procedure. The tenderers/candidates are not obliged to provide such supporting documents if the authority has the possibility to obtain them directly by accessing a free national database.

Russia

Public procurement is regulated by the PPP Law and Concession Law. The key principles are that the contracts procured by the public sector shall be awarded fairly, transparently, without discrimination and that all bidders are treated equally.

Investing in energy and infrastructure

The public sector must publish a tender notice online or send the notifications to potential participants. The selection process differs for the opened and closed procedures.

Bid procedures normally allow the winning bidder to submit mark-ups during post-tender negotiations of key terms (for example the timetable to close the deal); however, to a significant extent, a winning bidder is still bound to the published version of the concession agreement. Potential amendments to the concession agreement cannot include the terms which were conditions of the tender or which were contained in the winning bid.

Apart from public tenders both the PPP Law and Concession Law allow private initiative from an interested investor. In this case the initiative on the project comes from a private partner that suggests the conditions of the concession agreement and key terms of the project implementation, which should comply with the effective laws. If the public partner is interested in the project and has general consent to the conditions it publishes the relevant notification for any other party, which may be willing to implement the project. If any alternative investors are interested in the project, then the tender selection procedures take place.

If an investor seeks to invest in a project that has already been procured and is operational, it should be noted that assignments under the concession agreements are possible only if approved by the public sector.

Financing energy and infrastructure

On a publicly procured contract, the public sector may prescribe requirements on the funding arrangements.

Senegal

Different procurement procedures are provided for when purchasing goods and services in Senegal.

An invitation to bid can be opened or restricted.

A contract is awarded without negotiation, after competitive tender, to a bidder which has fulfilled the conditions of the bid and has submitted the lowest bid price.

The open bid process, which is the default procurement process, allow tenderers to submit offers. The tender period is, in principle, set at 30 days for national invitations to tender and 45 days for international invitations to tender, which may be reduced to 10 and 15 days respectively in urgency situations.

Under the restrictive process, bidders are invited to bid; however, this process has not often been used since 2014.

The Direct agreement is permitted to be used in cases of extreme urgency for public service continuity considerations or where only one supplier or service provider is able to provide the requested good, service or work. The authorization of the Central Directorate for Public Procurement (DCMP) is however required for a direct agreement. This procedure is, in practice, mostly used when a government wants to expedite a process for strategic or political purposes. It is often used for large projects.

The Request for Quotation (RFQ): Under this procedure, quotations are requested from at least three suppliers. The procedure is not frequently used, it is mainly for services or products immediately available and, sometimes, for small construction contracts (often less than XOF30 million).

This mechanism is said to be a source of corruption and procurement abuse as the type of contracts involved may be subject to less scrutiny compared to larger contracts.

The Request for proposal (RFP): is a two-stage procedure where a request for proposals is sent to at least the first three candidates selected through a call for expression of interest (EOI). They receive the reference terms and a letter of invitation specifying the selection criteria and information on the application as well as the draft contract. If the estimated amount of the contract falls below the thresholds set out in Article 53 of the Code, the process does not need to be public and five providers may be invited to submit a proposal.

Financing energy and infrastructure

Public procurement in Senegal is based on three main principles:

Any company, group of companies or any natural person benefits from free access to public procurement. It may apply for a public contract by complying to the requirements set by the rules and regulations.
There is an equal treatment of candidates and discrimination and obstacles to competition are prohibited.
There are also efficiency considerations as the procurement procedures must be efficient and provide the contracting authorities with the best services at the best price.

The provisions of Public procurement Code and the decree apply to contracts concluded by contracting authorities such as the state, including its decentralized services and organizations not endowed with legal personality placed under its authority; local authorities; public establishments; agencies or bodies, legal persons governed by public or private law, other than public establishments, national companies or public limited companies with majority public participation, whose activity is financed mainly by the state or a local community and is carried out mainly in the context of activities of general interest; national companies and public limited companies with majority public participation; and the like.

