Dissecting PPP contracts #7: Right-of-way

  • September 18, 2017

Dissecting PPP contracts #7: Right-of-way

 

Need ROW. For infrastructure projects that traverse rows of private properties, access and permission must be obtained from the owners. Without ROW, there can be no such road, expressway, rail or power-interconnection project over or through private or public land.

Public purpose. PPP projects and all government projects are intended for the public good. If government funds will be used for ROW purposes, then public purpose is a must for government funds cannot be used for private purposes.

ROW is not free. When ROW is exercised, the parties to a PPP, and consumers and end-users benefit. Thus, the private owner who will be permanently disturbed or deprived of his or her land must be compensated. Apart from legal easements, ROW over or through private land requires the “taker” to pay the owner. While voluntary sale based on an agreed price is the ideal, the “taker” may seek relief from the courts by filing expropriation cases. Delay in negotiations and court proceedings are the real culprits.

ROW in PPPs. PPP arrangements require the identification and delineation of roles and responsibilities. For example, in build-operate-transfer or build-transfer-operate arrangements, the private sector assumes these three functions including the financing and designing of the facility. What remains with or what is normally assumed by the government is providing for ROW.

Suggested wording. Borrowing from the template prepared by Castalia Strategic Advisors, ROW may be worded as follows: “The agency [government] shall be: [1] responsible at its own cost and expense for obtaining all land rights and permanent rights-of-way xxx and required in order to build, rehabilitate, own and operate the facilities, including, without limitation, temporary rights-of-way to install and construct the facilities; 
[2] make the project land available to the company in accordance with the phases xxx under a written lease, license, right of use or another form of express grant or disposition, as appropriate, and free from such liens as to ensure that the company can carry out the project and enforce the land rights against all third parties during the term of this agreement; and [3] ensure the establishment and operation of a road traffic management regime necessary to allow the company to discharge its obligations under this agreement.”

For the private sector, “The company shall: [1] assist the agency, using reasonable efforts, to acquire temporary rights-of-way or construction easements which the company needs for the construction and operation of the facilities in addition to those that the agency may have obtained on or before the effective date; [2] be responsible for and bear the costs of the restoration, relocation and reconnection of any utility pipes, cables or other media which may be present on the project land; 
xxx.”

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