Renong, RIL demand review of expressway

In addition, Reliance Industries has sought a new section on material adverse effect that identifies events/situations which are beyond the control and adversely affect the concession company and provides for relief in cash/extension of concession period. The events of the force majeure clause should also be covered under material adverse effect. Highlighting the absence of any compensation for termination of contract, it said the government must compensate the concession company for expenses incurred by it till date of termination with a reasonable post tax rate of return on investments.

The company has sought modifications in the terms of arbitration, saying that if the parties do not agree upon names of arbitrators, the chairman should be appointed by an independent body such as the Institution of Engineers. In the draft agreement, the Ministry of Surface Transport has been given the powers to appoint the arbitrator in such a situation. “Since MoST is one of the interested party to the agreement, such powers cannot be exercised by it,” according to Reliance officials.

Further, the company wants an extension of time given to achieve financial close — the concession period should commence from zero date of the project when all conditions precedent have been satisfied and financial close attained.

While the Malaysian giant Renong Overseas Corporation objected to the force majeure and termination clauses, it sought adequate security to lenders to enable the concession company to raise commercial loans. Accordingly, the revenue stream has to be effectively guaranteed during the land repayment period.