Singapore

In general, competitive bidding is the preferred procurement procedure of multilateral agencies. Public bidding processes have several advantages for host governments. A bid process increases competition among potential providers of the goods or services, minimizes the cost of the solicited good or service, and fosters public support and credibility for the project by ensuring that the process is transparent and thereby free of bribes and other corruption.

Investing in energy and infrastructure

The general procurement process would involve the following stages:

refinement of appraisal;
the Invitation to Tender (ITT);
receipt and evaluation of bids;
selection of preferred bidder and the final evaluation;
contract award and financial close; and
contract management.

Financing energy and infrastructure

The general procurement process would be similar.

Slovak Republic

Public procurement in Slovakia is governed by the Act on Public Procurement which is based on EU Directives. There are some sector-specific regulations and exemptions applicable, for instance, to the rail sector, as well as with regard to the provision of services in water sector, energy or defense.

Under the key principles applying to the procurement process, contracts procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where public sector entities are seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium, to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

In most cases, the public sector entity will need to publish a contract notice in the Journal of Public Procurement (Vestník verejného obstarávania), as well as in the Official Journal of the European Union (OJEU) and run one of the following procedures:

Public tender – This procedure is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the notice published in Journal of Public Procurement and in OJEU. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following a stage in which the tenderers submit their requests for participation in the tender. Change and negotiations to the tender are not permitted.
Competitive dialogue – This procedure suits the purposes of complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector entity.
Negotiation procedure with publication – This procedure involves a shortlisting of at least three bidders who are invited to dialogue with the public sector. It is used when there is a need to develop a detailed innovative solution, whereas due to the nature or complexity of the subject matter of the order, the order cannot be awarded without the dialogue and in the previous public tender or restricted procedure all of the submitted offers were unacceptable.
Direct negotiation procedure – Direct negotiation can be used for public procurement only under particular restrictive conditions stipulated by the Act on Public Procurement. Such conditions include, for instance, the fact that:
- no entity submitted an offer in the previous public tender or restricted procedure, or no entity fulfilled the criteria of such previous procedure;
- the requested services or goods may be provided only by a particular entity; or
- the requested goods are produced only for research, development, study or experimental purposes.

Investors may, however, seek to invest in a project (by acquiring an interest in a private sector partner) that has already been procured and is operational. Typically, such investments are controlled by contractual mechanisms (particularly on publicly procured projects) within the original awarded contract rather than procurement regulations themselves.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations.

Financing energy and infrastructure

On a publicly procured contract, the public sector entity may have prescribed requirements on the funding arrangements which have to be followed.

South Africa

Investing in energy and infrastructure

The constitution of South Africa imposes certain obligations on government entities (including state-owned enterprises) to ensure proper and responsible expenditure of public funds and allows such government entities to give priority to the government's socio-economic goals particularly transformation. This is given effect to through the Preferential Procurement Framework Act which imposes certain thresholds to be met by an entity seeking to do business with an SOE for example with regard to the local goods and services to be procured as part of the contract or project. The Preferential Procurement Framework Act also requires bidders to submit a certificate issued under the Codes of Good Practice prescribed by the Broad-Based Black Economic Empowerment Act. This certificate indicates what level of black economic empowerment contributor the bidder is and depending on the level, a certain score is allocated to the bid and counts towards the overall evaluation of the bid.

Financing energy and infrastructure

There are no specific procurement processes which attach to the financing of energy and infrastructure but due to the fact that a funder may end up acquiring an interest in a project or investment pursuant to the occurrence of an event of default, funders may need to consider some of the aspects raised above which affect investors. Examples of such considerations may include the conditions under which certain licenses were awarded to certain project companies or restrictions on the transferability of shares in black-owned project companies, such that the project companies remain predominantly black-owned in terms of the black economic empowerment requirements of the tender prerequisites.

Spain

Public procurement in Spain is, for the time being, in most instances governed by the Act 9/2017, dated 8 November, on Public Sector Contracts. There are some sector-specific regulations such as the Act 31/2007, dated 30 October, on Public Procurement in the Sectors of Water, Energy, Transports and Postal Services and the Act 24/2011, dated 1 August, on Public Sector Contracts on Defense and Security. All the regulations mentioned are based on EU Directives.

The key principles are that contract procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where Spanish public sector bodies or entities, seek to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to all bodies and entities that make up the so-called ‘public sector’, conforming to the regulations of the European Directives, including all types of public administrations, autonomous agencies (organismos autónomos), state owned companies (entidades públicas empresariales), public universities and foundations, state agencies etc. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

Sweden

Public procurement in Sweden is in most instances governed by the Public Procurement Act 2016 (Lag (2016:1145) om offentlig upphandling) which is based on EU Directives.

Investing in energy and infrastructure

Public procurement is relevant where the Swedish government, or a branch of it, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities, police and fire authorities and municipals. A regulated procurement is required where certain financial thresholds are met and, on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Thailand

The Government Procurement and Supplies Management Act B.E. 2560 (2017) (GPSMA) is the recently enacted act regulating procurement process of public sector which is not captured under the PPP Act. Under the GPSMA, there are four methods for procurement:

General invitation – Public authorities generally invite an operator and any qualified operator is able to make the offer. The relevant committee of each project will consider offers based on consideration of various factors, e.g. offering price, cost, quality of product or service and after-sale service, etc. The selection process could be different depending on practice of each authority. However, the principle of transparency is generally applied.
Selection process – Public authorities invite at least three operators possessing qualifications specified by such authorities to make an offer.
Specific method – Similar to the selection method but only one qualified operator is chosen to make an offer or negotiate with the authorities.
Design contest – This approach is used only for the procurement of design or supervision of construction where it concerns with special construction to compliment fine arts or architecture of Thailand.

Public procurement is relevant where the Thai government or public authorities is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset.

Requirements and conditions to participate in the procurement process are different depending on the terms of reference (TOR) of each project. In rail infrastructure procurement, some additional requirements or conditions are added to match the nature or type of such project.

In most cases, the public authorities will need to publish a contract notice and/or TOR in its website of and typically run one of the four procurement procedures under the GPSMA. Date, time and place to submit the offer or other electronics means are generally included in such publication. If the bidding process is needed, details will also stipulate in such publication.

The procurement process under the GPSMA is not applicable to certain projects including but not limited to:

procurement of state enterprise in relation to direct commerce;
procurement of arms and services regarding national security by G2G method or from other foreign countries whereby its laws specified otherwise;
procurement for research and development to provide educational services to higher education or hire of consultancy which cannot follow the procurement under GPSMA;
procurement by using loan or financial assistance from foreign entities; or
procurement of higher education or sanatorium which is a public division.

A procurement which is not governed by procurement process under GPSMA will be subject to criteria specified by the Policy Committee of Government Procurement and Supplies Management.

Investing in energy and infrastructure

According to PPP Act, the public authority which is the project owner needs to conduct the feasibility study and prepare the joint investment project plan. A qualified external consultant is required to be hired to assist in studying the project and preparing the joint investment project plan. After the completion of the feasibility study and joint investment project plan, the project owner needs to request the approvals from the relevant minister and the PPP Committee in relation to the principle of the joint investment project plan. Once those approvals are duly granted, the matter will then be forwarded to the cabinet for final approval.

In relation to the selection process of private party, a bidding is a default method under the PPP Act. However, in certain limited cases, the cabinet may approve other means for the selection process. Under the bidding process, the project owner shall prepare a draft invitation to tender, draft document for selection of private entity and draft joint investment contract and propose them for the PPP Committee’s approval. Once approved, the selection process of private party shall begin.

Upon receiving the result of the selection process and the draft joint investment contract negotiated with the selected private party, such draft joint investment contract shall be submitted to the Office of Attorney-General for review. Consequently, the full set of (i) selection result, (ii) reviewed draft joint investment contract and (iii) material conditions of the project shall be reviewed and approved by the minister of the project owner and the cabinet before executing the joint investment contract with the selected party.

After the joint investment contract is executed, the PPP Supervisory Committee will be set up to supervise the investment project. Revision to the executed joint investment contract could be done if the PPP Supervisory Committee’s approval is granted and the draft of revised joint investment contract is approved by the Office of Attorney-General and the minister of the project owner.

Financing energy and infrastructure

The public sector may have prescribed requirements on the funding arrangements. Following entry into the contract, the main tool for controlling the financing is that, typically, on project finance deals, a refinancing of the senior debt will require the consent of the public sector.

Ukraine

Public procurement in Ukraine is in most instances governed by the Law of Ukraine ‘On Public Procurement’ dated 25 December 2015 which is based on EU Directives and EU best practice. In addition, note that the new Law ‘On Concession’ dated 3 October 2019 and the Law ‘On Public Private Partnership’ dated 1 July 2010 contain some specifics on procurement process.

Additionally, there is established Model Contract on Lease of State Owned Property.

Investing in energy and infrastructure

The Law of Ukraine ‘On Public Procurement’ dated 25 December 2015 sets out the following procedures:

Open bidding procedure – This is suitable for easy-to-evaluate projects and tenderers simply submitting a tender offer in response to a notice. The pricing element will be a decisive factor for awarding a contract and announcing the winner.
Competitive dialogue – There is a shortlisting of at least three tenderers following an expression of interest stage and tenderers submit a bid. The public authority will hold negotiations on the contract terms with each of the three tenders.
Negotiation procedure – This procedure allows dialogue with one or a number of bidders. It can only be used in specific circumstances prescribed by the Law of Ukraine ‘On Public Procurement’ dated 25 December 2015.

Financing energy and infrastructure

On a publicly procured contract, the public sector may have prescribed requirements on the funding arrangements. Investors must ensure that they are fully familiar with the funding requirements set out in the specific tender documentation.

UK - England and Wales

Public procurement in England & Wales is, for the time being, in most instances governed by the Public Contracts Regulations 2015 which is based on EU Directives. There are some sector-specific regulations such as the Utilities Contract Regulations 2016 (applicable to the rail sector, water and energy) and the Defence and Security Public Contracts Regulations 2011 (which are also based on EU Directives and therefore this entire framework is subject to change as the UK leaves the EU).

The key principles are that any contracts procured by the public sector are awarded fairly, transparently and without discrimination on the grounds of nationality and that all potential bidders are treated equally.

Investing in energy and infrastructure

Public procurement is relevant where the UK government, or a branch of it, is seeking to outsource delivery of a new project. On an infrastructure project, a potential investor would have to bid in its own capacity or as part of a consortium to deliver the overall deal which could include design, build, operation, maintenance and financing of the relevant energy or infrastructure asset. The relevant procurement legislation applies to certain public bodies including central government departments, local authorities, police and fire authorities, NHS Trusts, various non-governmental bodies such as the Competition and Markets Authority and the House of Commons. A regulated procurement is required where certain financial thresholds are met and on most major infrastructure projects (where limited exclusions do not apply), it is likely that those thresholds will be met so a regulated procurement would need to be run.

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

UK - Scotland

Public procurement in Scotland is, for the time being, in most instances governed by the Public Contracts Regulations 2015 which is based on EU Directives. There are some sector-specific regulations such as the Utilities Contract Regulations 2016 (applicable to the rail sector, water and energy) and the and Security Public Contracts Regulations 2011 (these are also based on EU Directives and therefore subject to change as the UK leaves the EU).

Investing in energy and infrastructure

In most cases, the public sector will need to publish a contract notice in the Office Journal of the European Union (OJEU) and typically run one of the following procedures:

Open procedure – This is suitable for easy-to-evaluate projects and tenderers simply submit a tender in response to the OJEU notice. Change and negotiations to the tender are not permitted.
Restricted procedure – There is a shortlisting of at least five tenderers following an expression of interest stage and tenderers submit a bid. Again, no negotiation is permitted other than clarification and finalization of the contract terms.
Competitive dialogue – This is often the most common procedure for complex infrastructure projects and involves a shortlisting of at least three bidders who are invited to dialogue with the public sector to develop detailed solutions which are capable of being accepted by the public sector. Clarification and further negotiations are allowed following final tender but only on the basis of confirming the financial and other commitments in a tenderer's bid.
Competitive procedure with negotiation – This is sometimes described as a hybrid procedure as it allows dialogue with bidders but also allows the public sector to award a contract on the basis of an initial tender (or further stages) but clarification and negotiation is not allowed following final tender.

Depending on the structure of the deal, any acquisition of an interest or variation to the existing project may have procurement-related considerations that need to be borne in mind.

Financing energy and infrastructure

United Arab Emirates

These issues must be understood on a case-by-case basis.

United States

Investing in energy and infrastructure

Generally, project sponsors establish new special-purpose entities to develop individual energy and infrastructure projects. As a result, many energy companies are structured with a parent company, various holding companies and individual projects companies. Investors may acquire an equity interest in specific project companies or in the upstream holding and parent companies. These transactions are typically accomplished via a negotiated purchase agreement. The transaction remains subject to the procurement of necessary regulatory and contractual approvals.

As for the procurement of power and related capacity and ancillary services by regulated utility companies, such companies often conduct requests for proposals (RFP) based on a standard-form agreement. Procurement is based on a procurement plan revised each year and subject to review by the state public utility commission. A public RFP process is managed pursuant to applicable legal requirements and is intended to promote competition and a fair assessment of the available offers. The result is typically a long-term power purchase agreement which forms the economic basis for the development and financing of the applicable generation project. Contracts with retail utility companies are typically subject to approval by the state public utility commission. Retail utilities and industrial customers may also engage in direct bilateral negotiation of such agreements. In recent years, a number of local cooperatives and industrial customers, such as manufacturing facilities, and public customers, such as universities and hospitals, have sought location-specific generation in the form of small generation units, including rooftop solar.

Financing energy and infrastructure

The procurement of financing for energy and other infrastructure projects typically involves negotiation with a bank, financial institution or other lender or investor active in the infrastructure financing market. Often, such an entity is engaged as an arranger to assist with the marketing and syndication of the proposed financing to other players in the market in exchange for the payment of a fee. Many developers and sponsors rely on long-term relationships with such financing parties.

The financing of transport sector infrastructure projects often involves federal Transportation Investment Generating Economic Recovery (TIGER) grants. Rail projects may find funding via Railroad Rehabilitation and Improvement Financing (RRIF) loans. State and/or local governmental agencies also often contribute to the funding of transport projects. These matters are often developed as public-private partnerships (P3). Such P3 infrastructure projects are expanding beyond the traditional transport sector to include schools, housing, hospitals, courthouses, marinas, parking garages and other types of 'social infrastructure.'

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To what extent are energy and infrastructure assets publicly or privately owned?

The main assets of the sector in terms of production, transport and distribution have been acquired through public investment. Although public investment has advantages in terms of less complexity associated with works contracts and lower financial costs associated with concessional loans, in many cases, the participation of the private sector allows greater efficiency in investment decisions, risk mitigation and operation, which also constitutes an additional source of financing for the sector.

For the future, public investment should be reduced and reserved for activities and infrastructures that are in charge of the public sector or that benefit rural electrification, namely:

large dams that due to their size cannot be made via private financing;
Very High Voltage Transport – an activity that guarantees national energy security;
investments in the distribution of areas that are the responsibility of the public utility company for the distribution of electricity; and
investments in rural electrification, including transport and distribution infrastructures for isolated systems, which will later be managed by the private sector responsible for construction.

The participation of the private sector should cover an investment of USD8.9 billion, essentially at the level of Urban Production and Distribution.

Last modified 23 Jul 2020

Are there special rules for investing in energy and infrastructure?

There are general rules provided for in the Private Investment Law, approved by Law 10/18 of June 26, which are applicable to investment in the energy and infrastructure sector. Rules such as access to tax, exchange, customs and other benefits. Or also the forms of investment.

In addition to these rules, there are special rules for these sectors, of which we highlight the following:

The electricity sector has its main legislative and regulatory source in the Law no. 14-A / 96, of May 31 (General Electricity Law), which establishes the general guidelines the legal regime for the exercise of production, transportation, distribution and use of electrical energy, and has many other relevant diplomas, aimed to regulate its supply; distribution; production and transport chain, as also its commercial relations, including the quality of services, tariff regulation and access to networks and interconnections.

The exercise of electricity production, distribution and transport activities requires authorization from the state or a public legal person, by means of a concession or license.

The construction and operation of the electrical installations associated with the activities of production, distribution and transport of electricity also requires licensing, under the terms of the Installation Licensing Regulation. The competence for licensing these facilities is, as a general rule, the Ministry that supervises energy (Ministry of Energy and Water).

The regulation of the Angolan electrical system determines that the commercialization of electrical energy can be made within the scope of the Public Electrical System (SEP) (e.g. linked) or outside it (i.e. not linked).

Last modified 23 Jul 2020

What is the applicable procurement process?

In the case of award to a public company or to a company under the effective control of the state, the above tender process is dispensed.

Last modified 23 Jul 2020

What are the most common forms of funding / investing in energy and infrastructure?

Public companies or companies with public domain of the state, if the investor is a public entity.

Or, for a private investor, the most common types of business structures considered by foreign companies to operate in Angola are:

branches, which, although allowing the undertaking of commercial activities in Angola, are not independent legal entities, and thus the foreign parent entity undertakes unlimited liability for the obligations of the branch, and arising out from the performance of its activity in Angola; or
representative offices, which are merely aimed at developing and following the business of the foreign entity in Angola but are expressly forbidden to conduct any commercial activity in the country; or
companies (subsidiaries), which in Angola include (i) Private limited liability companies (Sociedades por Quotas), and (ii) Joint Stock limited liability companies (Sociedades Anónimas).

Last modified 23 Jul 2020

Luís Filipe Carvalho

Partner
DLA Piper Africa, Angola (ADCA)
[email protected]
T +244 926 612 525
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Jurisdictions

Projects

Investing in energy and infrastructure

Statutory regulation of government tenders

Policies, guidelines and codes of practice

Financing energy and infrastructure

Investing in energy and infrastructure

Financing energy and infrastructure

Investing in energy and infrastructure

Common concessions

Public-private partnership

Financing energy and infrastructure

Investing in infrastructure

Investing in energy

Financing infrastructure and energy

Investing in energy and infrastructure

Generation

Transmission

Distribution

Financing energy and infrastructure

Investing in energy and infrastructure

Public initiative PPP

Unsolicited proposal PPP

Funded 100% by a private investor

Funded by a private investor with 20% public funds

Financing energy and infrastructure

Procurement processes

Simplified below-threshold procedure

Open procedure

Restricted procedure

Negotiated procedure with prior publication

Negotiated procedure without prior publication

Competitive dialogue

Innovation partnership

Concession procedure

Procedure to award a public contract in the simplified regime

Investing in energy and infrastructure

Financing energy and infrastructure

Investing in energy and infrastructure

Generally

Legal framework of the public procurement in France

Publicity of the public procurement

Form of public procurement

Financing in the context of a public procurement

Investing in energy and infrastructure

Financing energy and infrastructure

Investing in energy and infrastructure

Open procedure

Restricted procedure

Competitive dialogue

Competitive procedure with negotiation

Financing energy and infrastructure

Other Applicable Law

Code of Practice on the Governance of State Bodies

Financing energy and infrastructure

Energy

Infrastructure

Publication of the call for tender

The submission of the offers

Evaluation of the offers by the awarding entity

Awarding of the tender and submission of the contract

Investing in energy and infrastructure

Financing energy and infrastructure

Investing in energy and infrastructure

Financing energy and infrastructure

Prerequisite

Preliminary steps

Types of procedures

Preparing the tender

Tendering the bid

Administrative certificates

Procurement of goods, other services and works

Procurement of consultancy services

Investing in energy and infrastructure

Financing energy and infrastructure

Investing in energy and infrastructure

Financing energy and infrastructure

Generally

Investing in energy and infrastructure

Financing energy and infrastructure